Breach of Covenant
Disputes commonly arise when a party to a lease fails to comply with a restrictive covenant in a lease, for example a covenant to pay rent, to insure, to keep premises in repair, not to alter premises or not to assign or sub-let.
What is a covenant?
- Covenants are frequently the source of disputes between landlords and tenants.
- Covenants are often in writing and contained in a deed, for example a lease, which is signed by the parties.
A landlord’s options in this situation are to either commence forfeiting the lease, or to continue the lease but go to court to claim damages to account for rent arrears or compel the tenant to comply with the lease.
If you are a landlord and consider the tenant to have committed a breach of covenant in a lease agreement, then you should contact our expert litigation solicitors in order to resolve the dispute as quickly as possible.
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A ‘covenant’ is a written agreement, signed by the parties and contained in a deed. A deed is simply a document ‘witnessed’ by third parties who can attest to its validity. Covenants are frequently the source of disputes between landowners because they compel one party to act to their detriment for another and are capable of being enforced by subsequent owners of land even though they were in no way involved in the original agreement.
If a tenant breaches a covenant, the landlord may have the right of forfeiture of the lease, meaning that they can terminate the lease early. This will depend on a number of factors, including the type of breach that has occurred, whether this was a “one-off” or is a continuing breach, and whether the breach can be remedied.
If a tenant is in breach of a covenant in the lease and the landlord accepts rent with knowledge of that breach, then the landlord may have waived their right to forfeit in respect of that breach. To amount to a waiver, the rent must have (a) accrued since the landlord became aware of the forfeiture event; and (b) been offered and accepted as rent by the landlord. If the landlord’s actions amount to the recognition of the continued existence of the lease and the landlord and tenant relationship, there is a risk that the right to forfeit the lease for a particular period has been waived.
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