Commercial Landlord and Tenant Law
Lease agreements establish the relationship between landlords and tenants (Cowan & McDermont, 2006). Besides, they outline the duties and obligations of either party and provide for redress. Leases offer the security of tenure to a tenant. A landlord cannot terminate a lease agreement arbitrarily (ODPM 2005). According to the Landlord and Tenant Act of 1954, a lease agreement should be in force up to the time of its expiry. However, a change in circumstances may drive the contracting parties to terminate their agreement before the lapse of time. In such instances, either party must discharge their obligations and avoid unduly inconveniencing the other party. Rent due to the landlord must be promptly paid, while the tenant should be duly reimbursed for compensation due.
Vacant Possession for Unit 1
Unit 1 was let on a FRI (Full Repairing and Insuring) lease for 15 years effective from the year September 2002. Up to the present time, the lease has subsisted for 13 years. By design, the lease should be in force until 2017. An FRI lease implies that the tenant must pay the stipulated rent on time, cater for all the repairs as they fall due, and provide insurance premiums for the rented facility. Repairs done to the rented premises will be reasonable and according to a desired standard. Repairs entail the restoration or renewal of subsidiary parts of the premises. The rule was laid out in the case of Lurcott v Wakely & Wheeler [1911] 1 KB 905. In this case, the courts stated that the repairs undertake must have regard to the age and design of the premises, to render them fit and habitable by another person.
In seeking to terminate the lease agreement, the landlord must first take into consideration the following factors: The first part is that the lease period has not expired. The second point is that the tenant had made improvements to the property, leading to a general increase in the value of the premises. The improvements were the building of an extension and the addition of an air-conditioner. According to the Act at s. 25, a landlord must serve notice to the tenant of intention to re-posses the premises. Such a notice must be served within a span of 6 months and 12 months. This period is designed to allow the tenant to find alternative housing or appeal against the case.
Under the Act, the landlord must prove a settled intention to develop the premises for him or her to have a valid claim for repossession. In this case, the landlord must demonstrate the reason why the tenant should be evicted from the premises. According to the fact pattern, the area nearby the premises was being improved to accommodate office buildings. The landlord must show why letting the premises as office blocks will be more beneficial to him. In the pursuit of this goal however, the landlord must not inconvenience the tenant unduly.
The landlord must pay compensation for the repairs done and the termination of the tenancy before lapse as stipulated under PART III of the Act. Under the Landlords and Tenants Act of 1954, the compensation payable is twice the rateable amount. For instance, if the tenant paid X Sterling pounds as rent, the landlord must reimburse the tenant 2X, as compensation for termination of the lease agreement. In addition, the landlord must compensate the tenant the value of money spent in making repairs to the premises. The landlord should wait for 2 years before he can make a possession declaration. Since the leasehold expires in September 2017, the landlord must give at least 6 months to the tenant
Vacant Possession for Unit 2
In this scenario, the rent from the tenant owes. Despites this, the tenant had occasionally fails the exam. The tenant and landlord in this case had agreed to structure the agreement to be a FRI lease. However, the tenant has on various occasions; the tenant had failed to honour his obligations. In several instances, the tenant has delayed in remitting the fund to the landlord. Failure to remit the funds meant for rent in good time is a breach of the trust and perseverance extended by the landlord. Despite the number of times that the tenant has delayed remitting the rent owing, the landlord has demonstrated goodwill and hospitality by not exercising. In the present case, the tenant has been in the habit of delaying with rent. The tenant is not in occupation and has not paid the rent for some time. According to the FRI lease entered into, the lease should terminate in 2017, after the lapse of the 15 years lease period. However, the landlord is looking for a way to end the lease without attracting maximum penalties.
The best options for bringing the lease to an end are through surrender and peaceful re-entry (Michael & John 2005, p. 33). Surrender applies if it is assumed that the tenant has impliedly vacated the premises by virtue of his or her absence and the unwillingness to pay rent. Once a tenant keeps away from the rented premises for a considerable amount of time, does not pay rent, and offers no explanation for their absence, such an action is tantamount to surrender. In that case, the landlord can re-occupy the premises or lease them to another party. After leasing to another party, the landlord can then begin distressing for the arrears using established mechanisms such as civil action. On the other hand, peaceful re-entry signifies the process through which the landlord takes over the ownership of the home after the tenant fails to pay up the outstanding dues and they do not offer an explanation to the same effect.
However, in both cases, the lease agreement must provide for the termination of the leasehold by surrender or peaceful re-entry. In the absence of the above provisions, the landlord has no option but to wait for the lapse of the leasehold before they can re-occupy the premises.
Vacant Possession for Unit 3
In this case, the tenant was on an Internal Repair (IR) non-secured lease. This means that the tenant was charged with the responsibility of making all the internal repairs to the premises as they fell due. Besides, the lease had no security of tenure. By implication of this provision, the landlord could terminate the lease agreement any time he deemed fit. However, the lease is subject to its literal expiration. Under the literal expiration provision, a tenant cannot be kicked out earlier or arbitrarily (Kemp & Keoghan 2001, p. 33). Such an action will lead to a civil action, in which the landlord will be liable to pay damages. However, after the expiration of the 6 year lease, the landlord can kick the tenant out if they do not leave on their own volition. Any continued stay in the premises beyond the stipulated time of 6 years will attract more profits.
The lease agreement between the landlord and the tenant was entered into in 2011. Thus, the lease would expire in 2017, after the lapse of the 6 years period. In this case, the landlord has to wait for 2 more years before he can perform re-entry. Any purported action of gaining possession before the expiration of this timeframe will lead to an action at law (Marsh 2006, p. 14). At the end of the 6 years period, the landlord can exercise re-entry. In the event that the landlord fails to evict the tenants one year after the expiration of the lease period, the tenants automatically become protected and cannot be removed arbitrarily.
In this case, vacant possession will be possible through a re-entry after the lapse of the six year period. The repossession does not necessarily require written notices. The lapse takes effect automatically. There is no compensation unless a party violates the landlord violates the quiet enjoyment of the property. However, prolonged stay by the tenants accrues mesne profits for the landlord. Besides, extended leases will affect the plans for redevelopment in case the landlord wanted to venture into other businesses.
Vacant Possession for Unit 4
In this case there were a15 years FRI lease agreement with a one year rolling break clause. The importance of the rolling break was to allow either party to determine the agreement by way of a one year notice. Thus, either the landlord or the tenant can bring the lease to an end by giving a one year notice. In the absence of the notice, the lease will subsist to its expiry (Martin et al 2006, p. 12). In practise, a lease with a rolling break terminates unless a party raises objections to its ending. In this case, the landlord will bring the agreement to an end if the tenant does not object. However, if the tenant applies for a renewal, the landlord can raise any of the grounds stipulated in s. 24-28.
The landlord break is conditional on the landlord fulfilling all the covenants (Crawford 2003, p. 490). At the time of applying for the break, the landlord must not be accused of failing to meet any covenant, especially one that will enhance quiet enjoyment of the property. From the fact pattern, it is apparent that the unit is in a dilapidated state, even by its age and setting. By implication, the landlord had not complied with the material covenants. In addition, the landlord break is effective if the agreement was conducted outside the Act. If the lease agreement was conducted outside the Act, then no compensation will awarded to the tenant Scottish Executive 2005, p. 14).
The landlord must issue a 1 year notice to the tenant, detailing the break. Such notice will be communicated in accordance with s. 25 of the Act. If the tenant does not insist on a renewal, then the lease will terminate. In the event the tenant pushes for a renewal, the landlord can raise any of the objections falling in the ss. 24-28. It is important for the landlord to ascertain that such breaks are available to allow room for redevelopment in case the present idea does not work well.
Vacant Possession for Unit 5
This particular case study requires an informed analysis on the best method to let a property without subjecting oneself to complicated processes or those that may be difficult to get out of. The landlord prefers a short term engagement as he makes up his mind about the available business opportunities. Therefore, a property letting process that would not give security of tenure to the tenant will be ideal. There are two possible options: a one year license or a 2 years lease.
A one year license will permit the tenant to occupy the premises for a period of exactly one year. The term will not be subject to a renewal and will not have any security of tenure provisions under the Act. On the other hand, a 2 year lease will be granted to a willing business. The lease will be signed as a contractual obligation that will be discharged after the lapse of the two year period. Similarly, the 2 year lease will not be covered under the security of tenure provisions of the Act. The landlord has to be careful not to allow a longer leasehold as it may generate security of tenure (Smith, Munro & Christie 2003, p. 86). Besides, the property owner is still evaluating viable business opportunities in the neighbourhood. It will be immature to confine oneself to a single business idea without exploring the rest. Sticking to a single business idea for long will affect the plans for redevelopment.
In the present circumstances, i will recommend a one year licence without any security of tenure.
List of References
Crawford, A 2003. “Contractual Governance” of Deviant Behaviour’ Journal of Law and Society 30(4): 479-505
Cowan, D & McDermont, M 2006. Regulating Social Housing: Governing Decline. London: Glasshouse
Kemp, P & Keoghan, M 2001. Movement into and out of the Private Tented Sector, Housing Studies, Vol 16, 21-37.
Michael, B & John, G 2005. Property Investment Funds for the UK: Potential Impact on the Private Rental Market, London: Council for Mortgage Lenders
Marsh, A 2006. The Private Rented Sector: The Regulatory Change, Briefing Paper Provided for Seminar Ensuring Compliance: The Case of the Private Rented Sector, March 2006.
Martin P, Alex M, Robert L, Frank S, Dave C, Helen C, Caroline H, & Tony C 2006. Ensuring Compliance: The Case of the Private Rented Sector. CMPO Working Paper Series No. 06/148
ODPM 2005. Housing in England 2003/04: Part 1. Trends in Tenure and Cross-tenure Topics. London: Office of the Deputy Prime Minister.
Scottish Executive 2005. Regulation of Private Landlords under the Antisocial Behaviour etc (Scotland) Act 2004, Consultation Paper, Edinburgh, Scottish Executive.
Smith, S, Munro, M & Christie, H 2006. Performing (Housing) Markets, Urban Studies, Vol 43, No 1, 81-98.
The Landlord and Tenant Act, 1954