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COMMERCIAL LEASES LECTURE 6

Explore the complexities of alienation provisions in commercial leases, including reasons, forms, implications on rent, tenant protection, and legal frameworks. Learn about conditional consent, reasonable refusals, and key cases shaping landlord-tenant relationships.

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COMMERCIAL LEASES LECTURE 6

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  1. Jennifer Slade COMMERCIAL LEASESLECTURE 6

  2. Commercial Leases: Lecture 6Today’s topics • Alienation provisions • T’s disposal of the lease

  3. Commercial Leases: Lecture 6Alienation • What is alienation? (p.1) • Why would a landlord wish to restrict it? • Part vs whole • L may place greater restrictions on dealings of part

  4. Commercial Leases: Lecture 6Alienation • Forms of covenant/restriction – prohibitions come in different “strengths” • Absolute • Qualified • Fully qualified • Absolute • “you must not…” – i.e. T needs waiver/variation of lease to dispose • Effect at rent review? – will depress rent at review

  5. Commercial Leases: Lecture 6Alienation • Qualified (p.2) • “you must not…. without my consent/approval/licence” • In writing • Note Aubergine • Licences to assign/sublet • All parties execute • Direct covenants? • Since no privity between L and sub-T, L will want direct covenant between them

  6. Commercial Leases: Lecture 6Alienation • Fully qualified – weakest form of prohibition • “you must not…. without my consent/approval/licence, which is not to be unreasonably withheld” • Alienation clauses can provide different restrictions for part/whole • e.g. fully qualified for dealings with whole, absolute for dealings with part

  7. L’s consent (not to be unreasonably withheld) needed for assigning/subletting whole A “Permitted Part” may be disposed of under certain stricter conditions

  8. Commercial Leases: Lecture 6Alienation • Effect of s19(1)(a) LTA 1927 (pp.2-3) • Converts qualified covenants to fully qualified covenants • Implies “such consent not to be unreasonably withheld” into alienation covenants where landlord’s consent required • All leases and all forms of alienation subject to this provision • Note also s144 LPA – no premium can be charged for consent, but L’s reasonable costs can be required

  9. Commercial Leases: Lecture 6Alienation • Meaning of “reasonable” (p.3) • When is it reasonable for a landlord to withhold consent (assignment/underletting)? • Leading case - International Drilling • To be reasonable, refusal must be referable to L-T relationship • Case law/examples (p.4) • Straudley Investments • Moss Bros } c.f. Newgate Centre • Ashworth Frazer} exercise

  10. Commercial Leases: Lecture 6Alienation • New tenancies: LT(C)A 1995 • s19(1A) LTA 1927 (pp.5-6) • Applies to assignments only • Commercial leases only (s19(1E)) • s19(1A)provides some certainty for when L’s refusal of consent will be reasonable: • Circumstances and conditions when L’s refusal will not be unreasonable can be agreed (in the lease) (p.7)

  11. Commercial Leases: Lecture 6Alienation • If a condition or circumstance involves L’s discretion, then L to act reasonably or T to be able to refer to3rd party • Circumstances • e.g. unsatisfactory references/poor financial standing, compliance with covenants • Conditions • e.g. provision of an AGA, surety • Where circumstances and conditions do not determine whether L reasonable, use International Drilling to fill “gaps”

  12. Billies Cookies question: Do the alienation provisions set out circumstances and conditions?

  13. Billies Cookies question: Do the alienation provisions set out circumstances and conditions? 4.10.3 – conditions 4.10.4 - circumstances (p.14-15)

  14. Commercial Leases: Lecture 6Alienation • Further Tenant protection (p.7) • s1 LTA 1988 – stops L’s solicitor “sitting on” T’s applications for consent • L’s duty to give consent unless reasonable not to, and if refused provide written reasons • Onus • Breach – tortious damages • Reasonable time • No statutory guidance • Cases (1 Month?) • Dong Bang Minerva • Go West • Blockbuster

  15. Commercial Leases: Lecture 6Alienation • LPA 1925 s144 • [LTA 1927 s19(1)(b)] • Offers to surrender • Allnatt

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