Painsmith Landlord and Tenant Blog

A practitioners landlord and tenant law blog from PainSmith Solicitors

Break Clauses and Rent in Advance

The financial consequence of rent being paid in advance and then a break clause being triggered was recently considered by the Supreme Court in the case of Marks and Spencer plc v BNP Paribas Securities Services Trust Company.

 

The lease required the rent to be paid on the usual quarter days in advance. Accordingly, the rent was paid in full on 25 December 2011, and on 24 January 2012 the break clause was activated.

 

Having validly exercised the break clause, M&S then demanded repayment of the basic rent that related to the period after the break period. Their lease did not have any clause within it which entitled M&S to any such reimbursement.

 

The Supreme Court found that, other than in very exceptional circumstances, a reimbursement of rent in advance would require a very clear clause in the lease to entitle a tenant to a refund. These would even apply to rent paid in advance relating to the period after the exercise of a conditional break clause. In giving its judgment the Supreme Court took the opportunity to clarify the law on implied terms generally and to confirm that the Apportionment Act 1870 does not apply to rent payable in advance.

 

Comment

 

Those drafting leases with a break clause should consider an apportionment clause for rent paid in advance where tenants are permitted to exercise a break clause if they wish to allow for rent to be paid back in this way. Anyone acting for a tenant should ensure that such a clause is in their lease.

Filed under: England & Wales

Edwards v Kumarasamy – Supreme Court

In Edwards v Kumarasamy, the Supreme Court held that the landlord of a leashold flat was not liable for the injury of his tenant sustained outside the block of flats he was renting. The Court of Appeal decision which caused so much concern to landlords of flats has been overturned.

 

A summary of the case and the Court of Appeal decision can be read here.

 

The Supreme Court held that there were three questions to consider and answer and the tenant would need to succeed on every one of them in order to win the case. The three questions were:

 

  1. Was the path part of the exterior of the property?
  2. Was there an implied easement over the path? and
  3. Did the landlord need to be given notice of a want of repair of the path?

 

Question 1

The Court resolved this question in the landlord’s favour. The Court refused to agree that a path which was far removed from the property could form part of its exterior. It held that despite the fact that the path was a key approach to the property, there was a distinction between the actual outside surface of the property and a path which was removed from the property itself. The court preferred the plain English meaning of ‘exterior’ as opposed to the strained meaning adopted by the Court of Appeal.

 

Question 2

Once again the Supreme Court adopted a plain English meaning here and agreed that the there was an implied easement. However, in light of the answers to Question 1 and 3 the Supreme Court did not dwell on this question.

 

Question 3

The Supreme Court decided, by a majority, that the landlord should be given notice. The Court held that it is the tenant that had the easiest opportunity to view the state of repair of the common areas. Furthermore, that while the landlord retained a right of access as against the freeholder, he had no right to actually effect repair.

 

Comment

This decision will come as some relief to landlords of flats who were facing the need to inspect the common areas of these properties and were potentially liable for the failures of the freeholder. While the Supreme Court has simplified things a great deal the issue of notice is not closed and is likely to raise its head again.

Filed under: England & Wales

Lettings Agent Fined

Colvin Houston Ltd, a lettings agent in Scotland, was fined £750 (reduced to £500 for an early plea) after becoming the first to be prosecuted in connection with the Tenancy Deposit Schemes (Scotland) Regulations 2011 that required all landlords (including England and Wales) to register deposits. The legislation was set up to ensure deposits were ring-fenced in independent tenancy deposit schemes and protected by third parties until such time as the tenant vacated the rented property.

North Ayrshire Council said the landmark ruling at Kilmarnock Sheriff Court could now have a “massive impact” for people renting properties across the UK

The deposit legislation primarily places the responsibility for securing deposits on landlords. However, the Consumer Protection From Unfair Trading Regulations (CPRs) were used in this instance to hold Colvin Houston Ltd responsible for the deposit they took on behalf of their client, the landlord.

In this prosecution, North Ayrshire Council’s Trading Standards team argued that landlords were consumers rather than professionals. Consequently, in failing to secure the deposit, the letting agent had committed the offence of unfair trading by “failing to meet the standard of skill and care that would reasonably be expected” of a trader in its field of activity, and hence their practice was deemed “unfair as it failed to meet the standard of professional diligence”.

Comment

It should be remembered that the CPRs apply equally in England as well as in Scotland and so a similar prosecution could be pursued South of the Border. Routine failure to protect deposits is something that agents should not be involved with and is likely to attract prosecution.

Filed under: England & Wales

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