Liability under an Authorised Guarantee Agreement survives disclaimer of the lease by an insolvent tenant

A guarantor's liability to a landlord under an Authorised Guarantee Agreement (“AGA”) continues despite the disclaimer of the lease by the liquidator of the insolvent tenant.

In Gabriella Shaw v Hazel Doleman [2009] EWCA Civ 283, the guarantor remained liable to the landlord under an AGA, even though the landlord had the right to compel the guarantor to take a new lease of the premises upon the disclaimer of the lease and had not exercised that right.

This case makes it clear that if the parties intend that an AGA should determine upon disclaimer, they need to make express provision for that to happen. Wording that links the duration of the guarantee liability to the liability of the tenant is unlikely to determine the guarantee upon disclaimer.

Empty non-domestic properties with a rateable value of less than £15,000 are no longer liable for rates

Since 1 April 2009, owners of empty properties with a rateable value of less than £15,000 are not liable for rates.

Rating is used as a tax on the occupation of property and a way to fund local services. However, the government has recognised that the current economic climate makes it harder for owners to re-let, re-develop or sell empty properties and this short-term measure is designed to alleviate the tax burden on owners of small empty non-domestic properties. The rationale behind not rating empty properties is that there was no revenue or rent out of which to pay rates and secondly, no services were being used by an empty building.

The measure is time-limited between 1 April 2009 and 31 March 2010.

Landlord's right to enter to carry out environmental investigations

In Heronslea (Mill Hill) Limited v Kwik-Fit Properties Limited [2009] EWHC 295 (QB), the High Court considered the extent of a landlord's right to enter premises to make surveys or drawings. The court held that the lease did not give the landlord the right to carry out environmental investigations involving the drilling of boreholes and taking of samples.

In addition to considering whether a landlord should be entitled to enter the premises to carry out environmental investigations, and if so under what circumstances, the case also serves as a general reminder to those negotiating a commercial lease to ensure that they have considered factors such as, whether there is, or is likely to be, any contamination present in, on or under the premises and which party should be liable for remediation of any contamination.

New Code of Practice for Service Charge Management of residential properties

The Royal Institute of Chartered Surveyors has updated its voluntary Code of Practice for Service Charge Management for residential properties with effect from 6 April 2009.

The Code, which applies to all leasehold properties in England where service charge is payable and the landlord is not a registered social landlord or a local authority, is aimed at promoting good practice in the management of residential leaseholds.

The Code can be obtained from the Royal Institute of Chartered Surveyors (http://www.rics.org.uk) in an electronic format at no cost to members and at a cost of £12.50 for the printed version.