Author: Chris Alexander

Regular blog readers may recall that I have written about some of the more curious senior court decision concerning the provisions of the Housing Act 2004 in relation to tenancy deposit schemes.

These were schemes set up to require that landlords paid the tenancy deposit into a government authorized scheme and confirm details of these arrangements with the tenant to prevent exploitation of tenants at the end of a tenancy.  Failure to do so meant that a landlord could not rely on section 21 as a ground for possession and faced returning the deposit and a fine to the value of three times the value of the deposit for non-compliance.

The courts took the view that the punishment did not fit the crime, particularly in relation to the fine payable and the decisions in Tiensia v Vision Enterprises Ltd (trading as Universal Estates); Honeysuckle Properties v Fletcher and others; and Gladehurst Properties Ltd v Hashemi more or less stripped the legislation of its effectiveness.

The government went back to the drawing board and under the Localism Act 2011 has tried to plug the holes created by the judiciary with some amendments to the original legislation:

1. Penalties for non-compliance apply to tenancies that have come to an end after 6 April 2012.
2. Penalties for non-compliance apply where the landlord or agent has protected the deposit after the deadline.
3. The deadline for the protection of deposits has been extended from 14 days to 30 days.
4. An element of judicial discretion has been introduced so that the financial penalty for non-compliance is now between one and three times the deposit.

It remains to be seen whether the Tiensia decision will stand and that a landlord can still fully protect themselves by registering a deposit before the final hearing for the matter.  However, the clear message for landlords must be to ensure that the deposit is protected and the tenant is properly informed of its whereabouts or face the consequences!

The Department for Communities and Local Government FAQ is published here.

If you would like more information or advice relating to a specific matter, please do not hesitate to contact Chris Alexander on 01727 798042 or by email chris.alexander@salaw.com or any member of the Property Litigation Team.

© SA LAW 2012
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual case.

Author: Chris Alexander

Misrepresentation claims in property transactions are notoriously difficult to succeed with. When the recession hit, I saw an increase in clients wanting to explore misrepresentation claims as a means of escaping the consequences of contracts that they had entered into, alleging that the agents had promised them the earth but that the vendor had only contracted to provide them with the moon.

The best way to protect yourself against these circumstances is always to ensure that the contract fully reflects the parties expectations and if some of those expectations are not going to feature in the contract that everyone is at least aware of this. However, there will always be some circumstances where a disagreement will emerge some time after exchange of contracts…

To read the full article click here.

Author: Chris Alexander

You may have heard me this morning on the Jonathan Vernon-Smith show on BBC Three Counties Radio discussing the implications of long-term solar energy contracts when it comes to selling your property.

There are a number of companies in the marketplace currently offering free installation of solar panels in exchange for contracts of up to twenty-five years which entitle the householder to benefit from the electricity generated and allows the installer to sell surplus energy back to the Grid. I was asked to comment upon the implications for householders proposing to sell where these agreements are in place.

The first observation I would make is that each company’s terms and conditions will be different. However, remember that by signing up to them, you are entering into a long-term contract with obligations you will need to perform for the entire duration. It is therefore essential to check the termination provisions in the contract (if any), to see what should happen in the event that you no longer wish to continue. I consider it is going to be unlikely to be easy to terminate the contract because of the capital investment made by the solar panel company.

The contract provides you with personal obligations to the solar panel company and these cannot generally be assigned to a buyer of your house without the solar panel company being a party to that arrangement. Therefore, if your buyer was prepared to continue with the contract, a novation agreement would be needed to transfer the obligations to the buyer and to release you from the contract. If you failed to procure the agreement of your buyer to step into your shoes and went on to breach your obligations to the solar panel provider, then I could envisage a hefty damages claim being brought by the solar panel company based on their losses for the remaining term of the contract.

However, in practice I would expect that this is unlikely to be an insurmountable problem, but will add to the complexity and cost of a sale transaction. Further, it may limit the type of buyer who would like to purchase your property.

Other Legal Issues to Consider

Before entering into one of these contracts you should consider whether or not planning or other permission is required for the development to your roof or wall. The government’s planning portal website provides some useful guidance on this. Also check that the terms of the contract are not granting any specific rights over your property to the solar panel company. These could require registration of the Land Registry and, also, could require the consent of your mortgagee to put in place.

Follow Chris on Twitter: @Alexander_CJ http://twitter.com/#!/Alexander_CJ

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For further information about our Litigation and Dispute Resolution services or to discuss a particular matter or situation in more detail, contact Chris Alexander at our St Albans office by email at chris.alexander@salaw.com or on 01727 798042.

© SA LAW 2011

Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual cases.

Author: Chris Alexander

This is hopefully a statement that the vast majority of us will never have to utter.  However, with the recent spate of civil unrest and several buildings across London ablaze over the last couple of nights, it is worth considering what provision your lease makes in the case of destruction or damage by an insured risk:

1.    Commercial leasehold premises

Every lease will be different but the usual position is that the landlord is responsible for insuring the building against  loss or damage by certain insured risks for its full reinstatement cost.  Fire and civil commotion (which is considered to include riots) are usually insured risks in most leases.

If the building is damaged or destroyed by an insured risk then the usual position is that the tenant should notify the landlord of the damage and the landlord should make a claim on the buildings insurance policy (most policies require notification within a certain period of time or cover can be lost).  The landlord is then usually obliged to apply the insurance monies for the reinstatement or rebuilding of the premises.  However, there are some exceptions to this general position:

a)    where the landlords obligations are conditional upon the tenant paying the insurance rent  and the tenant has failed to make payment;
b)    where the lease gives the landlord a discretion to decide whether to rebuild/reinstate (usually only in cases where it is considered impossible or impractical to do so)

I would also usually expect to see a suspension of rent clause, which will mean that the tenant is not obliged to pay the rent again until the premises are fit for occupation.

However, that said insurers as a general rule exclude riot from their fire damage policies.  It may therefore be the case that the policy in place does not exactly coincide with the landlord’s insurance obligations.  In the case of a claim denied by the insurers this could lead to a dispute between the landlord and tenant (unless the landlord’s obligation to insure is subject to any exclusions, limitations, excesses and conditions that may be imposed by the insurers).

The Riot (Damages) Act 1886 does give a right of action for damage against the police authority in instances of riot (although claims must be delivered within 14 clear days after the day on which the happenings giving rise to them occurred).  This provides alternative recourse for those affected by riot damage.

Finally, the landlord’s insurance covenant will rarely require the landlord to insure against the tenant’s loss of profit for the period for which the premises are beyond use.  Therefore, only tenants who have taken out business interruption insurance will be completely protected.

2.    Residential Long Leases

The position is similar in a residential long leasehold situation, in that the landlord is likely to be obliged to insure and reinstate in the same way.  However, in the event that it is impractical or impossible to repair or rebuild the building, there may be an issue of an insurance shortfall between the reinstatement cost (which is what the insurers would pay out for) and the market value of the leasehold premises (ie what it was purchased for).

Chris advises on litigation and dispute resolution within the property sector, with a particular specialism in ‘real property’ and landlord/tenant matters.

If you would like more information or advice relating to a specific matter, please do not hesitate to contact Chris Alexander on 01727 798000 or by email at chris.alexander@salaw.com.

© SA LAW 2011
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual case

Author: Chris Alexander

Is your business committing a criminal offence if its terms and conditions are unfair? A High Court decision earlier this year has raised the question as to whether unfair contract terms are now illegal as well as unenforceable.

SA Law Property Litigation Solicitor Chris Alexander discusses hidden dangers in terms and conditions.

Click here to read the full article

Author: Chris Alexander

It is not often that commercial lease renewal proceedings become headline news, however, this weekend I was flicking through the business pages of the Times and noticed that Humber Oil Terminals Trustee Ltd v Associated British Ports had made the papers.

The case concerned the Immingham oil terminal in the Humber Estuary which is owned by Associated British Ports and was let to a joint venture vehicle owned by Total and Conoco Phillips.  As tenant, they wanted to renew their 40 year lease which was coming to an end and to try and achieve that they had issued proceedings for a new lease under the Landlord and Tenant Act 1954.

This Act provides security of tenure for business tenants and means that a landlord can only terminate a lease after the end of the fixed term on a limited number of grounds.  One of the most common grounds for terminating a commercial lease is redevelopment but this case concerned the landlords intention to occupy the oil terminal itself.  The key date for assessing these intentions is the date of the hearing of the claim, which can often be important for tactical reasons and may have been one of the reasons that this particular part of the claim was heard as a preliminary issue.

The tenant had little option but to fight this case, as it expected that if APB assumed control of the terminal then it would cost it up to £40 million in additional charges.  APB’s case was that it wanted to occupy the terminal but that its business would involve giving access over or through the premises to other third parties.  There was a question as to whether APB’s plan would constitute occupying the premises for its own purposes and if so when, and in what circumstances APB so intended (ie if it could not show the relevant intention at the hearing date then its defence to the tenants claim for a new tenancy would fail).

Mr Justice Vos in the High Court decided in favour of APB.  In order to show sufficient intention the landlord only needed to show an ability to put its plan into effect.  Even thought the landlord’s plan may involve contracting with the current tenant charging it fees for using the port facilities, it was likely that ABP would occupy the oil terminal from the termination of the lease for the purposes of providing port facilities to third party oil companies or traders.

There remain other unresolved disputes but the landlord is now one step closer to recovering possession and the tenant.

Author: Chris Alexander

It has been an interesting few months in the courts for the tenancy deposit legislation and the balance of power has swung very firmly in favour of the landlords.

All private residential landlords should be familiar with the requirement to pay a tenancy deposit into an authorised scheme within 14 days of receipt.  It has been a mandatory requirement to do so since April 2009.  There legislation provided for some fairly draconian penalties against landlords for non-compliance, including a requirement to either return the deposit to the tenant or to pay it into a scheme and to pay the tenant a fine to the value of three times the amount of the deposit after the tenant has applied to Court.

Those of you who read my blogs in November 2010 (Tenancy Deposit Schemes, common sense prevails?) and in May 2011 (More Deposit Protection Developments) will be familiar with the fact that landlords can escape this fine if they pay the deposit into a scheme before the Court hearing date and that they can do this even after the tenancy has ended.

The position has got even tougher for tenants after the recent decision in Gladehurst Properties Ltd v Hashemi and another [2011] EWCA Civ 604.  Now, if a tenant fails to issue their Court proceedings before their tenancy ends, they will be too late to claim their fine as the Court of Appeal ruled that after the tenancy had ended it lacked the genuine discretion to choose.  This decision could be interpreted one step further and mean that even proceedings issued shortly before the end of the tenancy may not be effective as if the tenancy ends before the hearing then the tenant will lose.

This whole episode means that the likelihood of many more of these cases coming to Court is fairly limited as the door has been firmly slammed in the faces of the tenant.

However, it does not make compliance optional for landlords, until the deposit is properly protected and the relevant information has been served upon the tenant then the landlord still cannot use section 21, which is usually the cheapest way to evict a tenant.

Author: Chris Alexander

After watching this weeks Dispatches programme on Channel 4 (Landlords from Hell), I thought that it might be useful to summarise a number of the legal issues raised by John Snow in his investigation of the private rental market.

The main issues raised were:

• Unlawful eviction
• Rent Control
• Disrepair
• Overcrowding/HMO’s
• Sale and rent back agreements

I have written an article which you can read by clicking here looking at the various offences that landlords can commit and the private remedies that exist for tenants.

My own view is that the programme recognised that the legal remedies exist to punish rogue landlords but that local housing authorities have been woefully inadequate in prosecuting those offences.  Further, the types of tenant worst affected are those with low incomes with the least practical access to justice especially as legal aid becomes increasingly scarce.

I tend to act more for landlords than for tenants in these cases and anecdotally, many private landlords feel that the balance is stacked too heavily in favour of the tenant, for example it generally takes at least three months to evict a tenant with rent arrears.  My own view is that the private market is not currently well suited to low income or housing benefit tenants who often require greater overall support than most small scale private landlord’s can afford to offer; but Grant Shapps showed little appetite for changing the status quo in his interview.

Click here to read the full  Dispatches Landlords from Hell article.

For further information about our Property Litigation services or to discuss a particular matter or situation in more detail, contact Chris Alexander at our St Albans office by email at chris.alexander@salaw.com or on 01727 798000.

© SA LAW 2011
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual cases.

Author: Chris Alexander

The Court of Appeal has just handed down judgement in another tenancy deposit scheme case defeating another tenant seeking its the windfall of three times the value of the deposit.

Last years decision in Tiensia v  Vision Enterprises Ltd (t/a Universal Estates) and Honeysuckle Properties v Fletcher and Others [2010] EWCH Civ 1144 (QB) heavily blunted the financial sanctions against landlords for non-compliance with the deposit requirements of the Housing Act 2004. See my blog written at the time.

Potts v Densley and another [2011] EWCA Civ 1224 was an appeal by a tenant who put forward a clever argument that where a tenancy has ended before the deposit is protected, the relationship of “landlord and tenant” has ended.  Consequently, it was not technically possible for the “landlord” as defined in the Housing Act 2004, to register the deposit with a scheme after the end of the tenancy.  The Court of Appeal disagreed and said that the relationship of landlord and tenant crystallised when the deposit was paid.

A good try by the tenant but the Courts are showing a great reluctance to enforce the financial  provisions of the Housing Act 2004 and this is another example of this.  Back to the drawing board for the tenant, although as the parties represented themselves at least there were no heavy legal costs for them to deal with!

Author: Chris Alexander

Consumer Focus has recently published a report into Before the Event Insurance (“BTE”) entitled “In Case of Emergency” and has criticised the complexity and uncertainty of current provision.

They estimate that some 25 million UK households had the benefit of such policies as part of their household buildings or contents cover but that few knew they had it and fewer still understood what it would cover.  I have acted in a number of neighbour disputes in the past where legal expenses insurance has been available and in each case the parties were unaware of the fact that they had it before they took legal advice.

BTE can provide parties protection from the costs of litigation, both for their own costs and the adverse cost risks that litigation brings.  The Jackson Review on litigation costs endorsed the wider promotion of BTE as a means of increasing access to justice, which at present is increasingly the preserve of the wealthy.

Other issues identified by Consumer Focus were that consumers were restricted in their choice of solicitor, cover was not comprehensive and there was often duplication of cover across various policies.  The freedom to instruct a solicitor is in my view vitally important.  In my experience, the panel firms who insurers funnel their clients towards may be very cheap because of the volume of work which they are referred but this comes at the cost of service to clients.  Further, that system does not provide a proper incentive to the solicitors to seek the best possible result for their clients as this can come at a cost to the insurers who will be pressurizing them to keep costs to an absolute minimum.

The other option for Claimants is After the Event Insurance (“ATE”). This is an insurance policy that can be put in place to shield a party from the risks of adverse costs in proceedings.  It is often combined with a form of conditional fee agreement with the solicitor.  Oddly, while such a scheme also helps to improve access to justice, conditional fee agreements themselves were put under threat from the Jackson Review and the indications in Ken Clarke’s recent proposals are that they are to be outlawed.

You can read the whole Consumer Focus report here.