Landlord counts cost of failure to observe covenants | Articles | Knowledge Hub | B P Collins LLP Solicitors
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11 January 2013

Landlord counts cost of failure to observe covenants

When a landlord failed to comply strictly with its obligations under a lease, it was left to count the cost of the failure.

The landlord was required to insure the building it let out to four tenants and to hold the insurance in the joint names of itself and each of the tenants. The tenants, in turn, were each required to pay a quarter of the insurance premium, which was payable by way of an insurance rent.

For some reason, the insurance, which had been correctly annotated beforehand, started being issued without the interest of one of the tenants being noted. This went on for three years. The tenant refused to pay her insurance premium because the landlord had not complied with the covenant in the lease to take out the policy in joint names.

The Upper Tribunal held that in order to be able to recover the share of the insurance premium payable by the tenant, the landlord had to comply with the covenant in the lease.  

Commercial property senior associate, Alison Taylor, concludes: "The case should serve as a reminder to landlords of the necessity to adhere to the letter to the covenants in their leases."

If you are a landlord or tenant of commercial premises, contact Shona for lease advice.

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