Possession & Breach of Covenant Claims

What are Possession & Breach of Covenant Claims?

Possession and breach of covenant claims are breaches by the tenant (usually) or the landlord of their obligations contained in the lease. Tenants’ breaches commonly include:

• Failure to pay the rent
• Subletting without permission
• Carrying out unauthorised alterations
• Failure to repair
• Becoming insolvent
• Unlawful Use

Examples of landlord’s breaches and property disputes are:

• Wrongly withholding or delaying consent for either assignment, subletting or alterations
• Breach of quiet enjoyment (the tenant’s right to use his property without unlawful interference from the landlord)
• Failure to insure

The landlord faced with a defaulting tenant must decide whether he wants to bring the lease to an end (known as forfeiture) or for the lease to continue and to simply look to recover arrears of rent or damages or to bring an injunction (a Court order to compel the tenant to comply with the lease terms).

Alternatively, if the tenant owes rent then rather than forfeiting the lease, the landlord can re-enter the premises and simply seize the tenant’s stock. This is known as distress.

For the landlord to forfeit, the lease must first contain a forfeiture clause. This allows the landlord to terminate the tenancy upon the tenant failing to pay the rent (usually after a period of grace of between 14-28 days).

The landlord can forfeit a lease either by:

• Issuing proceedings in the Courts
• Re-entering onto the premises

With arrears of rent, the landlord can forfeit immediately after the period of grace has expired. With any other breach e.g., subletting, the landlord must also first serve a notice on the tenant specifying the breaches of covenant (known as a forfeiture notice or a Section 146 Notice) which allows the tenant the opportunity to remedy the breach.

If the landlord does forfeit the lease, then all is not lost for the tenant. He can apply to the Court to have the lease restored to him, known as relief from forfeiture. The Court has a wide discretion in allowing whether to grant relief. The Court’s usual approach is to allow this, providing the tenant:

• Remedies the breach of covenant quickly
• Pays any rent arrears, damages and the landlord’s costs

There are additional hurdles in place when trying to forfeit the long lease of a flat, as there are further steps that a landlord needs to take. We can assist and advise on these.

Tenant’s remedies are more limited and broadly speaking are restricted to bringing a claim in the Courts seeking damages or an injunction (an order requiring a landlord to comply with the lease). Only in very rare cases can a tenant look to end the lease because of the landlord’s breaches of his obligations.

The landlord’s options are more limited when dealing with tenants of residential property. Usually, the landlord can only recover possession by first issuing Court proceedings and obtaining a Court order for possession.

It is extremely difficult for a landlord to recover possession of premises let on a long lease, or where there is a “sitting tenant” occupying the property under an old-style protected tenancy under the Rent Act 1977. Today the most common short-term tenancies are assured shorthold tenancies and the landlord can recover possession more quickly.