Termination of Tenancies for Tenant Default - Law Commission

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2.41 Where a landlord serves a summary termination notice, the tenancy (and any interests derived from it) will automatically terminate one month after the notice was served. During the period between service of a summary termination notice and the termination of the tenancy, the tenant (and any qualifying interest holder) may apply to the court for a discharge order. Such an application will suspend the termination of the tenancy. The tenancy will only terminate automatically if and when the application to discharge the summary termination notice is unsuccessful. On dismissal of such an application, the court may order that the landlord is entitled to possession on the termination of the tenancy. 2.42 An application to discharge a summary termination notice will be a discrete application, distinct from the hearing of a landlord’s termination claim. There is a statutory presumption that the notice should be discharged. The landlord may rebut this presumption by showing that, on a termination claim brought on the ground of the tenant default, the applicant would have no realistic prospect of persuading the court not to make a termination order. The landlord must also show that there is no other reason why the matter should be disposed of by way of a hearing of a termination claim. 2.43 For a period of six months following termination of a tenancy pursuant to the summary termination procedure, the former tenant (or a former qualifying interest holder) may apply to the court for a “post-termination order”. This may be any order in connection with the tenancy that the court thinks appropriate and proportionate. It might be appropriate to make an order where, for example, the summary termination notice, although validly given, did not come to the attention of the tenant (or of a qualifying interest holder). Possible orders would include the grant of a new tenancy to the applicant or the payment of compensation. However, the court may not retrospectively revive the terminated tenancy. 2.44 Where a summary termination notice is discharged by the court, or withdrawn by the landlord, it will cease to have any effect. The tenancy will continue as before. Having failed to terminate the tenancy summarily, the landlord may wish to commence a termination claim on the ground of the tenant default. As with any termination claim, the landlord must first serve a tenant default notice within the default period. It may be that the default period has expired during the period in which the summary termination procedure was attempted. This is a risk that the landlord runs in seeking summary termination rather than giving a tenant default notice and making a termination claim from the outset. However, the court may, where it is just and equitable to do so, exercise its discretion to dispense with the requirement to serve a tenant default notice within the default period. SPECIAL CASES 2.45 Special provision is made in certain cases: (1) In the absence of any contrary provision in the tenancy, a covenant to pay rent shall be treated as broken if payment is not made within 21 days of payment first becoming due: no formal demand is necessary. (2) The protections conferred on those who hold long leases of dwellings, contained in Chapter 5 of the Commonhold and Leasehold Reform Act 2002, are preserved. 28
(3) The scheme preserves the protections conferred by the Leasehold Property (Repairs) Act 1938 where the landlord seeks to terminate the tenancy for breach of a covenant to put or keep the premises in repair (and the tenancy was granted for a term of seven years or more, and there are three years or more unexpired). This is achieved by placing restrictions on the power of the court to make orders in such circumstances. (4) The scheme preserves the protections afforded to a tenant where the landlord seeks to forfeit following the tenant’s insolvency by appropriate amendments to the Insolvency Acts. The current anomaly whereby a landlord may physically re-enter the property on the tenant’s bankruptcy is removed. 29
Page 1 and 2: The Law Commission (LAW COM No 303)
Page 3 and 4: THE LAW COMMISSION TERMINATION OF T
Page 5 and 6: Consultation 40 Reform recommendati
Page 7 and 8: Consultation 68 Reform recommendati
Page 9 and 10: (7) Any other matter 102 THE LEASEH
Page 11: Restrictions on using the summary t
Page 14 and 15: where appropriate using the various
Page 16 and 17: etains an equitable jurisdiction to
Page 18 and 19: of the law”. A number of leading
Page 20 and 21: procedure, the tenancy will not ter
Page 22 and 23: Part 6 examines the position of tho
Page 24 and 25: 2.7 When a tenancy is terminated un
Page 26 and 27: unless valid notices have been give
Page 28 and 29: Transfer order 2.30 Only a qualifyi
Page 32 and 33: PART 3 TENANT DEFAULT INTRODUCTION
Page 34 and 35: scheme by characterising the obliga
Page 36 and 37: to include such clauses and to allo
Page 38 and 39: perform their obligations under the
Page 40 and 41: SPECIAL CASES OF TENANT DEFAULT Den
Page 42 and 43: Assignment 3.51 Most tenancies cont
Page 44 and 45: the incoming tenant of the assigned
Page 46 and 47: often stipulate that a right to for
Page 48 and 49: insolvency process having the same
Page 50 and 51: 3.93 In addition, section 81 of the
Page 52 and 53: 1996 and Chapter 5 of the Commonhol
Page 54 and 55: covenant is non-payment of rent, a
Page 56 and 57: Reform recommendations 3.132 We rec
Page 58 and 59: The CP’s provisional proposals 4.
Page 60 and 61: do so by delaying until the default
Page 62 and 63: it is unlikely that a tenant would
Page 64 and 65: (4) give the date by which action m
Page 66 and 67: Specify the time for remedial actio
Page 68 and 69: (3) must specify in respect of the
Page 70 and 71: agreement (subject to a maximum ext
Page 72 and 73: underlying principle that qualifyin
Page 74 and 75: all tenancies granted for seven or
Page 76 and 77: 4.92 As we intend to retain the sam
Page 78 and 79: PART 5 MAKING A TERMINATION CLAIM (
Page 80 and 81:
e set off against the cost of carry
Page 82 and 83:
future liabilities under the terms
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(6) where a tenancy comes to an end
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5.43 During the period of the stay,
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described. During the consultation
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termination of a tenancy under the
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5.69 We recommend that the proceeds
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5.75 The First Report therefore rec
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making any order under the scheme t
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5.93 The CP provisionally proposed
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of the parties. 78 Proportionality
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past conduct of the parties. This m
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(7) Any other matter 5.127 It would
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PART 6 QUALIFYING INTERESTS INTRODU
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1925 extends to lessees, under-less
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according to the lease without any
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interchangeably by the courts, by s
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entitled to use the scheme to prote
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(2) if not in occupation, a right w
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property. The simplest means of ens
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(1) What should the landlord be exp
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claim with the court for service on
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have to apply for relief, which, if
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qualified covenant not to assign th
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that it is both appropriate and pro
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order unless the person who holds t
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CP suggested, close down any potent
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PART 7 SUMMARY TERMINATION PROCEDUR
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action rather than by physical re-e
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Paper was published. 22 It proposed
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7.28 It was hoped that this recomme
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equirement for service of a notice
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7.51 The final restriction was: It
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in the sub-tenant being removed fro
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termination claim, the summary term
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7.71 The summary termination proced
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Repairing covenants 7.79 The repair
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7.88 We do not wish to discourage t
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dispensation power will only be exe
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to costs under the summary terminat
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7.112 We recommend that: specifying
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PART 8 LIST OF RECOMMENDATIONS PART
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8.13 We recommend that the Insolven
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(a) the day after the deadline spec
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(6) if the court dismisses an appli
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8.39 We recommend that, where a ten
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8.49 We recommend that: (1) where t
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(4) the default is a breach of cove
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APPENDIX A DRAFT LANDLORD AND TENAN
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ii Interpretation, etc. 28 Meaning
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2 178 Landlord and Tenant (Terminat
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4 180 Landlord and Tenant (Terminat
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6 (8) This section is subject to se
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8 13 Remedial order 184 Landlord an
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10 186 Landlord and Tenant (Termina
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16 30 Meaning of “qualifying inte
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20 Preliminary 196 Landlord and Ten
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22 Proper address 198 Landlord and
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26 Settled Land Act 1925 (c. 18) 4
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32 Protection from Eviction Act 197
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34 Landlord and Tenant Act 1985 (c.
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38 (2) After that subsection, inser
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40 Settled Land Act 1925 (c. 18)—
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APPENDIX B EXPLANATORY NOTES TO THE
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landlord assigns the reversion, he
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33. For example, if a tenant defaul
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53. Subsection (5), although broadl
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If the court is satisfied of this,
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91. Subsection (4) mitigates the ef
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108. Under the current law, forfeit
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126. Subsection (2) applies where t
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145. Subsection (1)(d) includes wit
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unless he or she obtains a court or
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person who is the tenant as a resul
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termination notice (except where th
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Robin Sinclair, Solicitor Slaughter
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Termination of Tenancies for Tenant Default - Law Commission

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