Archive for the ‘surrender’ Category

The different effects of notice to quit and surrender on sub-tenants

January 25, 2011

Where a tenant has agreed with his landlord not to serve a statutory counter-notice in response to a notice to quit this is not the same as a surrender. The notice to quit will also bring a sub-lease to an end while a surrender will not.

Barrett v Morgan ([2000] 2 AC 264, HL) concerned an annual tenancy of agricultural land. The tenants had created a sub-lease. It suited both the landlord and the tenants of the head-lease to bring the sub-lease to an end. So they agreed that if the head landlord served a notice to quit then the tenants would not serve a statutory counter-notice that deprived the notice to quit of effect unless confirmed by the relevant authority. The aim was to bring to an end both the lease and the sub-lease. It is established law that if a tenancy is brought to an end by notice to quit then any sub-leases are also brought to an end. It has also long been settled that the surrender of a head-lease does not bring a sub-lease to an end. The question here was whether the agreement that no counter-notice would be served was tantamount to a surrender. The House of Lords held that it was not. A notice to quit and a surrender are distinct concepts. In the case of a notice to quit, the natural life of the lease comes to an end because it is determined in a way that had been envisaged from the outset. This is no less true if the landlord and tenant reach an agreement about the service of the notice to quit. Otherwise, a landlord would be prevented from doing with the tenant’s consent something that he was entitled to do without the tenant’s consent.

Estoppel is the basis of surrender by operation of law. When does payment of rent give rise to a periodic tenancy?

January 24, 2011

A surrender by operation of law arises independently of the intention of the parties where the conduct of the parties unequivocally amounts to an acceptance that the tenancy is ended. Whether payment of rent on a weekly or monthly basis gives rise to a periodic tenancy depends on the intention of the parties. If the payment can be satisfactorily explained on the basis of some intention other than that of an intention to create a periodic tenancy then none will arise.

In Mattey Securities Ltd v Ervin ((1999) 77 P & CR 160 CA (Eng)) the defendant had given the landlord a guarantee that the tenant would pay rent. The tenant went into administration owing rent arrears. A new company took possession and the landlord accepted rent arrears and rent from the new occupier which also ran into financial difficulty. There was no assignment of the lease to the new occupier although the landlord and the occupier had been in negotiation after the occupier had gone into the property concerning a possible assignment. Could the landlord enforce the guarantee of the lease? Or had acceptance of the rent from the new occupier amounted to a surrender by operation of law so that the guarantor had no liablility for arrears that accrued after that date?

A surrender by operation of law does not depend on the intention of the parties. It is based on estoppel and arises when the conduct of the parties unequivocally amounts to an acceptance that the tenancy is ended. Here the negotiations for an assignment showed that the parties assumed the continuation of the original lease even after the new occupier took over possession and paid rent.

Whether payment of rent on a weekly or monthly basis gives rise to a periodic tenancy does depend on the intention of the parties. Here the landlord had accepted rent because it was due under the original lease and he did not care who paid it. There was no intention to create a periodic tenancy.