Q&As

A tenant (A) proposes to take an assignment of a lease from the existing tenant (T). The lease entitles the landlord (L) to require a director’s guarantee from the assignee, where reasonable. L and A have agreed that A will provide a rent deposit instead of a guarantee, although the lease does not provide that L may require a deposit. L refuses to include a covenant in the rent deposit deed to procure a covenant from any new reversioner (R) to comply with L's covenants in the deed concerning the deposit and to transfer the deposit to R. Does A have any grounds to require that such a covenant is included?

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Published on LexisPSL on 01/06/2018

The following Property Q&A provides comprehensive and up to date legal information covering:

  • A tenant (A) proposes to take an assignment of a lease from the existing tenant (T). The lease entitles the landlord (L) to require a director’s guarantee from the assignee, where reasonable. L and A have agreed that A will provide a rent deposit instead of a guarantee, although the lease does not provide that L may require a deposit. L refuses to include a covenant in the rent deposit deed to procure a covenant from any new reversioner (R) to comply with L's covenants in the deed concerning the deposit and to transfer the deposit to R. Does A have any grounds to require that such a covenant is included?
  • The rent deposit deed
  • Release under the Landlord and Tenant (Covenants) Act 1995
  • Transmission of benefit and burden of covenants
  • Code for Leasing Business Premises in England and Wales 2007

A tenant (A) proposes to take an assignment of a lease from the existing tenant (T). The lease entitles the landlord (L) to require a director’s guarantee from the assignee, where reasonable. L and A have agreed that A will provide a rent deposit instead of a guarantee, although the lease does not provide that L may require a deposit. L refuses to include a covenant in the rent deposit deed to procure a covenant from any new reversioner (R) to comply with L's covenants in the deed concerning the deposit and to transfer the deposit to R. Does A have any grounds to require that such a covenant is included?

In answering this Q&A, we have assumed that the lease is a new tenancy (ie one granted on or after 1 January 1996), as referred to the Landlord and Tenant (Covenants) Act 1995 (LT(C)A 1995)—8 Procedure for seeking release from a covenant under section 6 or 7.

The rent deposit deed

Whether or not the rent deposit must be returned or not on the assignment of the reversion depends largely on the specific provisions of the rent deposit deed and the terms negotiated between the parties to it. If the landlord’s covenants in the rent deposit deed are not expressed to be personal, then they will automatically pass to the incoming reversioner. If they are expressed

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