Q&As

Where a head tenant of a lease is entitled to part with possession of the premises to a member of its group of companies (without the Landlord's consent provided that the interest created is a tenancy at will), what happens if the subtenant then grants an underlease to another party (sub-undertenant)? Can a tenant at will further underlet the premises? Also, if the headlease provides that an underletting requires the superior landlord's written consent and forfeiture is successful, what rights and claims does the sub-undertenant have against the various parties including its direct landlord?

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Produced in partnership with Natalie Brown of Radcliffe Chambers
Published on LexisPSL on 05/05/2017

The following Property Q&A produced in partnership with Natalie Brown of Radcliffe Chambers provides comprehensive and up to date legal information covering:

  • Where a head tenant of a lease is entitled to part with possession of the premises to a member of its group of companies (without the Landlord's consent provided that the interest created is a tenancy at will), what happens if the subtenant then grants an underlease to another party (sub-undertenant)? Can a tenant at will further underlet the premises? Also, if the headlease provides that an underletting requires the superior landlord's written consent and forfeiture is successful, what rights and claims does the sub-undertenant have against the various parties including its direct landlord?

Looking at the position where A is the landlord, B is the tenant and C takes a subtenancy from B, the basic rules are that:

  1. B can create no better right to occupy the premises than it has as a matter of property law, but can make a contract binding between itself and C on any terms—it is simply that B will be powerless to perform the contract if the subtenancy claims to give rights greater than B has under its own tenancy. If B is a tenant at will, any tenancy it grants to C will only have the effect of a tenancy at will as against A, although C may sue B for breach of a lease promising a greater security of occupation

  2. where the tenancy between A and B contains restrictions on subletting, the effect is similar. Any lease made by B with C is effective to create a contractual tenancy binding and enforceable in accordance with its terms by C against B, but the rights created by such a lease are defeasible by A exercising its rights of re-entry under its lease with B

So far as forfeiture is concerned, any lease created by B (whether or not it is authorised by A or permitted under the terms of the tenancy between A and B) will automatical

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