Main Provisions of Landlord and Tenant (Covenants) Act 1995
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The Landlord and Tenant (Covenants) Act 1995 addresses the assignment and release of tenant covenants in leases. Its main provisions aim to provide relief to tenants by limiting their liability for covenants after assigning their lease. Here are the key provisions of the Landlord and Tenant (Covenants) Act 1995:
Privity of contract: The Act preserves the principle of privity of contract, which means that the original tenant remains liable to the landlord for the performance of covenants in the lease even after assigning the lease to a new tenant.
Authorised Guarantee Agreement (AGA): The Act introduces the concept of an Authorised Guarantee Agreement. When a tenant assigns their lease, they can require the assignee to enter into an AGA. Under the AGA, the assignee guarantees the performance of the covenants in the lease for the duration of the assignment.
Release from liability: If the assignee of a lease assigns it to a subsequent tenant, the original tenant can seek a release from liability for future breaches of the lease covenants. The release is obtained by serving a notice on the landlord, and once the notice is served, the original tenant's liability for future breaches ends.
Consent to assignment: The Act provides that a landlord cannot unreasonably withhold consent to the assignment of a lease. If the landlord unreasonably withholds consent, the tenant may apply to the court for relief and, if successful, the assignment will be deemed to have taken place.
Application to subleases: The Act also extends its provisions to subleases. If a subtenant assigns the sublease, the original tenant can seek a release from liability for future breaches of the sublease covenants in a similar manner as with the original lease.
The Landlord and Tenant (Covenants) Act 1995 is a complex piece of legislation, and its application can vary depending on the specific circumstances and the terms of the lease.
Privity of contract: The Act preserves the principle of privity of contract, which means that the original tenant remains liable to the landlord for the performance of covenants in the lease even after assigning the lease to a new tenant.
Authorised Guarantee Agreement (AGA): The Act introduces the concept of an Authorised Guarantee Agreement. When a tenant assigns their lease, they can require the assignee to enter into an AGA. Under the AGA, the assignee guarantees the performance of the covenants in the lease for the duration of the assignment.
Release from liability: If the assignee of a lease assigns it to a subsequent tenant, the original tenant can seek a release from liability for future breaches of the lease covenants. The release is obtained by serving a notice on the landlord, and once the notice is served, the original tenant's liability for future breaches ends.
Consent to assignment: The Act provides that a landlord cannot unreasonably withhold consent to the assignment of a lease. If the landlord unreasonably withholds consent, the tenant may apply to the court for relief and, if successful, the assignment will be deemed to have taken place.
Application to subleases: The Act also extends its provisions to subleases. If a subtenant assigns the sublease, the original tenant can seek a release from liability for future breaches of the sublease covenants in a similar manner as with the original lease.
The Landlord and Tenant (Covenants) Act 1995 is a complex piece of legislation, and its application can vary depending on the specific circumstances and the terms of the lease.
