The Practical Lawyer

Home
About
CPD
Subscribe
Contact
Landlord and tenant – commercial

Insolvent T – L’s bank covenants?

The insolvency of T can have a direct impact on L’s financial arrangements. Indeed, non-payment of rent by T may mean that L is in breach of an interest cover covenant, or a loan-to-value covenant.

Subscribers only...
 

Rent – no apportionment

If a lease requires rent to be paid in advance, then T cannot apportion the final rent payment (unless the lease says otherwise). This is particularly important on the expiry of a lease – whether it be by passage of time, forfeiture, surrender, or exercise of a break clause.

Subscribers only...
 

Administrator – unlawful occupation?

On an insolvency administration, how do you balance the competing interests of L (who wants to enforce the terms of the lease) and the creditors (who want to maximise the business value)?

Subscribers only...
 

Administration – empty properties

As administration becomes more commonplace, it is important for Ls to be aware of the empty property rates implications of a property being occupied by a T in administration.

Subscribers only...
 

Repair – latent defects

The standard definition of ‘repair’ dates from Lurcott [1911]:

‘The restoration by renewal or replacement of subsidiary parts of a whole. Renewal, as distinguished from repair, is the reconstruction of the entirety, meaning by the entirety not necessarily the whole of the subject matter but substantially the whole of the subject matter.’
Subscribers only...
 

Virtual assignment – alienation breach?

A ‘virtual assignment’ is a side arrangement (not involving L) by which all the economic benefits and burdens of a lease are transferred without there being an assignment of the lease, and without there being a change of occupier.

Subscribers only...
 

Service charge – ‘promotion’ costs

It will often be in the mutual interest of both L and T for L to spend money promoting a large shopping centre or complex. Typically, shopping centre leases will contain provisions whereby ‘promotion’ costs form part of the service charge, but with L having to make a contribution in respect of such items. Indeed, the Trafford Centre in Manchester has just such a provision (with L having to make a 50% contribution).

Subscribers only...
 

Right to inspect – intrusive

A typical lease will allow L, on giving reasonable notice, ‘to enter upon premises generally to inspect and examine the same to view the state of repair and condition thereof’.

Subscribers only...
 

Insolvency – L’s remedies (1)

This table summarises L’s remedies when dealing with an insolvent individual (non-corporate) T.
Subscribers only...
 

Inspection – drilling bore holes

A typical lease will allow L to inspect the premises (on giving reasonable notice). But, does that right to inspect mean that L has the right to drill bore holes?

Subscribers only...
 


Page 50 of 52

Most-read articles

Could you write for The Practical Lawyer?

We are looking for help! If you can write in a practical, easy style, about a range of legal topics then please email a short CV to john.pritchard@legalease.co.uk

Resources

IAG International
MSI Global Alliance
Join the IBA now!
www.totallylegal.com
In House Lawyer