Repairs and alterations

Repairing covenants

The scope of a repairing obligation in a lease can vary widely according to the specific wording of the particular clause and the circumstances of the letting. The tenant's repairing covenant interacts with other provisions in the lease (including those dealing with insurance, rent review and service charge), and any deficiencies within it can have a significant impact on the parties' liabilities and/or remedies in the event of a dispute.

A covenant to 'keep in repair' includes an obligation to put the property into the appropriate standard of repair, even if it is in disrepair at the date of grant.

The meaning of 'repair' is found in case law. Key principles include that:

  1. repair is not improvement - liability ‘to repair’ cannot arise in the absence of disrepair

  2. repair is distinct from renewal or replacement - replacement will only be justifiable in place of continuing repair if it is reasonable in the circumstances. The costs of repair and replacement will feature heavily in any decision.

  3. liability for inherent or latent defects depends on the express terms of the lease and the particular circumstances

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Insolvency, declarations of trust, loan agreements, artificial asset protection, sham transactions, transactions defrauding creditors, interspousal asset transfers, change of position defence and wife’s entitlement to share of husband’s assets (Sayers v Dixon)

Restructuring & Insolvency analysis: The court held that six declarations of trust (DoTs) executed by the transferor (Mr Dixon) in favour of his wife (Mrs Dixon) constituted transactions defrauding his creditors within the meaning of section 423 of the Insolvency Act 1986 (IA 1986) and that two of them, purporting to transfer all his future assets and income to Mrs Dixon, along with an accompanying loan agreement, were shams which were void and ineffective. It set aside the DoTs and ordered Mrs Dixon to restore the value of three transferred properties (which had been converted into £551,589 cash) to Mr Dixon’s trustees in bankruptcy (trustees) together with interest of £101,726. It also ordered an account to be taken of the funds that had been transferred to Mrs Dixon or on her behalf by Mr Dixon over the seven years between the date of the DoTs and his bankruptcy. The court dismissed Mrs Dixon’s defence of change of position to the trustees’ claim for restoration, finding that even if such a defence were generally available (which is unclear), she had not acted in good faith and could not rely on it. It also dismissed her defence that, having been married to Mr Dixon for many years, she was entitled to half his assets and/or an entitlement to a share of them by virtue of a right to be maintained. Written by Jonathan Lopian, barrister at New Square Chambers, who acted for the successful claimants.

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