A consistent change in the way that legislation is adopted by the courts has provided many tenants who choose to assign a lease relief from the obligations of the assignee. In the past there have been many agreements which have provided tenants an ability to assign a lease with the landlord’s consent. Traditionally such agreements would impose conditions on the tenant, such as covering the rental cost of the assignee should they fail to meet them.
Courts in many jurisdictions have sought to sever any clauses which contain provisions upon the tenant. In the UK, the Landlord and Tenant Act 1995 provides that an agreement will be considered void if it attempts to exclude, modify or frustrate the Act’s purpose.
In cases such as Good Harvest Partnership LLP v Centaur Services Ltd [2010], the court did not enforce the guarantor to pay for the assignee’s rent obligations and viewed the agreement as void. It was ruled that while the Act did not prohibit the arrangement, any obligations by the guarantor ended with the tenant and would not continue upon further assignment.
It is accepted that courts will be unlikely to circumvent this adopted change for landlords who indirectly try to avoid the new provisions.
If you would like to discuss this topic further, you should contact our property team at Matthews Folbigg on 9635 7966.
Anna Zdrilic
Director, Property and Commercial Groups
Phone: 02 9806 7461
Email: annaz@matthewsfolbigg.com.au
DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as definitive or complete statement of the relevant law.
