Freeholders and Sub-tenants

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    Freeholders and Sub-tenants

    Hello all,

    I would be grateful for some views on the following situation. We are a freeholder, and have a non-resident leaseholder who has been sub-letting his flat for more than a decade. We took over the freehold about 6 years ago. It has since come to our attention that the leaseholder did not arrange for a deed of covenant to be executed between the sub-tenants and the freeholder (which is one of the conditions upon which he is allowed to sub-let according to the lease).

    What I'd be interested to know is
    (i) whether we as freeholder could be capable of breaching any rights the sub-tenants may have for quiet enjoyment of the flat when there is no contract between ourselves and the sub-tenants;
    (ii) whether it is possible for the non-resident leaseholder to allege a breach of quiet enjoyment of the flat by the freeholder when he is not resident in the flat?

    This occurs within the context of a water leak from the flat in question which has affected the business activities of the commercial premises (retained by the freeholder) directly below. The leak has damaged the electrics in the ceiling, and resulted in loss of business due to the electrical failure throughout the premises. This was an extremely stressful time. We arranged for a plumber to come out to inspect the commercial unit and the flat on the same day so as to resolve the situation, but the (very difficult leaseholder) is now claiming that calling out a plumber on the same day was a breach of quiet enjoyment of the flat. To be clear, we were not able to gain access. The sub-tenant simply stood at the doorstep and refused us and the plumber access, so we walked away. I'm just curious to know whether we're in fact capable of breaching either party's quiet enjoyment of the flat as detailed in the lease when we have no legal relationship with the sub-tenants (it seems) and when the leaseholder himself doesn't actually live in the flat? (Can't help adding that It has been 5 weeks since the incident and still we have not been allowed access....)

    Also, as an aside, it has only recently come to our attention that the correct processes were not followed by the leaseholder with regards to his subletting of the flat. The previous freeholder was completely unaware, apparently, that the flat had even been sublet since the leaseholder never informed him. Has the breach likely been waived after all this time, or can we still require that the situation be remedied if we decided to take action?

    Thanks very much.

    #2
    A Deed of Covenant would not be required unless the leaseholder was selling the flat, he remains responsible for complying with the obligations set out in the lease.

    He may need permission to let or to register the sub-letting depending on the wording of the lease.

    Your contract is with the leaseholder and you are required to allow him quiet enjoyment of the flat even though he has let his property.

    Unless it was an emergency and it does not appear to have been, you are required to give reasonable notice to the leaseholder to enter the flat. You should contact the leaseholder and make arrangements for a mutually convenient time. If you are unable to agree a date within a reasonable time, I think that it is 3 months, you are entitled to seek a Court Order.

    There does not appear to be a breach of the lease unless the leaseholder is required and he has failed to give notice of a sub letting. As that was more than 10 years ago and no action has been taken against him, it would be difficult to enforce now.


    Comment


      #3
      I wouldn't have thought that the leaseholder has much chance of successfully arguing that this is a breach of "quiet enjoyment" unless it isn't an isolated incident.

      While it is unlikely that any lease would entitle the freeholder, or their representatives, to enter a leased flat without appropriate notice (i.e. whatever is detailed in the lease), I don't see how it could be considered unreasonable for access to be requested.
      If there isn't more to the story than you have said, you had a workman investigating the problem in the commercial unit and, because the problem was considered to be a leak from a flat above, asked for entry to be granted so that you could investigate. Access was denied, so you left.

      As eagle2 has said, there is likely to be little to be gained from pursuing the leaseholder for breach of the lease now, that would just seem like retaliation for not being granted access when the tenant was under no obligation to grant this. If there isn't a continuing problem with a leak from above, you may be better off dropping this and working on improving the freeholder/leaseholder relationship.

      Comment


        #4
        Hi Eagle2,

        Thank you for your reply.

        This is the wording of the lease:

        "The Lessee hereby covenants with the Lessor as follows:-

        "Upon every assignment or underletting of the Lease to procure the execution by the intended assignee or underlessee of a Deed of Covenant to be entered into by the intended assignee or underlessee with the Lessor in a form acceptable to the Lessor in which the intended assignee of the underlessee shall covenant with the Lessor to observe and perform the obligations of the Lessee herein contained including a covenant in the terms of this sub-paragraph hereof".

        As the leaseholder never executed a Deed of Covenant as per the terms of his lease above, it was my impression that there had been a breach of the lease. Happy to be corrected on that. Whether it can be remedied is of course another question...

        I'm surprised to hear that "quiet enjoyment" can refer to someone who is non-resident. This is what I've been curious about. If a breach of quiet enjoyment is considered to have genuinely occurred, what damages or sufferings can possibly be claimed by the leaseholder when he has given up possession of the property to a third party?

        Thanks again for your comments.

        Comment


          #5
          I agree with Macromia that based on what we have been told, the leaseholder would be unable to claim a breach of the lease..

          It does appear that there is more to the story than we are being told and the relationship with the leaseholder is strained. Normally, I would expect a leaseholder to cooperate and allow access but strictly he is entitled to proper notice unless there is clear evidence that water is continuing to escape and cause damage, which may be regarded as an emergency. We have not been told that there is any further damage as a result of the delay in gaining access and as 5 weeks has elapsed, I wonder why access is still required. I would have thought that a simple request for an explanation, confirmation that it is not ongoing and details of any damage inside the flat which is to be included in an insurance claim would suffice.


          Comment


            #6
            Originally posted by cday356 View Post
            Hi Eagle2,


            "Upon every assignment or underletting of the Lease to procure the execution by the intended assignee or underlessee of a Deed of Covenant to be entered into by the intended assignee or underlessee with the Lessor in a form acceptable to the Lessor in which the intended assignee of the underlessee shall covenant with the Lessor to observe and perform the obligations of the Lessee herein contained including a covenant in the terms of this sub-paragraph hereof".

            As the leaseholder never executed a Deed of Covenant as per the terms of his lease above, it was my impression that there had been a breach of the lease. Happy to be corrected on that. Whether it can be remedied is of course another question...

            I'm surprised to hear that "quiet enjoyment" can refer to someone who is non-resident. This is what I've been curious about. If a breach of quiet enjoyment is considered to have genuinely occurred, what damages or sufferings can possibly be claimed by the leaseholder when he has given up possession of the property to a third party?

            Thanks again for your comments.
            The clause does not apply because the leaseholder remains responsible for complying with the obligations set out in the lease.

            Quiet enjoyment does apply to any leaseholder and it would include his tenant. As explained above, he does not appear to have grounds to claim a breach of the lease based on what we have been told. It would be up to the leaseholder to prove that he or his tenant has not had quiet enjoyment and that he or his tenant has suffered loss or damage as a result.



            Comment


              #7
              Thank you for your replies Macromia, and Eagle2 once again,

              Of course you're both correct, there is much more to the story. However, I wanted to temper my original post as much as possible and to resist going off on multiple tangents.

              In the past the sub-tenant(s) haven't had any problems giving us access (to investigate prior leaks from the flat) on relatively short notice. This is really the first time that we've turned up on the day with a plumber and access has been refused entirely. It is the leaseholder who has instructed them to refuse access. From what I can gather, the leaseholder is refusing access because we have not actioned his informal lease extension request (because he is in service charge arrears) and he claims that he does not trust our contractor to investigate the water leaks impartially. I would say that there has been a complete break down in communication.

              Specifically in response to Macromia's comments, we have received some correspondence from the leaseholder. As far as I can tell, his main objection and claim for there being a breach of quiet enjoyment is simply the fact that we didn't give written notice. He has essentially tried to portray the fact that we turned up with a plumber on the subtenant's doorstep without prior notice as an act of intimidation, or "bullying" I believe is the word he used. I can't see that he is pointing to any further specific behaviour on our part that he believes to have been "bullying".

              Unfortunately, we must find a way to get access to the flat now one way or another. This is not the first leak so it is definitely a continuing problem. By my count there have been 7 so far. 3 in the last three years. And we have been willing to write off previous leaks either due to lack of timely access being granted by the leaseholder or in an effort to be neighbourly. I now see that that has done us no favours as the leaseholder is using our friendly, laid back approach in the past to deny that there were ever any previous leaks from his flat. Because we have alleged that previous leaks occurred (which they did) he is claiming that we are out to unfairly blame his flat as being the source since we have no evidence that the leaks came from his flat. And on that basis he does not believe our investigations will be impartial and therefore is refusing to provide us access. It comes across to me as an entirely circular and unreasonable argument.

              We have been advised by the insurers that the next time a leak happens, we may not be able to claim, so doing nothing is not an option. This really can't continue. I also really can't emphasize enough the amount of sheer stress and disruption that these leaks cause every time they happen. You honestly have to experience it to understand I think. What's even worse is that it is interferring with a business premises which is our livelihood and we are responsible for the safety of our employees and of the public who enter into and use the premises, which we cannot guarantee until these leaks are resolved.

              Comment


                #8
                At the moment we do have a plan of action in terms of gaining access to the flat, even under these difficult circumstances. That's why I've mainly only asked about these breach of quiet enjoyment allegations.

                In desperation, we contacted the local authority who has since gotten involved and have taken the view that damage to the electrics by water ingress potentially poses a danger to life. The inspector who visited has suggested that they will be willing to take action on our behalf, relatively quickly. We'll see whether this is progressed on their side.

                Comment


                  #9
                  Involving the local authority is hardly going to improve the relationship with your leaseholder. It seems to me that the problem is mainly a matter of communication. There should be a simple request asking the leaseholder to explain the leaks and requesting politely that he ensures that they do not recur.. I am not convinced that insisting on access to the flat will assist you unless there happens to be by chance a leak of water at the time of the visit. If the leaseholder objects to a particular contractor, you should ask him to suggest another one. The leaseholder does not appear to have any case for claiming bullying. .

                  Comment


                    #10
                    7 leaks from a residential flat, with just 3 of these in the last 3 years, doesn't sound like a problem that will easily be found if you do gain access. Unless the tenant only has a bath or shower once a year, or uses a washing machine in the flat as irregularly, you may well find that you won't trace a leak with a single visit.

                    Have you asked the leaseholder to get a plumber in themselves to check for leaks? That should have been your first course of action before trying to force access.

                    Regarding the lease extension and service charge arrears, have you found out why the arrears haven't been paid? This may be an indication of another area of conflict between freeholder and leaseholder.

                    Comment


                      #11
                      Thanks Eagle2,

                      No, I agree, involving the local authority won't improve our relationship with the leaseholder at all. But we seem to have little choice. We very well may not be able to find anything in the flat, but I don't think that's a good reason for not even attempting to investigate at all.

                      We have of course written to the leaseholder, politely, regarding the leaks. He simply denies that the leaks have come from his flat and blames the roof instead (or heavy rainfall). So asking him to ensure that they do not recur means nothing to him. Even if the leaks are coming from the roof as he claims, we still need access to his flat to investigate the roof area. Also, his problem is not with our contractor, it is with us. He believes that anyone we commission, because they have been commissioned by us, would not be acceptable. It is an excuse. I think he simply doesn't want a competent contractor to enter his property and to identify that the leaks are indeed coming from his flat.

                      My personal view is that this goes slightly further than a matter of poor communication, though I do not believe our communication has been ideal. This leaseholder has always been difficult from the start. He was the same with the previous freeholder (who also had difficulty gaining access). I won't go into details here. We should have known better since we were aware that there was a difficult leaseholder in the property prior to purchasing.

                      Comment


                        #12
                        Hi Macromia,

                        I agree, it won't be easy to find the leaks. If we do gain access, then that is my next biggest concern. But, the leaks are coming down into two rooms at once, so when they do occur they cover a significant area. The council has advised that our electrics have also been corroded as a result, and the ceiling is starting to show signs of bowing due to the water ingress. Therefore, we have to at least try to investigate. We have some idea of what may be going on up there, based on the causes of previous leaks and based on things that the subtenants have told us. There is a possibility that we can successfully recreate the water leaks and thereby identify the source. If we can't then we can't.

                        The leaseholder has already invited his own plumber down who he claims has found nothing. The council has advised that we should use our own plumber for investigations. The leaseholder above has no real incentive to properly investigate since the leaks don't affect him.

                        Yes, there are various reasons for why the service charge arrears haven't been paid. The majority of the leaseholder's reasons are, I believe, unreasonable. I suspect this will not be resolved amicably. Only if we agree to waive the arrears, but that hardly seems fair.

                        Comment


                          #13
                          I am not suggesting for a minute that the leaseholder is blameless but this seems to be getting out of control, you were given access before, so he was cooperating at one stage. If there is substantial water escaping from his flat, the chances are that there is damage within his flat and so it is in his interests to deal with the problem, If it were coming from the roof and that is your responsibility, I have no doubt that he would have been the first to complain to you. I would put the responsibility on him to trace the cause and let him choose his contractor and make it clear that if the leaks continue, you may need to recover losses from him,

                          Comment


                            #14
                            A covenant for quiet enjoyment is an agreement by the landlord that he will not physically interfere with the tenant's enjoyment of the property whoever is in occupation. Knocking on the door and asking nicely if you can check where a leak is coming from is not a breach of the covenant - nor is it a breach of the covenant to give notice before inspecting.

                            As to the lease clause quoted, the tenant is in breach. I could comment at length on the suitability of the covenant overall, but will just say that it is wholly unreasonable to require a deed in the terms expressed if the underletting is for a short term.

                            Comment


                              #15
                              Eagle2,

                              Since we refused to extend his lease informally (specifically we asked him to instruct a solicitor and to deal with his lease extension on a formal basis with us, which he refused to do) he began to refuse access. He has specifically stated in correspondence that he will not provide access until we extend his lease in the manner in which he dictates (amongst other unreasonable preconditions). I don't think he wants to extend under the act because he doesn't want to pay solicitors' and surveyors' fees. He is pressuring us to extend his lease before he will allow access. As far as we're concerned, that's not going to happen. When we made that clear to him, he doubled down on his refusal to provide access.

                              We have repeatedly asked him to trace the source of the leaks. He has simply said, repeatedly, that there is nothing more he can do. He was satisfied with his plumber's findings that they could not find any dampness in his flat. We cannot force him to trace the leaks if he simply doesn't want to. We have then pointed out to him the absurdity of him claiming that it is coming from the roof whilst at the same time refusing us reasonable access to investigate the roof (or relevant areas). It all falls on deaf ears. By the way, this is why the local authority was willing to help us. We've let them see a lot of the correspondences which shows just how unreasonable this behaviour is, otherwise I don't think they would have done anything.

                              I believe this leaseholder knows full well that the leaks are in fact coming from his flat and is fearful of us being able to prove it. That is also partly why he won't allow access, and why he leaves it until the leaks have dried up and have become next to impossible to trace. Exactly as you say, he would have been the first to complain if he truly believed the leaks were coming from the roof.

                              Comment

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