Introduction The relationship between landlord and tenant involves obligations on each side, continuing for the duration

of the lease and it is regulated by a substantial body of legal rules. So far as tenants obligations are concerned, this essay will concentrate upon the tenants obligations regarding repair. The major interest regarding their obligations will lie in the regulation of landlords rights to forfeit leases in the event of breach. Leases are almost invariably contracts, in that a proprietary interest is conferred on the tenant. A Lease is characterised by the land owner (referred to as the Landlord or Lessor) granting exclusive possession of the property to a Tenant (often referred to in a Lease as a Lessee) for a fixed term at a specified rent. Whilst a simple document incorporating these issues signed by both parties would constitute a Lease, leases are generally lengthy documents which try to regulate the relationship between the Landlord and the Tenant as carefully as possible. The parties need to be fully aware of what they contain to fully understand their respective obligations. Particularly for a Tenant these obligations can be onerous. A contract is breached when a party, without lawful excuse, fails to perform any of his contractual obligations. The lease must identify the tenant's repairing obligations. Is the tenant to repair the whole of the building or simply the interior?

Probably the most important thing to consider when taking on a lease is the extent of the tenant's repairing liability. The repairing obligation is likely to fall into one of two categories:1. Full repairing. The tenant is responsible for the whole of the premises including the structure of the building.

If the landlord alleges that the tenant has failed to comply with his repairing obligations, he may serve what is called a "schedule of dilapidations". This is simply a list of alleged breaches of the repairing covenant. A schedule of dilapidations can be served during the term of the lease or after it expires. 2. FRI terms 3. A phrase often used is "FRI terms". What this means is that one way or another the lease imposes on the tenant a full repairing and insuring liability. Usually the tenant's obligation will be actually to do the repairs but to reimburse the landlord with the cost of the insurance. Where the landlord carries out the repairs but charges the cost to the tenant through a service charge, the lease is still said to be on FRI terms because it is the tenant who bears the ultimate cost of both repairs and insurance. If the tenant does not comply with the terms of his lease, the landlord will normally have what is called the right of "forfeiture", that is the right to cancel the tenancy.

Subject to some statutory exceptions the landlord can forfeit the lease in one of two ways:1. He can peacefully re-enter the premises. 2. He can issue proceedings for possession. The court also has power to grant the tenant "relief" against forfeiture if the tenant remedies his breach. However it is illegal for the landlord to exercise the right of peaceful re-entry if there is someone on the premises resisting the landlord's attempts to enter. For this reason it is not all that uncommon for a landlord to seek to achieve peaceful re-entry at night or over a weekend, when the premises are likely to be empty. There are some statutory restrictions one the right of forfeiture and these are:1. The landlord cannot proceed to forfeit a lease (other than for breach of the covenant to pay the rent) without giving a particular form of statutory notice to the tenant and waiting a reasonable time to allow the tenant to remedy the breach; 2. Under the Leasehold Property (Repairs) Act 1938, where the original term of the lease was 7 years or more, and 3 or more years remain unexpired and the landlord is seeking to forfeit for breach of the repairing obligation, the tenant has the right to give notice to the landlord that he claims the benefit of the Act. If he does this, the landlord can only forfeit if he first obtains the court's permission. Where the tenant invokes the mechanism of the Leasehold Property (Repairs) Act 1938 the landlord can only proceed to forfeit the lease if the court gives permission. Forfeiture (relevant in England and Wales only) The right of a landlord to terminate the lease early if the tenant fails to comply with the lease. In practice, this right is rarely exercised as a Court will generally give a tenant relief from forfeiture if they remedy the breach of the lease. Fully repairing and insuring (FRI) lease A lease where the tenant is responsible for repairing, maintaining and insuring the interior and exterior of the premises. REPAIRING AND INSURING OBLIGATIONS 3. Commercial Leases are usually full repairing and insuring (FRI) Leases. This means, for example, that if a property is a single unit the Tenant will normally have to arrange insurance and pay the premium and arrange and pay for all repairs to be carried out to the property. 4. An obligation to repair is also interpreted as an obligation to put a property into good repair so that the Tenant will have to ensure that the property is properly maintained and decorated. This can be expensive for a Tenant and advice on these issues is required at the beginning of a transaction. Furthermore, at the end of the term, however it ends, the Tenant will be required to put the property into a good and proper state of repair and decoration. 5. Depending on the condition of the property, because of the onerous nature of the repairing covenants, the repairing covenants are often limited by reference to a

Schedule of Condition agreed between the parties at the beginning of the Lease. This requires careful consideration and negotiation and accurate drafting. If a Lease has only been granted over a part of a building, the repairs are usually carried out by the Landlord but the Landlord will seek to recover from the Tenant the cost of repairs by way of a Service Charge. Once again the Service Charge must be carefully negotiated and drafted to ensure that the Tenants liabilities are not more than appropriate for the property being leased.

TERMINATION OF LEASES

9. Whilst one of the characteristics of a Lease is exclusive possession for a fixed term, a Landlord can bring a Lease to an early end in the event that the Tenant is in breach of any of the covenants in a Lease. The Landlord can peaceably re-enter without a Court Order in the event that the Tenant fails to pay his rent within a specified time of the due date. This contrasts with residential tenancies where a Court Order would be needed. However, in the case of any other breach of covenant a Landlord must first give a Tenant notice of the breach and give them time to remedy the breach before bringing an application to the Court to determine the Lease. However, it must be clearly understood that commercial Leases usually reserve payment of Service Charge and insurance premiums as rent so that if these sums are not paid on the due date the Landlord can forthwith forfeit the Lease for non payment of rent. These are breaches by the tenant (usually) of their obligations contained in the lease. Tenants' breaches include; failure to repair. The landlord faced with a defaulting tenant has to decide whether he wants to bring the lease to an end (known as forfeiture). For the landlord to forfeit, the lease must first contain a forfeiture clause. This allows the landlord to terminate the tenancy in the event of any other specified breach of covenant. The landlord can forfeit a lease either by (i) issuing proceedings in the Courts or (ii) re-entering onto the premises. If the landlord does forfeit the lease then all is not lost for the tenant. He can apply to the Court to have the lease restored to him, known as relief from forfeiture. The Court has a wide discretion in allowing whether to grant relief. The Court's usual approach is to allow this providing the tenant (i) remedies the breach of covenant quickly and (ii) pays any rent arrears, damages and the landlord's costs. Tenant's remedies are more limited and broadly speaking are limited to bringing a claim in the Court seeking damages or an injunction (an Order requiring a landlord to comply with the lease). Only in very rare cases can a tenant look to end the lease because of the landlord's breaches of his obligations.

The purpose of this essay is to review briefly the remedies open to the tenant where the landlord is in breach of covenant, with particular reference to some of the more recent case law in this field. The law is stated as it is believed to be up to 1st July

If the tenant does not fulfil his repairing obligations the landlord's remedies are forfeiture or suing the tenant for damages. The measure of damages is the difference in value of the premises as they stand and the value of the premises fully repaired (Landlord and Tenant Act 1928 s 18). Landlords Remedies If there has been a breach of the repairing covenant the remedies available to a Landlord are: 1. Damages Under the final schedule the Landlord can claim for damages for the rectification works, which will also cover loss of rent, service/estate charges, rates, professional fees and VAT during the period the Landlord is unable to market or let the premises. 2. Forfeiture The Landlord may forfeit the lease and claim damages if the tenant is breach of the repairing covenant. 3. Specific Performance It is now possible for landlords to enforce specific performance of repairing covenants. Statutory Relief for the Tenant If the Landlord pursues one of the above options: 1. In respect of the Interim Schedule the tenant may obtain relief from forfeiture proceedings under the Leasehold Property Repairs Act 1938. This relief only applies if the terms of the lease exceed 7 years and 3 or more years of the lease remain unexpired. 2. In respect of the Final Schedule the tenant may be entitled to relief against damages claimed under Section 18(1) of the Landlord and Tenant Act 1927 which provides: a) the Landlord cannot recover damages exceeding the reduced value of the Landlords investment by the Tenants breach of covenant;

b) where a Landlord intends to demolish the building or carry out structural alterations whereby the Tenant breaches of covenant to repair become irrelevant, then if the Tenant can prove his case absolutely, then no damages will be recoverable by the Landlord

5513. Landlord remedies relating to breach of rules and covenants. (a) If the tenant breaches any rule or covenant which is material to the rental agreement, the landlord shall notify the tenant of such breach in writing, and shall allow at least 7 days after such notice for remedy or correction of the breach. This section shall not apply to late payment of rent which is covered under 5502 of this title. (1) Such notice shall substantially specify the rule allegedly breached and advise the tenant that, if the violation continues after 7 days, the landlord may terminate the rental agreement and bring an action for summary possession. Such notice shall also state that it is given pursuant to this section, and if the tenant commits a substantially similar breach within 1 year, the landlord may rely upon such notice as grounds for initiating an action for summary possession. The issuance of a notice pursuant to this section does not establish that the initial breach of the rental agreement actually occurred for purposes of this section. (2) If the tenant's breach can be remedied by the landlord, as by cleaning, repairing, replacing a damaged item or the like, the landlord may so remedy the tenant's breach and bill the tenant for the actual and reasonable costs of such remedy. Such billing shall be due and payable as additional rent, immediately upon receipt. (3) If the tenant's breach of a rule or covenant also constitutes a material breach of an obligation imposed upon tenants by a municipal, county or state code, ordinance or statute, the landlord may terminate the rental agreement and bring an action for summary possession. (b) When a breach by a tenant causes or threatens to cause irreparable harm to any person or property, or the tenant is convicted of a class A misdemeanor or felony during the term of the tenancy which caused or threatened to cause irreparable harm to any person or property, the landlord may, without notice, remedy the breach and bill the tenant as provided in subsection (a) of this section; immediately terminate the rental agreement upon notice to the tenant and bring an action for summary possession; or do both. (c) Upon notice to tenant, the landlord may bring an action or proceeding for waste or for breach of contract for damages suffered by the tenant's wilful or negligent failure to comply with tenant's responsibilities under the preceding section. The landlord may request a forthwith summons.

For breach of repairing covenants We have already mentioned that certain special rules apply in cases where the covenant which has been breached is that to repair. Where it is the landlord who is seeking a remedy, the following restrictions apply:

First, he cannot normally obtain an injuction or specific performance in order to enforce a tenants obligation to repair since damages will usually be an adequate remedy. Second, where a landlord is seeking damages, two special rules apply. In certain cases he cannot commence an action for damages without serving a s 146 notice and, where the tenant so requires, without obtaining the leave of the court. Even where he does obtain damages, the measure of those damages is limited by statute; they can, in no event, exceed the amount by which the value of his reversion is diminished and, where the landlord is planning to demolish or re-develop the premises at the end of the lease, he cannot recover damages at all. Third, where a landlord is seeking to forfeit for breach of a repairing covenant a number of special rules apply. In certain instances the s 146 notice must inform the tenant of his right to claim the benefit of the Leasehold Property (Repairs) Act 1938 by serving a counternotice within 28 days. The landlord must prove that the tenant actually knows that the s 146 has been served. Where the tenant does claim the benefit of the LP9(R)A 1938 the landlord cannot proceed to forfeit without the leave of the court. This will not be given unless he proves that the tenant is in breach and that the case is covered by one of the 1938 Act grounds.

The potentially far reaching provisions of the 1938 Leasehold Property Repairs Act, limits a landlord's right to claim damages or forfeiture for disrepair during a tenancy. The Act is essentially designed to prevent landlords from making a profit or imposing pressures on tenants, which hence, is consistent with The Landlord and Tenant Act 1927, section 18, which reads: damages during the lease are limited to 'the amount (if any) by which the value of the reversion is diminished owing to the breach' and that, on termination of the lease, no damages are available if the premises are to be pulled down This Act, now extended by the Landlord and Tenant Act 1954, applies to all types of property (except for agricultural holdings) where leases have been granted for a period of more than seven years with a term of at least three years to run. It applies to leases created before or after the Act. It must be noted that the Act applies to covenants to keep or put a property in repair, In the event of breach, the landlord must serve a section 146 notice on the tenant, to inform him that he has a twenty-eight day period in which to serve a counter notice on him claiming protection of the Act, by virtue of sections 1(2), (4) and 3 of the Act. When such a counter-notice has been served the landlord requires leave of the court before enforcing the covenant. However, Lord Denning warned in Sidnell v Wilson that 'in most cases leave will not be given for in most cases the reversion is not diminished much in value by the breach.' However, since this case Associated British Ports v CH Bailey has overruled Sidnell in that the landlord only has to show a prima facie case.

For all breaches other than the non-payment of rent, the landlord will need to give the tenant notice of intention to forfeit the lease under Section 146 of the Law of Property Act 1925 - a failure to do so will make the forfeiture unlawful.

schedule of dilapidations may be served at the end of a lease or during the lease term. A landlord instructs a surveyor to inspect the property and prepare the

schedule. This includes items of disrepair, remedial work required, the clause in the lease which applies to each item and the estimated cost of the repair. Additionally, the schedule may include items such as professional fees and loss of rent incurred during the period when repairs are being dealt with. Landlords Objectives During the lease term, the landlord may serve a schedule simply to ensure that the property is adequately repaired and maintained. The landlord may wish to enter the premises to carry out repairs at the tenants expense. The landlord may be seeking forfeiture of the lease on the ground that the tenant has not complied with the repairing covenants. The landlord may use a schedule as a lever in other negotiations with the tenant which are not related to repair. At the end of the lease the landlord may seek a cash settlement. The tenant may decide to carry out repairs prior to the end of the lease to control the method of repair and costs, but also to avoid any claim for consequential damages such as loss of rent. Back to Top Types of Schedules of Dilapidations Interim schedule made during the lease term, usually prior to the final three years. With an interim schedule, the tenant may obtain relief from forfeiture proceedings (eviction) under the Leasehold Property Repairs Act 1938. This is providing the original term of the lease exceeds 7 years, of which 3 or more years must remain unexpired. In some situations the tenant may be entitled to relief In the case of a final schedule and corresponding claim for damages, the tenant may be protected by Section 18(1) of the Landlord and Tenant Act 1927. This is with the priviso that: 1. The landlord cannot recover damages exceeding a sum by which the value of the landlord's investment is reduced by the tenant's breach of covenant. 2. Where a landlord intends to demolish the building or carry out structural alterations such that the tenant's breaches of covenant to repair become irrelevant, then if the tenant can prove his case absolutely, no damages will be recoverable by the landlord.

Full Repairing and Insuring Lease It is of particular relevance to landlords and tenants where the property has been let under the terms of a standard commercial Full Repairing and Insuring (FRI) lease where the tenant is responsible for repairs, both internal and external, including the structure of the building. The FRI lease is the norm rather than the exception in commercial property rentals. Tenants often agree to leases, even short term leases, which have full repairing and redecoration obligations and fail to record the ingoing condition of the property. Landlords and tenants should always make sure that leases for commercial property include a thorough schedule of condition ideally supported by photographic evidence. For breach of covenants the injured party may pursue his normal contractual remedies, ie he can sue for damages or seek an injunction to restrain breach. Peculiar to leases is the landlords remedy of forfeiture of the lease. The leasehold estate arises where a person possessing an estate in real property grants a lesser estate in land to another for a fixed period of time. The terms of a lease are referred to as covenants. The lease contains repairing covenants imposing obligations of full repairing and insuring on the tenant. Leasehold Property (Repairs) Act 1938 has application where the landlord is proceeding for damages or forfeiture and the lease was originally granted for 7 years or more and has at least 3 years remaining on it. In such a case the landlord cannot proceed without first serving on the tenant a notice in prescribed form that complies with section 146 Law of Property Act 1925. In circumstances where the 1938 Act applies, the landlords notice must inform the tenant of his right to serve a counter notice within 28 days, claiming the benefit of the Act. Specific performance is an order of a court which requires a party to perform a specific act, usually what is stated in a contract. It is an alternative to awarding damages, and is classed as an equitable remedy commonly used in the form of injunctive relief concerning confidential information or real property. While specific performance can be in the form of any type of forced action, it is usually used to complete a previously established transaction, thus being the most effective remedy in protecting the expectation interest of the innocent party to a contract. It is usually the opposite of a prohibitory injunction but there are mandatory injunctions which have a similar effect to specific performance.