One to Watch – Breaches of Covenant
All leases contain covenants, that is an agreement to do or refrain from some activity. Buyers of their first leasehold property can be surprised at the large number of rules they have to abide by as part of their lease. Covenants as to behaviour are usually there for the benefit of all people living in and sharing a building.
Covenants against immoral behaviour are also common. A recent case which might surprise many is that of a London Solicitor who faces her losing her £1.2m apartment for, allegedly, failing to do enough to stop it being used as a brothel. The leaseholder here has won a temporary reprieve and right to a rehearing of her case, with the outcome certainly being one to watch.
Forfeiture is something most residential leaseholders will never come across. It is a right that exists in many leases for a landlord to re-enter the property, bringing the lease to an end, where the tenant is in breach of any their obligations under the lease. In the vast majority of residential leases, forfeiture gives the landlord a large windfall.
Covenants and making sure they are observed is therefore important. In this recent example, it is alleged the property had been used as a brothel for an extended period of time and the leaseholder did not do enough to stop it.
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