What if the tenant stops paying rent, and someone else moves in and pays rent?

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    What if the tenant stops paying rent, and someone else moves in and pays rent?

    My commercial tenant stopped paying rent last year and "assigned" his lease to someone else before informing me, and then asked if I would sign a new lease at the same rent with the new occupant (after he took money from him of course!). I said no, as his rent is over 100% below market rate, which is why someone would pay to take over his lease. FYI his lease expired last year but it is within the 1954 Tenancy Act.

    The new occupant wants the lease to himself, and has offered to pay rent and even cover all the arrears (6 months) of my tenant.

    Is the lease automatically assigned to the occupant if I accept his rent and the original tenant pays me nothing? Does the new tenancy remain in the 1954 act? My original tenant won't give up his lease until someone pays him off yet again.

    Can I somehow "terminate" the rolling lease by taking rent from the occupant? If yes, does the occupant take over a rolling lease (i.e. expired but inside the Tenancy Act) or a brand new 10 year lease?

    ps: We sent a section 40 a few months ago and he claimed that was the sole tenant, and that the occupant is an "employee". This can be easily disproved though as they run different companies that are based on my property.

    Would be interested in hearing advice on situation above as I am in a broadly similar situation, I have held off taking rent but after 18months this is becoming critical. Ideally I want vacant possession.


      I also had something similar occur. I had a tenant with a lease inside the 1954 Act. I had moved overseas so I did not know what was going on.
      It appeared that the tenant ran out of money and gave a Third Party the keys who took over the premises. I believe he paid some money.
      I was asked to "assign" the lease to the Third Party. I refused to do it as although leases often say that a request for an assignment cannot be unreasonably refused I had a thorough investigation of the Third Parties finances and found sufficient reason to refuse to grant an assignment.
      Had I not been living overseas I would have taken the premises back myself.
      I started to take Rent off the Third Party, thus he became a Periodic Tenant.
      When he wanted a new lease I was only prepared to offer a 3 year lease Outside the 1954 Act which he agreed to.
      I wont say whats happened since but its essential that if you offer a new lease its outside the 1954 Act.

      With another Commercial Lease my solicitor inserted a very useful clause in that the lease was a Full Repairing and Insuring Lease and that if I needed to have a Schedule of Dilapidations done, I could charge the Tenant. A good Chartered Surveyor quoted £2500.




          I advise obtaining legal advice.

          I can only comment from my limited experience ( I am not a lawyer).

          As i understand, it's possible to assign by operation of law but in my experience that only happens when the landlord continues to demand/accept rent without knowing there has been a change of tenant.

          On one occasion, from my experience, a multiple retailer assigned its lease to a national charity without first obtaining my landlord-client's consent (which if requested could not have. been unreasonably withheld). The retailer's agent's 'excuse' was that dozens of shops had to be got rid of quickly as cheaply as possible and there wasn't time for niceties. My client accepted the position because they weren't worse off.

          Another occasion, where I was acting for the new tenant, the previous tenant had led my client (a first-time tenant with no experience of business tenancies) to believe that the landlord's consent wasn't needed. As my client had bought the business as a going concern, including taking over its existing bank account, and my client hadn't changed the business trading name, the first the landlord knew about the change in ownership was a few years later when in concluding the rent review it became a question of who was the legal tenant for signing the documentation. To regularise the position, I got the landlord to agree to the assignment by operation of law.

          Otherwise, as I understand, operation of law only applies when there is unequivocal conduct of both a landlord and tenant demonstrating an acceptance of the situation.

          Obtaining vacant possession is not straightforward. Whether the new tenant has a tenancy-at-will or a periodic tenancy depends. The occupancy might be an equitable lease or a legal lease: although the two separate legal systems of common law and equity have been fused into one system.

          Starter reading try Walsh v Lonsdale [1882) : https://en.wikipedia.org/wiki/Walsh_v_Lonsdale

          Also : Proudreed Ltd v Microgen Holdings Ltd [1996] ; Landsdowne Tutors Ltd v Younger [2000]


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