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Breach of Covenant Claims for Commercial Properties
When a tenant is in breach of its lease during the term, there are various remedies that the landlord can consider pursuing to enforce the tenant’s liabilities under the commercial lease (commonly known as covenants). These solutions are dependent on the breach, the terms of the lease and what the landlord is aiming to achieve.
Generally speaking, where a tenant is in breach of a covenant during the term of the lease, as with any breach of contract, the aggrieved party (in this case, the landlord) is entitled to be put back in the position they would have been in if the responsible party (the tenant) had complied with their obligations. It is not uncommon for damages to be inadequate as a remedy and, therefore, the landlord has to consider an application for injunctive relief.
We advise on breaches of leasehold covenants in commercial properties from a landlord or tenant perspective.
How JMW Can Help
Our property litigation team is well versed in dealing with breach of covenant claims, which frequently have to be made on an urgent basis. This is the case when, for example, a tenant is threatening to breach a covenant preventing them from assigning the property or parting with possession.
If you have a query with regards to a breach of covenant claims, please call 0345 872 6666 and one of our real estate litigation solicitors will be happy to discuss this with you. Alternatively, fill in our online enquiry form and we will get back to you.
The ‘Jervis v Harris’ Clause
Aside from non-payment of rent, it is common for disputes to arise out of a breach of repairing obligations contained within a lease. If the terms of the lease provide for it, a landlord may be able to enter the property to carry out repair works themselves, pursuant to a clause known as a ‘Jervis v Harris’ clause.
A ‘Jervis v Harris’ clause entitles the landlord to enter into the premises during the term of the lease and carry out any repair works needed. The landlord is then able to recover the expenditure as a debt rather than as damages, so that the Court’s consent is not required before the landlord can take action.
Service Charge Disputes
Landlords and tenants of commercial properties often have opposing views when it comes to service charges. A landlord will be looking to recover as much as possible, while a tenant will be to looking to pay as little as possible. This can give rise to a number of points of contention in relation to the reasonableness of services provided, the quality of the work carried out, and the amount charged under the lease.
We act for both landlords and tenants who are concerned about service charges, and aim to provide commercial advice to help you reach your desired outcome as quickly as possible.
My tenants have raised a dispute over service charges and have stopped paying my demands - can I stop providing services at the property?
Generally, a landlord’s obligation to provide a service at the property is not dependent on the tenant paying for it; although this depends on how the service charge provisions are worded in the lease.
In certain circumstances, a landlord may be able to show that the tenant’s default has rendered the supply of services impossible. We can review the terms of your lease and provide you with full advice on your obligations in the event your tenants are refusing to pay the service charges incurred.
What is the usual process of a dispute raised for service charges and how much will this cost me?
We advise landlords and tenants alike to take a commercial approach in service charge disputes. Often, the cheapest and fastest way to come to a resolution is through negotiation and mediation. We have a wealth of experience in guiding parties through successful alternative dispute resolution proceedings, and provide you with practical, commercial advice in relation to your dispute.
A tenant facing significant loss of business due to a breach of quiet enjoyment
Our client - a tenant of commercial premises that were used as a high-end restaurant - was facing significant loss of business arising out of building works carried out by their landlord. The lease contained a quiet enjoyment covenant that meant the landlord had to ensure that the tenant’s possession of the property was not interfered with, so the tenant was able to enjoy the property as they ought to have been able to.
We threatened to make an immediate application for injunctive relief to restrain the landlord from breaching the quiet enjoyment covenant and/or not derograting from the grant. On the back of our letter, the landlord entirely changed its pattern of working so that any building works were undertaken outside of the tenant’s business hours.