Breach of Covenant Definition

GLOSSARY

/briːtʃ/ /ɒv,(ə)v/ /ˈkʌv(ə)nənt/

Published by a ��Ӱ�� Property Disputes expert

What does Breach of Covenant mean?

A breach of a term of a lease where a tenant has covenanted (agreed) to do, or to not do something, such as to pay rent or not to part with possession. If an express right is reserved in the lease, the breach may entitle the landlord to forfeit.

View the related checklists about Breach of Covenant

Due diligence—head lease alienation provisions—checklist

Due diligence—head lease alienation provisions—checklist On any due diligence exercise on the acquisition of a leasehold interest in land, it is essential to consider the ability of the tenant to assign, underlet or charge the property. Any provisions that are unduly restrictive may: • have an adverse impact on the ability of the buyer to dispose of their interest in the property in the future • be a property management burden • impact on the overall value of the property to the buyer This Checklist is aimed primarily at leases granted for a reasonably long term at an annual market rent. For further guidance on: • building leases, see Practice Note: Building leases—alienation • side-by-side or geared rent leases, see Practice Note: Headlease rent linked to underlease rents • long leases granted for a premium at a peppercorn rent where the leasehold interest is virtually equivalent to a freehold interest, see Precedent: Long lease of whole of commercial premises at a premium Assignment Can the tenant assign the...

Steps to take when landlord becomes insolvent—checklist

Steps to take when landlord becomes insolvent—checklist This Checklist sets out the points that a tenant should consider if its landlord becomes insolvent. A tenant must continue to fulfil its obligations under the lease, but should also contact the insolvency practitioner immediately as a tenant will require information as set out below. Who should rent be paid to? The tenant must continue to pay rent in accordance with the terms of the lease. If the landlord has entered into administration, liquidation or bankruptcy, or had receivers appointed over the property, rent should be paid to the administrator, liquidator, trustee in bankruptcy or receiver as appropriate. In a company voluntary arrangement (CVA), the rent may be payable to the CVA supervisor, depending on its terms. The insolvency practitioner will normally serve notice on the tenant with directions about where rent is to be paid. Is the landlord holding a rent deposit? You must consider whether the rent deposit deed has been drafted so that the deposit remains separate from the assets...

Buyer’s contract negotiation guide—title and encumbrances

Buyer’s contract negotiation guide—title and encumbrances Are title clauses just standard ‘boilerplate’? Many commercial property contracts will deal with title matters in a similar way and often there is little scope or need to amend the clauses if the title is straightforward and nothing bespoke is required. However, it is important to be clear on the effect of the clauses, the legal background, how they apply in particular scenarios and their interaction with the buyer’s due diligence. Key legal principles for sellers and buyers of property We consider here the fundamental legal principles of the buyer-seller relationship. Implied obligation selling free from encumbrances There is an implied obligation that the seller is selling a freehold estate free from encumbrances. This can only be rebutted in three ways: • by express contractual provision • if the buyer knows (actual knowledge) that there is an irremovable encumbrance, or • if there is a patent (ie visible) defect in title (although this is overridden if the seller expressly agrees...

Due diligence—head lease use provisions—checklist

Due diligence—head lease use provisions—checklist On any due diligence exercise on the acquisition of a head lease it is essential to consider the permitted use, any breaches of the permitted use and the ability of the tenant to change use. Any provisions that are unduly restrictive may have an adverse impact on value or the ability of the buyer to secure finance or dispose of its interest. Can the tenant change use and is landlord's consent required? A change of use may be: • prohibited • permitted with landlord’s consent, not to be unreasonably withheld, or • permitted with landlord’s consent, which can be withheld in the landlord’s absolute discretion—a covenant against changing use without landlord’s consent is not subject to a proviso that consent is not to be unreasonably withheld, unless specifically imposed by the lease If permitted changes of use are restricted to a certain use class, this should be confirmed in your report on title. What should be checked in due diligence? If the lease has...

Discover our 118 Practice Notes on Breach of Covenant

Share purchase agreement—pro-buyer—corporate seller—conditional—long form

Share purchase agreement—pro-buyer—corporate seller—conditional—long form This Agreement is made on [insert day and month] 20[insert year] Parties 1 [Insert name of selling corporate entity] incorporated in [England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Seller); 2 [Insert name of purchasing corporate entity] incorporated in England and Wales OR [insert country of incorporation] OR with registered number [insert company number] whose registered office is at [insert address] (the Buyer), and 3 [Insert name of guarantor entity] incorporated in England and Wales OR [insert country of incorporation]] with registered number [insert company number] whose registered office is at [insert address] (the Guarantor) [(each of the Seller, the Buyer and the Guarantor being a Party and together the Seller, the Buyer and the Guarantor are the Parties).] Background (A) The Company (as defined below) is a private company limited by shares and is incorporated in [England and...

Share purchase agreement—pro-buyer—individual sellers—conditional—long form

Share purchase agreement—pro-buyer—individual sellers—conditional—long form This Agreement is made on [insert day and month] 20[insert year] Parties 1 The several persons whose names and addresses are set out in Schedule 1 (together the Sellers), and 2 [Insert name of purchasing corporate entity] incorporated in [England and Wales OR [Insert country of incorporation]] with registered number [insert company number] whose registered office is at [insert address] (the Buyer), [(each of the Sellers and the Buyer being a Party and together the Sellers and the Buyer are the Parties).] Background (A) The Company (as defined below) is a private company limited by shares and is incorporated in[ England and Wales OR [insert country of incorporation]]. Details of the Company are set out in Schedule 2, Part A. (B) The Sellers are the legal and beneficial owners of the Sale Shares (as defined below), being in aggregate the entire allotted and issued share capital of the Company. (C) The Sellers have agreed to sell and the...

Dive into our 26 Precedents related to Breach of Covenant

Can a freeholder take enforcement action for breach of the tenant's alteration covenant where the lease under which the alterations were undertaken has been surrendered and a new lease granted?

Can a freeholder take enforcement action for breach of the tenant's alteration covenant where the lease under which the alterations were undertaken has been surrendered and a new lease granted? This Q&A assumes that the new lease was granted to the same tenant. The answer to this question will depend on the interpretation of the surrender and new lease, taking into account (in the usual way) the background circumstances known to the parties at the time. The starting point is that the landlord is entitled to take action for breach of covenant after the end of a lease, subject to any defences, such as limitation (and including equitable defences where the landlord seeks an injunction). See Practice Note: Landlord’s remedies for alteration without consent. However, this right may be lost if the surrender includes a release of liability in favour of the tenant. If there is a release that covers the breach concerned, the landlord will have lost the right to any claim in that respect. See Practice Note: Lease...

A landlord is renting out a commercial property which is used as a business by the tenant. The tenant is in considerable arrears and under the terms of the lease, such arrears allows the landlord to take back possession using peaceable re-entry. The tenant has installed an alarm system without the landlord's consent and not provided the landlord with the passcode. Assuming the landlord follows the correct procedure (ie done while the property is empty, displays the appropriate notices), would the alarm being set-off invalidate the peaceable re-entry, or would the landlord still be able to reclaim possession?

A landlord is renting out a commercial property which is used as a business by the tenant. The tenant is in considerable arrears and under the terms of the lease, such arrears allows the landlord to take back possession using peaceable re-entry. The tenant has installed an alarm system without the landlord's consent and not provided the landlord with the passcode. Assuming the landlord follows the correct procedure (ie done while the property is empty, displays the appropriate notices), would the alarm being set-off invalidate the peaceable re-entry, or would the landlord still be able to reclaim possession? This question raises the issue of how a landlord might effect a peaceable re-entry. It focuses upon a particular issue, it being assumed that the notice under section 146 of the Law of Property Act 1925 has been served. It is also assumed that the right to forfeit has arisen, that it has not been waived and that a right of re-entry is reserved by the lease. Care has been taken to...

See the 245 Q&As about Breach of Covenant

Family feud clarifies estoppel argument in adverse possession (Malik v Malik)

Property Disputes analysis: This case came before the Court of Appeal on 4 November 2024 after a long running history which involved two brothers, Iftikhar Malik and Vaqar Malik. The dispute between the brothers related to the ownership of a valuable two-bedroom property at 7 South Lodge, 245 Knightsbridge, London. It was concluded in the lower courts that the flat was purchased solely by Iftikhar as the legal and beneficial owner and there was no appeal against that finding. The Court of Appeal was asked to determine whether Vaqar could establish an interest in the flat under the doctrine of adverse possession. Iftikhar successfully defended the claim for adverse possession by way of estoppel by conduct based on Vaqar’s assertions made at a hearing in 2012 which Iftikhar claimed estopped Vaqar from bringing a claim for adverse possession at a later date. The case helps to show that legal practitioners must be careful to ensure that no misleading representations are made in proceedings which could later give rise to an...

Property Disputes weekly highlights—31 October 2024

This week's edition of Property Disputes weekly highlights includes: The Autumn Budget 2024, Court of Appeal decisions on the intentions of donors of trust property, amendments in possession proceedings, and staying execution of a possession order pending an appeal. It also includes High Court decisions on section 423 of the Insolvency Act 1986 and whether a charging order can be made over a buyer’s beneficial interest, and an Upper Tribunal case on service of a notice of invitation to participate in a Right to Manage claim.

Read the latest 147 News articles on Breach of Covenant

Speed up all aspects of your legal work with tools that help you to work faster and smarter. Win cases, close deals and grow your business–all whilst saving time and reducing risk.

Case studies

"Everything at Advocates is done on a timed basis, so we need to conduct our research efficiently. We don't want to charge clients unnecessarily or write off our time. With Lexis products, we can get more research done each day"

Advocates

Access all documents on Breach of Covenant

GET ACCESS NOW

Top

Trial

��Ӱ��

GLOSSARY