With conditions on the high street showing little signs of improvement and tenants seeking to maximise their income streams, Landlords and their agents or surveyors should carefully consider their response to any applications for consent.
The case of Prudential Assurance v Mount Eden Land may date back to 1997 but its implications are of paramount importance. The tenant, in accordance with the provisions of the lease, asked for consent to alter the premises. The Landlord’s agent replied in a letter setting out terms upon which a licence would be granted. The letter was headed “subject to licence” and in the body of the letter it stated that if the tenant confirmed acceptance of the terms they would arrange for the solicitor to prepare the licence. The tenants went ahead with the alterations without the licence and subsequently the Landlord claimed a breach as the licence was never put in place. The court however held there was a binding agreement.
Many agents and surveyors will therefore bind the Landlord to an alteration, assignment subletting or a change of use merely by expressing initial consent before a solicitor is even involved. This case has been confirmed in subsequent decisions even to the extent that email correspondence from a Landlord’s solicitor agreeing in principle to assignment making it clear that the email did not constitute a Licence nevertheless constituted the licence for these purposes.
It is therefore advisable that the Landlords agent or surveyor should not give consent until they (and their clients) are comfortable with the terms of the tenant’s application (be it for assignment, alteration or otherwise). To assist in preventing inadvertently granting consent, solicitors should be involved from the outset and any licence must be made conditional (for example on undertakings as to costs). Surveyors and agents should be wary of expressing any form of consent or acceptance to a tenant’s request in correspondence, even if qualified.
Increasingly, leases will be drafted in such a way that applications for Landlord consent will be “subject to a formal licence by deed drawn up by a solicitor” to prevent any ambiguity. The problem arises in part from the fact that most cases simply provide for the Landlords consent to be in writing. This problem may be overcome in the case of leases granted in future if Leases are drafted, to make it clear that the consent must be given in a deed prepared by the Landlords Solicitor.
If you require advice in relation to the issue of consent or a tenant’s application, BSG has a wealth of L&T experience and can provide valuable assistance and guidance. Please contact Alex Walshawl@bsglaw.co.uk at Preston office 01772 253841 or Mark Burrow email@example.com in Lancaster 01524 386500.