Are You Unintentionally Breaching An Absolute Covenant?
Published date | 17 March 2021 |
Subject Matter | Real Estate and Construction, Landlord & Tenant - Leases |
Law Firm | Cleaver Fulton Rankin |
Author | Ms Shane Conlan |
On 6 May 2020 the Supreme Court gave judgment in the case of Duval v 11-13 Randolph Crescent Ltd [2020] UKSC 18, finding that a landlord was not entitled to grant a licence for alterations for works because it was in breach of an absolute covenant (i.e. an absolute prohibition against doing something), which was a mutually enforceable covenant (i.e. the landowner must enforce covenants and obligations against all other occupiers). An absolute covenant differs to a qualified covenant, as the latter may permit a certain act with the prior written consent of a landlord, whereas the former prevents any action.
If a landowner grants occupants (i.e. tenants or plot owners) the benefit of a mutual enforceability covenant, they will put themselves in breach of covenant if they give any one of the other occupiers permission to do something that breaches an absolute covenant. This scenario may arise when:
- A developer is selling houses and grants mutually enforceable covenants to each purchaser.
- A landlord of a multi occupant building or area of land granting leases to the occupants e.g shopping centre, block of flats, or an industrial estate.
Whether there is a breach of an absolute covenant or not will depend on how the land is demised or transferred. Some common examples where developers, landlords and managing agents, may unknowingly be in breach of absolute covenants are as follows (non-exhaustive list):
- In a block of apartments or flats permitting a tenant to carry out works to property without checking the terms of the lease which contains an absolute covenant not to carry out works.
- In a housing development allowing for a house owner to carry out works to a party wall or removal of a fence without consulting the adjoining landowner and the terms of the transfer deed.
- In a...
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