The following Property guidance note provides comprehensive and up to date legal information covering:
This Practice Note covers what happens to a lease on disclaimer and the effect of disclaimer on the tenants, guarantors and former tenants, vesting orders, the position of any subtenants, and disclaimer and vacant possession.
A liquidator or trustee in bankruptcy has power to disclaim onerous property and contracts. Where a tenant has become insolvent it is highly likely that a lease of its business premises will represent onerous property, and that rent arrears are among the tenant's outstanding debts and obligations. If the tenant's is the only covenant available to the landlord in respect of the lease, disclaimer will end the lease and with it all future liability for rent, leaving the landlord with no recourse except as an unsecured creditor for rent and other sums that have previously fallen due. Disclaimer terminates the rights, interests and liabilities of the tenant from the date of disclaimer. It destroys a tenant's right to remain at the premises and the landlord may (but is not obliged to) retake possession by way of mitigation of loss.
The result is different if there are other covenants available to the landlord—whether guarantors or former tenants who remain liable to perform the tenant covenants of the tenancy. In those cases, disclaimer of the lease by the
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234