Author: David Linklater

The recent case of Avocet Industrial Estates LLP vs Merol Limited [2011] EWHC (Ch) has imposed an additional burden on commercial tenants wishing to exercise a break option.

Avocet was a commercial tenant and served a break notice to terminate its lease.

The break right, as is often the case, was conditional and required Avocet to pay all rent and “other sums” due under the lease.  It also had to pay a premium.

The tenant paid the premium by cheque, which was delivered to the landlord one day before the break date.  The tenant had a history of paying rent late and the lease provided that the tenant should pay interest on late payments.
Whilst the landlord had indicated that it wanted interest to be paid, it had not invoiced for interest.  The tenant had dismissed the landlord’s request for interest as “silly”.

The tenant vacated the premises and handed it back on the break date.  The landlord refused to accept that the tenant had validly exercised the break, arguing that the premium was not “paid” when the cheque was received (as it had not cleared), and the interest on late cheque payments should have been paid as well.

The disputed interest was approximately £130.

The Court found that the supply of the cheque meant that the premium had been “paid”, as there was an implied agreement that payment could be made by cheque.

However, interest should have been paid as well and therefore the break notice was ineffective and the lease continued.  This was the case even though the landlord had not invoiced for the interest because the lease stated that interest was “payable” regardless of whether or not a formal demand had been made.

As a result of the failure to pay the £130 interest, the tenant now finds itself in a lease that is does not want, which in theory will result in a liability in excess of £300,000.

The break clause in Avocet was not unusual and the provisions regarding interest are also commonplace.  This scenario will affect tenants who have throughout the course of a tenancy paid any sums by cheque, or been at all late in making any payments to the landlord.

A failure to pay any interest due could therefore potentially invalidate a break.  The key to this is in the wording of the lease and if in doubt, legal advice should be sought.

If you would like more information or advice relating to a specific matter, please do not hesitate to contact David Linklater on 01727 798097 or by email at david.linklater@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

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

Contact Us

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

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: Lynsey Newman

Landlords could be seeking to reclaim millions as a result of the recent ruling in Office of Fair Trading v Foxtons [2009]. Charges which are unfair and that are hidden away in the small print of terms and conditions could leave letting agents open to claims from landlords seeking to recover historic fees.

Foxtons’ standard terms which included charging commission at 11% for tenancy renewals and 2.5% when tenants went on to buy the property even where Foxtons had little or no involvement in the process where held to be unfair by the High Court. The Court ruled that to be fair contracts should be clear and the language used should be plain and intelligible. Important terms should be brought to the attention of the customer, as a typical customer would not expect such important terms to be hidden away in the small print.

This landmark decision serves as a warning to letting agents as to the enforceability of their terms of business and charging structure and the importance of highlighting these to their customers.

Please click here to read an article which explores the ruling in the case and provides practical advice for compliance with the Foxtons decision.