Covenant Act 1995

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The Landlord and Tenant (Covenants) Act 1995 (LTCA 1995) broadly enacts the principle that covenants should be enforced only by, and against the persons who are the landlord and tenant for the time being. The purpose of this essay is to analyse the pre Act common law provisions of enforcing a covenant after an assignment alongside the post 1995 statutory regime, to gain an understanding of whether the statutory reform was necessary or not in giving more equality of bargaining power between the landlord and tenant.
The pre LTCA 1995 common law rules were based on three basic principles. The first of these was privity of contract. This term described the relationship between the original contracting parties. All the covenants in the lease remained …show more content…

There was an increase in rent review clauses and increasing usage of surety's (a third party obligation which takes responsibility of performance) and as a result landlords sought to shift the risk on to other parties. The original tenant had very little power in protecting themselves from breach of covenants made long after they had disposed of their interest. The first assignor could take an express indemnity from his assignee enabling liability to be revisited on default, shifting the balance of power back to the tenant. However the harsh reality of this defence can be shown in Centrovincial Estates plc v Bulk Storage ltd which results in injustice. The original tenant was held liable for a substantial rent increase due to a rent review clause being altered in the lease by the assignee which was originally granted. The former tenants could argue the rule of variation of the lease to protect themselves. This would result in surrender of the lease and a new one would be granted, therefore removing the liability of the former tenant. This position could however be marked with the landlords very powerful remedy of forfeiture were the lease is brought to an end in the event of non compliance if a tenant did not comply with a covenant. It was proposed that contractual liability will not extend to any increase rent in relation to a relevant variation of the …show more content…

The Bill was originally presented to parliament in a form did not embody the changes needed to reflect the agreement made between the British Property Federation and the British Retail Consortium. In essence, the Bill which became law through the Landlord and Tenant Act 1995 eliminated continuing contractual liability between former tenants under new leases in return for landlords having more control over the conditions which a lease could be sighed to, however this was only applicable to commercial leases only. The constraints of the parliamentary timetable in the House of Commons meant that very substantial amendments had to be rushed through in the House of Lords without interested parties having time to consider and make sensible representations. The result was an Act drafted quickly and it has been argued that because of this the proposers will repent of it at their leisure as their will still be landlords which seek to evade the law regardless of the passing

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