Overview WEEK 9 DEALINGS WITH LEASES (ASSIGNMENTS) . An assignment is a transfer of an interest in a lease by either the lessor or lessee · Assignments lead to issues about enforcement of covenants Complicated by dual nature of a lease as a contract and interest in land . Two concepts operate: privity of a lease as a contract and privity of estate o When is the lessor's consent required to assignment of the lease and can it be unreasonably withheld? Lessor Both parties are bound by terms of lease as a contract Privity of contract Privity of estate Lessor and lessee bound to covenants that ‘touch and concern' the land Lessee Touch and concern the land" Covenants so closely connected with the leasehold estate that they attach to and form part of estate and define and limit the estate Assignment of lease Distinguish a sublease [14.740] [14.940] Requirement s for a legal assignment of lease · Assignment of lessee's interest to another person . Assignment at law must comply with s 199 PLA . Assignment may require the lessor's consent · Assignment without a deed of consent signed by lessor, assignor and assignee only creates privity of estate · A sublease is: o A lease of all or part of the premises o That is granted by the lessee o For a term that ends at least one day before the end of the lease term . If the sublease is granted for a term that equals or exceeds the remainder of the lease term, it will be an assignment of the lessee's interest - Milmo v Carreras · The assignor (usually the lessee that's already in the property) and assignee must agree to an absolute assignment in writing - s 199 PLA . Notice to the lessor of the assignment - s 199 PLA . Consent of the lessor may be required (may be a condition of the lease) · Legal estate does not pass to assignee until transfer of lease is registered - s 62 LTA
Position after legal assignment - common law Covenants that touch and concern the land Examples of covenants that touch and concern the land Lessor If only privity of estate - lessor can only sue lessee on covenants that touch and concern the land - same for lessee as against lessor Privity of contract - After assignment lessee remains liable to lessor for breaches by assignor and assignee unless express release Privity of estate Lessee I (Assignor) Lessee 2 (Assignee) No privity of contract with lessor unless a deed of consent Registered lease T Lessee I entitled to indemnity from lessee 2 for breach of covenant that touches and concerns 7 [14.830]. [[4.860] . Lessor and lessee were both in privity of contract and estate, after assignment at best the lessor and lessee #1 remain in privity of contract that is subject to the parties that being the lessor, lessee 1 and 2 having not released lessee 1 from their obligation in