Breach of covenant
What is a covenant?
A covenant is an obligation owed by one party to another to do, or not do, something.
Usually, both a tenant and landlord will have covenants that they need to comply with in a lease.
A freehold title can also contain covenants. A covenant that restricts how the land can be used for the benefit of another owner’s land and binds successors in title. Positive covenants such as to contribute to the maintenance of walls do not usually bind successors in title unless there is a chain of indemnity.
A breach of covenant occurs if a party has not complied with a covenant.
What covenants could be found in a lease?
|To provide the tenant with quiet enjoyment||To pay the rent|
|To provide the services||To pay the service charge|
|To insure the property||To obtain landlord’s consent on assignment of the lease|
|To reinstate the property where it has been damaged by an insured risk||To keep the property in the standard of repair and condition required by the lease|
What are the options available to the landlord where a tenant is in breach of covenant (other than for non-payment of rent)?
For most tenants, covenants that have been breached (other than non-payment of rent), the landlord may be able to do the following (however this will depend on the type of covenant being breached, what the lease says, the discretion of the courts/Leasehold Valuation Tribunal (whichever is relevant) and the circumstances in each case):
Forfeit the lease - effectively, the lease would come to an end once certain processes had been undertaken. A landlord must also take care not to ‘waive’ the breach which means that the landlord, by their conduct, treats the tenant’s lease as continuing resulting in a loss of the right to forfeit for that breach. However, this is less of a concern for a landlord where the breach is a ‘continuing breach’.
- Specific performance – obliging a tenant to perform an obligation in the lease.
- Damages- putting the landlord back into the position it would have been in had the tenant complied with the covenant.
- Injunctions- requiring the tenant to perform, or not perform, a covenant.
- A claim for possession in relation to an assured tenancy or assured shorthold tenancy.
Breach of repair obligations
A lease may permit a landlord to serve a notice on the tenant and enter the property to carry out the tenant’s repairing obligations where the tenant is in default. The landlord can then recover the costs of doing so from the tenant.
This is often an alternative remedy sought by landlords.
Remedies for non-payment of rent
Where a tenant is in rent arrears, the landlord may be able to do the following (however this will depend on what the lease says, the circumstances in each case and the discretion of the courts/Leasehold Valuation Tribunal (whichever is relevant) where claims to them are being made. It is also important that the correct processes are followed):
- Start a claim for possession in relation to an assured tenancy or assured shorthold tenancy only
- Start proceedings to retrieve rent arrears
- Pursue previous tenants and guarantors in certain circumstances
- Use funds from the tenant’s rent deposit
- Forfeit the lease - the lease would come to an end following certain processes and circumstances being undertaken. A landlord must also take care not to ‘waive’ the breach which means that the landlord, by their conduct, treats the tenant’s lease as continuing resulting in a loss of the right to forfeit for that breach.
‘Once and for all’ breaches v continuing breaches
An example of a once and for all breach is a breach of the requirements regarding assignment. In this instance, where the landlord waives its right to forfeit, the landlord loses its right to forfeit in respect of this breach.
An example of a continuing breach is a breach of an obligation to insure the property. Here, if a landlord waives its right to forfeit, the landlord acquires a new right to forfeit the lease in respect of the breach the following day.
What are the options available to the tenant where a landlord is in breach of covenant?
A tenant can bring a claim against the landlord for a breach of covenant. Depending on what the lease says, the circumstances in each case and the discretion of the court/Leasehold Valuation Tribunal (whichever is relevant), the tenant may be able to:
- Receive damages
- Specific performance – obliging a landlord to perform an obligation in the lease.
- Injunctions - requiring the landlord to perform or not perform something.
Enforcing a covenant against another tenant in the building
Sometimes, a long lease of part of a building contains a clause that requires the landlord to enforce a covenant that has been breached by a tenant at the request of another tenant in the building. These are often found in leases of flats.
Usually, the clause will require that the tenant making the request pays the landlord’s costs in enforcing the covenant.
A long lease may also contain a clause allowing the tenant instead to enforce a covenant breached by another tenant directly and so there is no requirement to involve the landlord.