Liability following assignment
Liability following assignment

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Liability following assignment
  • Landlord and Tenant (Covenants) Act 1995
  • Tenant—old tenancies
  • Tenant—new tenancies
  • Tenant—old and new tenancies
  • Landlord—old tenancies
  • Landlord—new tenancies
  • Guarantors—old tenancies
  • Guarantors—new tenancies

While this Practice Note primarily covers commercial property matters, it also touches on residential considerations.

Landlord and Tenant (Covenants) Act 1995

The Landlord and Tenant (Covenants) Act 1995 (LT(C)A 1995) provides that any lease granted on or after 1 January 1996 creates what is defined as a ‘new tenancy’ for the purposes of the LT(C)A 1995, except for:

  1. a lease granted pursuant to an agreement for lease or order of the court made before that date

  2. a lease granted pursuant to an option or a right of first refusal conferred before that date

  3. an overriding lease granted pursuant to LT(C)A 1995, s 19 if the relevant lease is not a new tenancy

Tenant—old tenancies

Where the lease is an old tenancy, the original tenant remains liable for the tenant covenants throughout the term of the lease, even if it has assigned its interest. However, it will not be liable for any obligation arising from a variation of the lease made without its consent following assignment, unless the variation was anticipated under the terms of the original lease, eg an increase in rent under the rent review clause.

An assignee of an old tenancy is liable for those tenant covenants that touch and concern the land for as long as the lease remains vested in the assignee (privity of estate).