enforceability of leasehold covenants

• What is privity of contract in the context of leases?

  • Legal relationship between parties to a contract
  • In leases, it refers to enforceable rights and obligations between the original landlord and tenant
• What is privity of estate?

  • Legal relationship between landlord and tenant
  • Based on ownership of legal estates in the property
  • Exists during the lease term
• What happens when the lease or reversionary interest is assigned?

  Privity of contract remains with the original parties, but privity of estate transfers to the new landlord or tenant.
• Why is the enforceability of leasehold covenants important?

  • Ensures obligations can be upheld
  • Avoids covenants ceasing to exist when original parties leave
• What is the old system of rules regarding leasehold covenants?

  • Governs leases granted before January 1, 1996
  • Based on privity of contract and privity of estate
  • Original parties remain liable for covenants after assignment
• What difficulties arose under the old system of leasehold covenants?

  Original landlord and tenant remained liable for the full lease term, causing hardships for tenants.
• What is the Landlord and Tenant (Covenants) Act 1995 (LTCA 1995)?

  • Reformed leasehold covenants for leases granted on or after January 1, 1996
  • Abolished privity of contract for new leases
  • Introduced new rules for covenant enforcement
• What significant change did the LTCA 1995 make regarding privity of contract?

  The LTCA 1995 abolished privity of contract for new leases, releasing original parties from liability after assignment.
• How does the LTCA 1995 handle the release of parties from liability upon assignment?

  Under s 5, a tenant is automatically released upon assignment, but a landlord must apply for release.
• What happens in the case of an excluded assignment under the LTCA 1995?

  The tenant is not automatically released from obligations if the lease is assigned in breach of an alienation covenant.
• What is the automatic transmission of covenants under LTCA 1995, s 3?

  When a tenant assigns a lease, the assignee acquires the benefit and burden of all covenants in the lease.
• What happens if a landlord wants to enforce a covenant against a former tenant?

  The landlord can sue if the outgoing tenant provided an Authorised Guarantee Agreement (AGA) under s 16.
• Are there exceptions to the automatic transmission of covenants under LTCA 1995?

  Yes, covenants expressly stated to be personal to the original parties do not pass to third parties.
• What is the role of indemnities in leasehold covenants?

  • Ensures assignee compensates assignor for covenant breaches
  • Former tenant can claim indemnity from the assignee
• How can a landlord ensure that subtenants comply with covenants?

  Landlords can require subtenants to covenant directly with them to perform covenants in the head lease.
• What is an Authorised Guarantee Agreement (AGA)?

  An AGA is a guarantee by an outgoing tenant ensuring the incoming assignee fulfills lease covenants.
• What happens when a subtenant breaches a covenant?

  A landlord cannot enforce positive covenants against a subtenant, but restrictive covenants can be enforced.
• What is the common law rule in *Moule v Garrett* (1872)?

  The rule allows a former tenant to sue a subsequent assignee for damages from a breach of covenant.
• How does the LTCA 1995 apply to subleases?

  The LTCA 1995 allows restrictive covenants to be enforced against any owner or occupier, including subtenants.
• What happens if a landlord forfeits the head lease?

  The sublease is automatically terminated, but the subtenant may claim relief.
• What is the key difference between old and new leases regarding liability for covenants?

  In old leases, original parties remain liable after assignment; in new leases, liability passes to new parties.
• What happens if the covenant is ‘expressed to be personal’?

  Covenants expressed to be personal are not transferred to new parties and remain enforceable only between original parties.