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Landlord and tenant – commercial

Latent defects – liability

Earlier this year there was a case in which a residential lessee spent several thousand pounds repairing damage to his basement flat caused by leaks from some light wells. Those leaks occurred because the concrete surrounds had been laid defectively when the building was converted into flats before the date of the lease. The High Court decided that L was not liable for T’s repair costs because T had no contractual claim against L.

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Guarantor – contracting out

The contracting-out regime allows L and T to agree that T will not have security of tenure. The process was simplified in 2004 and there is no longer any need for a court order (under the new procedure, L serves a warning notice, with T then signing or swearing a declaration in response).

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Rent – monthly?

There has been much publicity about some retailers requesting monthly rather than quarterly, rent payments. Even if L is inclined to agree to this request there may well be documentation to be reviewed:

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SDLT – five-year period

SDLT was introduced in December 2003. With leases, the general scheme was that SDLT would be paid on the basis of the rents in the first five years. But, the fifth anniversary can give rise to further SDLT payments (or even repayments). Accordingly, as from December 2008, these become important concerns.

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Insolvency – pre-packs

Pre-packaged administration sales (pre-packs) have become controversial in recent times. In essence, a pre-pack is a sale of a company’s business and assets that is negotiated prior to the formal appointment of an administrator, with the idea that he then completes that sale immediately following his appointment.

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SDLT – five-year period

As we noted in last month’s issue (p22), when SDLT was first introduced in December 2003, the general scheme was that SDLT would be paid on the basis of the rents in the first five years of a lease. But, the fifth anniversary can give rise to further SDLT payments, and accordingly December 2008 means that these potential complications now arise.

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Rent reviews – s17 notices

Section 17(2) L&T (Covenants) Act 1995 applies to both old and new leases. It requires L to serve notice on a former T within six months of any arrears falling due:

‘The former T shall not be liable… to pay any amount in respect of any fixed charge… unless, within the period of six months beginning with the date when the charge becomes due, the L serves on the former T a notice informing him… that the charge is now due.’
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Rent – which month?

Remember that T can allocate his rental payment to a specific rental period – and that may have unintended consequences for L if T is in arrears. Consider the case of Thomas [2006].

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Lack of repair – LTA 1927

When a lease comes to an end, whether by forfeiture or termination, T will be liable to L for any want of repair. In principle, the damages recovered by L will be the cost of the necessary repair works.

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Page 50 of 54

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