Q&As

Where a commercial lease with repair and reinstatement obligations is due to expire, and the landlord plans to sell to a developer, who will demolish the existing buildings? Can the landlord assign the dilapidations claim to the developer? Will the developer have a claim for the additional demolition work caused by the tenant’s failure, in breach of covenant, to remove buildings and structures? If the sale to the developer is conditional on the property being in a state consistent with compliance with the tenant’s covenants, would any supersession argument fail because the works will need to be done?

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Published on LexisPSL on 25/04/2019

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

  • Where a commercial lease with repair and reinstatement obligations is due to expire, and the landlord plans to sell to a developer, who will demolish the existing buildings? Can the landlord assign the dilapidations claim to the developer? Will the developer have a claim for the additional demolition work caused by the tenant’s failure, in breach of covenant, to remove buildings and structures? If the sale to the developer is conditional on the property being in a state consistent with compliance with the tenant’s covenants, would any supersession argument fail because the works will need to be done?
  • Disrepair
  • Reinstatement

Where a commercial lease with repair and reinstatement obligations is due to expire, and the landlord plans to sell to a developer, who will demolish the existing buildings? Can the landlord assign the dilapidations claim to the developer? Will the developer have a claim for the additional demolition work caused by the tenant’s failure, in breach of covenant, to remove buildings and structures? If the sale to the developer is conditional on the property being in a state consistent with compliance with the tenant’s covenants, would any supersession argument fail because the works will need to be done?

This Q&A raises a number of issues concerning compliance with repair and reinstatement covenants at lease end. Broadly, a useful approach to considering whether the landlord will have a claim for breach of those covenants following expiry of the lease is as follows:

  1. first, consider whether the covenants, on their terms, are engaged in the current circumstances. For example, has any notice requiring reinstatement been served in time?

  2. second, consider whether the covenants have been breached

  3. third, consider whether the breach of covenant has caused the landlord loss on the usual contractual measure: the reasonable cost of

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