Leasehold covenants and issues - Leases granted before 1 Jan...

Learning Outcomes

This article examines the detailed legal framework governing leases granted before 1 January 1996, providing a comprehensive understanding of the doctrines and statutory rules that support the enforceability and transmission of leasehold covenants in “old leases.” The principles of privity of contract and privity of estate are examined in their operation before the Landlord and Tenant (Covenants) Act 1995. By engaging with this material, readers will gain a clear understanding of the following key outcomes:

• Accurate identification of the distinctions in covenant liability regimes that apply to leases granted before and after 1 January 1996, including the capital importance of the “old rules” for pre-1996 leases and the continuing applicability of those rules in modern legal practice.
• A precise analysis of privity of contract: recognition that the original tenant and landlord typically remain liable to one another for all lease covenants throughout the lease term unless expressly released, regardless of assignment.
• Application of privity of estate: understanding when and how obligations and benefits "run with the land", so that assignees of both term and reversion may enforce or be bound by those covenants, particularly those that “touch and concern” the land.
• Clarification of the role of assignment: clarifying the respective liabilities of original tenants, assignees, and successive assignees, including the critical importance of indemnity covenants, both implied (by statute or land registration rules) and express, for outgoing tenants.
• Discussion of the special statutory provisions (Law of Property Act 1925, ss. 141–142) that transfer enforcement rights and obligations of covenants to successors in title to the landlord’s reversion, and critical practical implications—especially in sales of property with tenanted interests.
• Comprehensive explanation of the “touch and concern” test, with numerous examples of typical covenants that qualify (rent, repair, insurance, user), and why purely personal covenants do not run with the land.
• Thorough explanation of enforcement mechanisms: who can sue and be sued (including possible “leapfrog” claims by and against former tenants and assignees), the function and implications of direct covenants in licences to assign, and the importance of assignment mechanics and notice in creating or releasing obligations.
• Detailed account of special statutory protections and procedures, such as s.17 LT(C)A 1995 default notices for recovering fixed sums from former tenants, the concept and operation of the overriding lease mechanism, and the procedure and effect of notices and remedies available.
• Practical appreciation of the position of head landlords and subtenants, including the operation of privity doctrines in subleases, enforceability of restrictive covenants with notice, and strategies for enforcing positive and negative covenants against subtenants.

The in-depth understanding gained will enable practitioners and candidates to analyse complex scenarios, determine parties’ liabilities and rights in old commercial and residential leases, and apply statutory and common law principles in both litigation and transactional contexts.

SQE1 Syllabus

For SQE1, you are required to understand pre-1996 leasehold covenants, with a focus on the following syllabus points:

• The distinction between the “old rules” for leases granted before 1 January 1996 and the “new rules” for those granted on or after that date, with particular focus on the legal consequences of this division.
• The workings of privity of contract and privity of estate as they apply to original parties, assignees, subtenants, and assignees of the reversion.
• The ongoing liability of the original tenant following assignment under an old lease, and how this differs fundamentally from the regime under LT(C)A 1995.
• The statutory modification and supplementing of common law through sections 141 and 142 of the Law of Property Act 1925, passing the benefit and burden of covenants on assignment of the reversion respectively.
• The critical concept of covenants that "touch and concern" the land, their definition, and their running with term/reversion.
• The practical operation and importance of indemnity covenants—both implied and express—and the chain of indemnities typically found in successive assignments.
• Procedural requirements: the service and timing of s.17 LT(C)A 1995 default notices as prerequisites for recovery of overdue fixed sums from former tenants/guarantors; how the overriding lease mechanism provides landlord-like remedies to the former tenant who pays.
• The legal position and remedies available in subletting scenarios, including the lack of privity of estate between head landlords and subtenants, mechanisms by which head landlords can enforce covenants against subtenants, and the effect of direct covenants.
• The practical consequences of the assignment of a landlord’s reversion: how and when enforcement rights and obligations pass to the incoming landlord, and the limitations on outgoing landlords.
• The general and special rules for enforcing leasehold covenants, osmosis of liabilities between original tenants, assignees, former tenants and assignees of reversion for breaches (including existing breaches), and principles supporting who can sue or be sued in any given scenario.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Under a lease granted in 1990, which doctrine primarily ensures the original tenant remains liable for covenants throughout the lease term, even after assignment?
   1. Privity of estate
   2. Privity of contract
   3. The rule in Spencer's Case
   4. The doctrine of 'touch and concern'
2. Tenant A took a lease in 1992 and assigned it to Tenant B in 1998. Tenant B breached a repairing covenant in 2001. Can the landlord sue Tenant A for this breach?
   1. Yes, due to privity of estate.
   2. No, because Tenant B is the current tenant.
   3. Yes, due to privity of contract.
   4. No, because the assignment released Tenant A.
3. Which type of covenant's burden generally runs with the land under the principle of privity of estate in pre-1996 leases?
   1. All express covenants
   2. Only positive covenants
   3. Covenants that 'touch and concern' the land
   4. Personal covenants

Introduction

Leases granted before 1 January 1996 (commonly referred to as "old leases" or "pre-1996 leases") fall under a fundamentally different legal framework regarding the enforceability and transmission of leasehold covenants than those governed by the Landlord and Tenant (Covenants) Act 1995. These "old rules" are not just of historic interest: many leases predating 1996 are still in force and the pre-1996 framework supports a significant body of ongoing disputes, assignments, and transactional issues.

Old leases are governed at common law by the dual doctrines of privity of contract (binding the original parties to the lease, even after assignment) and privity of estate (binding successors as regards covenants that meet certain criteria). These principles are supplemented and shaped in key respects by statutory intervention, notably through the Law of Property Act 1925, especially sections 141 and 142, which provide for the transfer of enforcement rights and liabilities on assignment of the reversion.

A key practical distinction for such leases is that the original tenant's liability persists for the duration of the lease, regardless of any assignment, and liability for breaches of covenant may "leapfrog" back to the original tenant even many years after disposal of the lease. Equally, landlords remain liable on their covenants unless fully released. The result is a potentially complex web of liability, indemnity chains, and enforcement rights.

Key Term: Privity of Contract
The legal relationship existing between the original landlord and tenant who both signed the lease. Under privity of contract, these parties remain personally and contractually liable to perform their obligations and are entitled to enforce the other's covenants throughout the lease term unless expressly released. This liability persists even after assignment.

Key Term: Old Lease
A lease (including an underlease or sublease) granted before 1 January 1996. Such leases—not just the terms but all assignments made before, on, or after that date—are governed by the pre-1996 common law and statutory rules, not the Landlord and Tenant (Covenants) Act 1995.

Governing Principles: Privity of Contract and Privity of Estate

The relationship and liabilities between landlords, tenants, and their respective successors in title under old leases are founded on the two doctrines outlined below.

Privity of Contract

Privity of contract is the classic doctrine of contract law, under which only the original parties who have signed a contract are personally liable for its performance, unless and until released by the other. In the leasehold context, this means the original landlord and original tenant remain bound by the lease covenants for the entire contractual term, no matter how many times the lease or reversion are assigned.

For tenants, this is critically important: even after lawfully assigning the lease, the original tenant has ongoing liability for all tenant covenants (such as payment of rent, repair, insurance, and user) throughout the duration of the lease. The same holds true (in reverse) for landlords, who remain contractually bound to the original tenant unless fully released, despite transfer of the reversion.

As a matter of practice and risk allocation, outgoing tenants (assignors) will seek an express indemnity from their assignee to ensure that, if the landlord enforces any ongoing liability against the assignor after assignment, they can recover the sum from the assignee who was in occupation at the time the breach was committed. Express indemnities are thus normal but, in some circumstances, an indemnity is implied (see below).

Key Term: Indemnity Covenant
A covenant by which an assignee (recipient of the lease) agrees to "indemnify" the outgoing tenant (assignor) for any losses resulting from post-assignment breaches. In old leases, an indemnity is implied on assignment for value of an unregistered lease (Law of Property Act 1925, s.77), or is preserved on registered leases (Land Registration Act 2002, Sch 12). However, an express indemnity is always best practice.

Privity of Estate

Privity of estate refers to the legal relationship between the current landlord and the current tenant by virtue of their respective titles: the immediate landlord (holding the reversion) and immediate tenant (in possession of the term). The doctrine allows for the transmission (running) of the benefit and burden of certain covenants with the land, binding not only original parties but also their successors.

The rule applies to covenants that "touch and concern" the land. This includes covenants affecting the use, enjoyment, value, or mode of occupation of the premises, such as those relating to payment of rent, repairs, insurance, alterations, user, and so on. Covenants of a purely personal nature (that do not affect the land) do not run.

Key Term: Privity of Estate
The relationship between the current landlord (holding the reversion) and the current tenant (holding the lease), by virtue of their estates being immediately connected. Allows enforcement of lease covenants (touching and concerning the land) between these parties, even absent privity of contract, but only whilst estates are so connected and for qualifying covenants.

Key Term: Touch and Concern
For a covenant to touch and concern the land, it must affect the nature, value, or use of the land and not be personal to the original parties. Examples: obligations to pay rent, repair, insure; prohibitions or restrictions on user; obligations to yield up, etc. Covenants solely relating to personal conduct, reputation, or non-property matters do not qualify.

The common law basis for transmission of the benefit and burden to successors is the rule in Spencer’s Case. Statute further strengthens and clarifies the running of benefits and burdens on assignment of landlord’s or tenant’s interests.

Key Term: Spencer’s Case (Principle)
A decision establishing that, provided a lease covenant "touches and concerns" the land, the benefit and burden will pass to assignees (of term or reversion), even where the lease is silent as to the point. However, purely personal obligations do not run.

Key Term: Reversion
The landlord’s interest remaining after granting a lease. The reversion entitles the landlord to receive rent, enforce covenants, and take back possession at the end of the term. It can be assigned to a new landlord, who then acquires certain statutory and common law rights and obligations.

Statutory Framework (LPA 1925, ss. 141–142)

The 1925 Act supplements the common law as follows:

• Section 141 LPA 1925: On assignment of the reversion, the benefit (including enforcement rights) of tenant covenants that "touch and concern" the land automatically passes to the assignee landlord, including the right to sue for existing and future breaches. The outgoing landlord cannot sue for breaches occurring after assignment (unless expressly reserved).

• Section 142 LPA 1925: The burden of landlord covenants that "touch and concern" the land attaches to the landlord for so long as the reversion is vested in that party (assignee or successor) and passes on assignment to the new landlord.

Assignment of the reversion does not—unless otherwise agreed—break privity of contract with the original tenant, so the original landlord remains potentially liable to the original tenant for the full lease term.

Liability of Parties under Pre-1996 ('Old') Leases

Who is liable for performance (or breach) of lease covenants in old leases may often appear complex, especially after multiple assignments. A step-by-step approach, based on identifying contractual or estate relationships and understanding relevant statutes, is essential.

Liability of the Original Tenant

The most significant distinguishing feature in old leases is the "stickiness" of the original tenant's liability. By reason of privity of contract, the original tenant remains liable for all express lease covenants throughout the lease term—even when the lease has long since been assigned to another (or many other) tenants, unless there is a clear and express release.

This “privity stickiness” means the landlord retains the right to pursue the original tenant for breaches committed years after their assignment, including breaches by any later assignees during their tenure, even if the original tenant had nothing personally to do with the default. Landlords also retain the discretion as to whom they sue—the current tenant, the original tenant, or, if relevant, any intermediate assignee who entered a direct covenant.

Outgoing tenants will, therefore, invariably seek an indemnity from their assignee. This indemnity ensures that, if the landlord sues on the basis of privity of contract, the liability is ultimately passed on to the party actually responsible for the breach.

Key Term: Assignment
The legal transfer of the entirety of the tenant's remaining interest in a lease to a new party (the assignee), upon which the assignor ceases to be tenant in possession, but may retain ongoing liability under privity of contract.

The rule in Moule v Garrett (1872) LR 7 Exch 101 establishes that, in the absence of contrary intention, indemnities may be implied on each assignment, creating a “chain” of recourse back to the defaulting party.

Express indemnity covenants are standard practice, but statutory indemnities are also implied in certain situations—by s.77 LPA 1925 (implied in assignments of unregistered leases for value) and by Land Registration Act 2002, Sch 12, for registered leases.

Key Term: Default Notice (s.17 LT(C)A 1995)
Statutory notice which a landlord is required to serve within six months of a fixed sum (such as rent or service charge) falling due, before seeking to recover it from a former tenant or guarantor. Applies to old and new leases alike. A failure to serve in time bars the landlord’s right to recover that sum from former tenants or their sureties.

Key Term: Overriding Lease
Where a former tenant pays a fixed sum to the landlord following a valid s.17 notice, the former tenant may within 12 months demand the grant of an overriding lease from the landlord. This lease is interposed immediately above the defaulting tenant’s lease, turning the paying former tenant into the immediate landlord, with the consequential rights of enforcement (including forfeiture) against the defaulting tenant.

Continuing Liability in Practice

In transactional and practical terms, original tenants' ongoing liability means that:

• Vendors of leasehold interests should pursue a robust indemnity strategy to protect against historical liability exposure.
• Landlords may gain the advantage of “deep pockets” from former tenants even where a current assignee is insolvent or missing.
• Guarantors of the original tenant’s obligations may face contingency liability for the entire lease term.

A paying former tenant (or their guarantor) who is compelled to pay under s.17, and who is granted an overriding lease, will be able to recoup losses by enforcing the tenant covenants against the defaulting successor, and may ultimately recover the property.

Worked Example 1.1

Leo granted a 25-year lease of commercial premises to Tina in 1990. The lease contained a tenant covenant to keep the premises in good repair. In 1998, Tina assigned the lease to Alex with Leo's consent. In 2005, Alex failed to repair damage to the roof, breaching the repair covenant. Leo wants to recover the cost of repairs.

Answer:
Leo can pursue either Tina or Alex.

• Leo can sue Alex (the current tenant) based on privity of estate, as the repairing covenant "touches and concerns" the land, and Alex is liable for breaches committed while the lease is vested in him.
• Leo can also sue Tina (the original tenant) based on privity of contract. Tina remains liable for the repair covenant for the whole lease duration. If Leo sues Tina, Tina has an indemnity claim against Alex if one exists.

Worked Example 1.2

A landlord under a 1991 lease seeks to recover six quarters’ rent arrears from the original tenant (who assigned years ago). The landlord sends a demand letter to the original tenant nine months after the first missed quarter without having served any statutory notice.

Answer:
The landlord cannot recover the missed rent from the former tenant without serving a timely s.17 default notice for each fixed sum. Each relevant notice must be served within six months of the sum falling due. If not, the landlord's right to recover from that former tenant or their guarantor is barred for that sum. The landlord may, however, still recover from the current tenant.

Application of s.17 and Overriding Lease

The s.17 notice regime protects past tenants/guarantors from liability for historic rent/service charge arrears unless the landlord acts promptly. If the statutory procedure is correctly followed and the former tenant or guarantor pays, they may demand an overriding lease—making them the new immediate landlord of the defaulting tenant, with all enforcement rights that entails (including forfeiture). This mechanism ensures that those paying historic arrears are not left as mere payers but get real remedies.

Liability of Assignees

An assignee is liable under privity of estate for all breaches of covenants that "touch and concern" the land for the period he holds the lease. This liability arises automatically on assignment and lasts only while the lease is vested in the assignee. Once the assignee assigns the lease, their liability (for future breaches) ceases, but they remain liable for breaches during their own tenure.

The position changes, however, if an assignee has entered into a direct covenant (typically at the landlord’s demand, as a condition in the licence to assign). In that case, the assignee's liability may be transformed into contractual liability, just as heavy as that of the original tenant, and lasting even after further assignment unless otherwise specified.

Key Term: Licence to Assign
A formal written consent given by the landlord under a lease that requires consent to assignment. Typically, a licence to assign may require the incoming assignee to give a direct covenant to the landlord, and may also contain an indemnity clause protecting the assignor.

Key Term: Direct Covenant
A promise or undertaking by the assignee (usually within the licence to assign), made directly to the landlord, to perform the tenant covenants for the remainder of the term. This creates privity of contract between the assignee and the landlord and may extend liability beyond privity of estate.

Landlords would typically insist on a direct covenant within the licence to assign for commercial or valuable residential leases, particularly in situations of perceived risk or multiple assignees.

Worked Example 1.3

Boris took a lease in 1991, then assigned to Chantal in 1999. As a condition of consent, Chantal covenanted directly with the landlord to perform all tenant covenants for the remainder of the term. Chantal assigned to Dev in 2007 without giving a direct covenant. Dev failed to insure in 2008 contrary to the lease.

Answer:
The landlord can sue Dev (the current tenant) under privity of estate for the insurance covenant, which "touches and concerns" the land. The landlord can also sue Chantal under privity of contract (on the direct covenant) for Dev’s breach, as her promise was for the remainder of the term even after she assigned. Chantal may claim an indemnity from Dev if one exists.

Limiting Assignee Liability: Use of Express Release

An assignee who has entered a direct covenant can only be released from continuing liability by express agreement with the landlord—mere assignment to another party will not suffice unless the landlord (expressly or impliedly) agrees to release.

Liability of Landlords and Their Assignees

• Original landlord: Remains bound to the original tenant for the entire term (privity of contract), unless expressly released. Thus, if an original landlord assigns the reversion but later defaults on an obligation performed before assignment—such as reimbursement of service charge overpayments—the original tenant can in principle still pursue the original landlord.

• Assignee of the reversion (new landlord): On assignment of the landlord’s interest, the right to enforce tenant covenants (touching and concerning the land), including existing breaches, passes to the incoming landlord (by s.141 LPA 1925). Equally, the burden of relevant landlord covenants passes to the assignee by s.142 LPA 1925.

This means the new landlord may sue previous tenants—e.g., for arrears incurred before the reversion assignment—as well as the current tenant.

Key Term: Head Landlord and Subtenant (Privity)
There is no privity of estate between a head landlord and a subtenant; the head landlord may only have enforcement rights if the subtenant enters a direct covenant, or, for restrictive covenants, if notice is given and the subtenant has actual or constructive notice of their existence.

Where a sublease is involved, liability is structured as follows:

• The head tenant remains liable under the headlease for its entire term (privity of contract and estate).
• The subtenant is liable to the head tenant under their underlease.
• The head landlord may be able to enforce restrictive covenants in the headlease directly against the subtenant if notice is given or if there is a direct covenant.

Worked Example 1.4

A 1990 lease was originally granted by L1 to T1. T1 assigned to T2 in 1995 and accrued rent arrears in 1996. L1 sold the reversion to L2 in 1997. L2 sues T1 for the 1996 arrears.

Answer:
L2 (the new landlord) can sue T1 for the arrears by virtue of section 141 LPA 1925. This transfers the benefit (including the right to sue for existing breaches) of tenant covenants (touching and concerning the land) to the assignee of the reversion. L1 cannot sue, as the right to action for the breach passes with the reversion unless specifically reserved.

Effect of Subletting and Covenants in Headleases

Subletting does not create privity of estate between a head landlord and subtenant. However, the courts will enforce restrictive covenants against a subtenant if the subtenant had notice (actual or constructive) of the restriction on user contained in the headlease.

Worked Example 1.5

A headlease granted in 1992 prohibits use as a hot food takeaway. The head tenant sublets in 2000; the sublease says nothing about takeaway use. The subtenant begins a takeaway business.

Answer:
The head landlord can restrain the subtenant’s use due to the operation of notice and restrictive covenant rules. Even in the absence of privity of estate, the head landlord may secure an injunction if the subtenant has notice of the restriction. In practice, head landlords frequently require a direct covenant from the subtenant to observe all headlease covenants, thereby creating privity of contract.

Contractual and Practical Issues in Enforcing Sublease Covenants

The subtenant’s liability to the head landlord is typically limited to observing covenants to which the subtenant has agreed in the sublease or has notice of (for restrictive covenants). Enforcement of positive covenants typically requires a direct contractual link, hence the importance of direct covenants in modern drafting practice.

Sub-Indemnities and Chains of Liability

For all old lease assignments, a key practical protection for outgoing tenants is an indemnity from the assignee, either implied or express. This creates a “chain” from earliest to latest tenant. If an original tenant pays a sum due to the landlord for a breach committed by a later assignee, the former can pursue the party in default by invoking the indemnity chain. Similarly, each assignor in the chain can recover from their immediate successor.

Under s.77 LPA 1925, an indemnity is implied into every assignment for value of an unregistered lease, binding the assignee to perform lease covenants from assignment onwards; it is implied for registered leases by Sch 12, para 20 LRA 2002. Express indemnities will override any inconsistencies in implied terms.

Registration and Formalities

Assignments generally must be by deed. For registered leases, the assignment must be registered within two months (Land Registration Act 2002). Notice of assignment should be given to the landlord to ensure that any correspondence, service of notices, and enforcement rights are properly directed. Failure to give notice may, in some leases, even render the assignment ineffective or void.

Further Examples and Practical Application

Worked Example 1.6

Original Landlord (L1) grants lease in 1992 to Tenant (T1). T1 assigns to T2 in 1996. T2 assigns to T3 in 1998, giving T3 an express indemnity. In 2000, T3 defaults on rent and repairs. Landlord sues T1 for rent; T1 pays, then sues T2; T2 pays, then sues T3; T3 is insolvent.

Answer:
T1 is strictly liable to the landlord by privity of contract, and must pay on demand if properly sought. T1 can then sue T2 by virtue of the indemnity; T2, in turn, sues T3. If T3 is insolvent, the financial risk falls ultimately on the earliest solvent party in the chain above the defaulting tenant.

Passing of the Reversion: Rights and Liabilities

On assignment of the landlord’s reversion, s.141 LPA 1925 governs the transfer of the benefit of tenant covenants (touching and concerning) to the new landlord, whilst s.142 passes the burden of landlord covenants similarly. Pre-assignment breaches may be sued upon by the new landlord, but the right of action for those breaches passes with the reversion (see Re King (deceased); Robinson v Gray [1963] Ch 459).

A reservation of rights to sue for pre-assignment breaches in the sale of the reversion must be explicit to fall outside the statutory transfer.

Re-entry, Forfeiture, and Remedies Affected

Landlords may use forfeiture clauses or s.146 LPA 1925 notices to terminate the lease for breach, provided the correct procedural steps are observed. Landlords can also pursue a debt action against the tenant (current or original), enforce against a rent deposit (if held), or pursue guarantors where such exist. Importantly, a landlord seeking to recover from a former tenant (or their guarantor) must issue a valid s.17 notice in a timely manner beforehand.

Key Term: Licence to Underlet
The document by which a landlord consents to a tenant granting a sublease. In modern lease practice, a licence to underlet will typically require that the subtenant enters into a direct covenant with the head landlord to perform lease covenants, so creating privity of contract if required for enforceability.

Variations on Liability: Release, Merger, and Surrender

A release (by deed) from the lease covenants by the landlord can end the original tenant’s or guarantor’s liability, but is rare, especially in commercial practice. Surrender or merger of the lease extinguishes future obligations and brings the relationship to an end.

Exam Warning

It is essential to keep the following differentiations at the forefront of analysis:

• For old leases (pre-1 Jan 1996), the original tenant remains liable for breaches of lease covenants (subject to privity of contract), even after lawful assignment, unless released.
• For new leases (on or after that date), assignment generally releases the outgoing tenant automatically—but the landlord may require an Authorised Guarantee Agreement (AGA) under the 1995 Act, which can reimpose liability for the next shortest term only.
• Recovery of fixed sums from former tenants/guarantors under old leases requires a timely s.17 notice; delay or omission bars this course without affecting actions against the current tenant.
• On assignment of the reversion, statutory provisions (LPA 1925, ss.141–142) transfer enforcement rights and obligations, making new landlords able to sue for prior breaches, and likewise binding them to performance of landlord covenants touching the land.
• Direct covenants in licences to assign bind the assignee in contract for the term specified, creating exposure well beyond their own period in occupation unless expressly released.

Failure to apply the correct legal regime based on the lease date or misapplication of s.17 notices, indemnities, or assignment mechanics is a common source of error, especially given the overlap of multiple parties’ interest chains.

Summary

To recover fixed sums from former tenants or guarantors under old leases, a landlord must serve a s.17 LT(C)A 1995 default notice within the statutory deadline. A paying former tenant may then demand an overriding lease, becoming the immediate landlord of the defaulter and so able to enforce.

Key Point Checklist

This article has covered the following key knowledge points:

• Leases granted before 1 January 1996 (old leases) are governed by pre-1996 common law doctrines, alongside LPA 1925 sections 141 and 142.
• Under privity of contract, the original landlord and tenant remain mutually bound to the lease covenants for the full lease term, irrespective of assignment.
• Privity of estate connects the current landlord and tenant, who can enforce only those covenants that "touch and concern" the land, and only during their respective tenures.
• The original tenant remains strictly liable under all lease covenants (unless personally released), even post-assignment; risk is managed in practice via indemnity chains, both express and implied.
• An assignee is personally liable only while the lease is vested in them (for breaches during their own tenure that touch and concern), unless they have entered a direct covenant, which may extend personal liability further.
• Assignment of the landlord’s reversion passes enforcement and liability for touching and concerning covenants to the new landlord under LPA 1925; all existing breaches are captured by statutory transfer.
• Landlords may require direct covenants from incoming tenants or subtenants within licences to assign or underlet, creating privity of contract with the landlord where needed for positive covenants.
• Enforceability of restrictive covenants against subtenants depends on notice; head landlords can secure direct enforcement via direct covenants or by establishing that the subtenant had actual/constructive notice of the restriction.
• Service of s.17 LT(C)A 1995 default notices within time is essential for recovering arrears from former tenants/guarantors, and gives access to the overriding lease mechanism for enforcement and recovery.
• Release from liability under old leases occurs only with express consent by deed or due to surrender or merger of the lease; continued liability for both tenants and landlords is the rule rather than the exception.
• Head landlords and subtenants have no privity of estate. Positive covenants bind only on the basis of contract; restrictive covenants can be enforced with notice, and direct covenants are often required for effective enforcement.

Key Terms and Concepts

• Privity of Contract
• Privity of Estate
• Assignment
• Touch and Concern
• Old Lease
• Reversion
• Spencer’s Case (Principle)
• Indemnity Covenant
• Licence to Assign
• Licence to Underlet
• Direct Covenant
• Default Notice (s.17 LT(C)A 1995)
• Overriding Lease
• Head Landlord and Subtenant (Privity)