How has legislation changed regarding leasehold covenants and which is better at regulating the passing of covenants?
-State the old rules and the new rules
- Give your opionion of which you think works better.
(Don't need introduction)
Before discovering whether the covenant is eligable to pass on to successor landlords or tenants. It is essential to discover whether the covenant has been correctly created. Covenants may be implied or express. If the covenant is express it is usually written up in a deed, this deed must comply with S2 LP(MP)A '89.
The old rules regarding the passing of leasehold covenants were the leases granted before 1 January 1996. The enforceability of these covenants are that the original parties liable for the duration of the lease. This means that due to the privity of contract the original covenantor stays liable, so if the current tenants cant pay, the original parties would be vulnerable. This varies from the current/new law of covenants where under s.5 of the 1995 Act which provides that the tenant is released from the burden of his covenant and ceases to be entitled to the benefit of the landlords covenant. Whilst for the landlord release is obtained with the consent of the tenant or on a court order. However, according to City of London Corporation V Fell assignees have always been freed from future liabiltiy on the covenants in the lease when they inturn assign and the principal beneficiary from the provision will undoubtedly be the original tenant and the covenantor who is thus freed from the continuing liability on his covenant.
To accord with this major change in the law, the 1995 Act includes two consequential provisions, which are; it provides that LPA 1925, s79 (by which the covenantor is deemed to covenant on behalf of himself, his succesors in title and the persons derviving title under him), shall not apply to new tenancies (1995 Act, s30 (4)(a)). The second cosquential provision it that the statutory provisions which insert implied indemnity covenants into assignments of leases are replealed in respect of new tenancies (s.30(2)(3) LT(C)A 1995). Nevertheless, as we shall see, there…