A landlord’s covenant for quiet enjoyment is a standard feature in modern leases and indeed is implied where not expressly provided. The covenant of non-derogation from grant is implied. This article examines the meaning and effect of those two covenants.
Covenant for quiet enjoyment
What is it? Contrary to popular belief the covenant for quiet enjoyment has nothing to do with noise levels at the premises. It means that the tenant has a right, not just to occupy the property, but to use the property in a lawful way without interference. If substantial interference is suffered the tenant can claim damages and/or obtain an injunction against the landlord to prevent the interference from continuing.
Who and what does it cover? The usual covenant will cover the landlord, his agents, or any other person claiming their title through the landlord. Some leases contain an unqualified covenant, which also covers the actions of any superior landlord. All actions of the landlord, lawful or unlawful, can be a breach of the landlord’s covenant to the tenant. However, only lawful actions of the landlord’s agents and third parties are covered – the landlord cannot be held responsible for another’s unlawful act.
What is “substantial interference”? Whether an act amounts to “substantial” interference will depend upon the facts of the case. Historically the interference had to have a physical aspect, but more recent findings have expanded the scope of interference to non-physical acts. Activities that have been found to be “substantial interference” include:
- cutting off the gas and electric supplies to the tenant’s property;
- permitting an escape of water from the neighbouring property which damages the tenant’s buildings;
- continuous loud noise which interferes with the tenant’s enjoyment of his property;
- putting the tenant in fear and intimidating him into leaving the premises.
Activities cannot amount to substantial interference if they occurred or were in existence prior to the start of the lease, because the tenant is deemed to have taken the lease in the knowledge of the interference. Similarly, a temporary disturbance that does not seriously interfere with the tenant’s occupation of the property is unlikely to breach the covenant. Finally, the covenant for quiet enjoyment cannot be used to imply a positive duty on the landlord to repair the property, or operate to give the tenant rights over neighbouring property that he would not otherwise have – a tenant cannot, for example, use the covenant to argue for a right to light which otherwise would not exist.
Obligation not to derogate from grant
This principle embodies the concept of fair dealing between the parties – if the landlord has granted a lease for a particular purpose he may not then use the adjoining land so as to frustrate the purpose for which the lease was granted. If the landlord does derogate from his grant the tenant may again claim damages and/or obtain an injunction against the landlord.
As with the covenant for quiet enjoyment, the derogation must be substantial: letting adjoining premises to a business rival is not sufficient, nor is it sufficient for the landlord to act in such a way that the intended use of the tenant’s premises is more expensive than it would otherwise be. However, activities such as turning the end wall of the tenant’s premises into a party wall so that the tenant is forced to block up his windows, interfering with access to the tenant’s premises and causing the tenant to be in breach of a licence to manufacture explosives are examples of breach of the landlord’s obligation.
The covenants for quiet enjoyment and obligation not to derogate from grant are very much standard features of the landlord-tenant relationship. Because they are not positive obligations, they are rarely seen as an issue for landlords when deciding to grant a lease. Landlords should be aware, however, that in certain circumstances these obligations can operate to restrict their use of adjoining land and can even impose responsibility on them for the lawful actions of others.