Before tenants can assign, sublet or alter premises, or change their use, they will usually have to obtain the consent of their landlord. Landlords will usually document any consents they have granted in relation to property in the form of a licence.
However, landlords can find that they have granted consent through a communication that they did not mean to grant consent. This is because, unless the tenant's lease states otherwise, there is no legal requirement for consents to be given in the form of a deed or other formal legal document.
What constitutes a consent?
As there is no special form that a consent has to take, the courts tend to interpret the requirement quite broadly. All of the following communications from landlords or their agents have been considered a suitable consent:
- a letter from the landlord's agent stating that the landlord had no objection to the change;
- a letter from the landlord's agent, which was headed 'subject to licence' but confirmed that the landlord gave consent subject to certain conditions. As all other conditions except completion of the licence were satisfied, the Court of Appeal ruled the letter was sufficient;
- a chain of letters from the landlord's surveyors, each headed 'subject to licence', culminating in a letter, also headed 'subject to licence', confirming receipt of satisfactory references and that a draft licence would be issued;
- correspondence from the landlord's solicitors confirming 'consent in principle'. The fact that the letters sent by the solicitors were headed 'subject to licence' and contained conditions did not make this consent equivocal or uncertain;
- an email from the landlord's solicitors confirming 'consent in principle' to assigning a lease, even though the email was expressed to be conditional on payment of the landlord's costs and completion of a licence to assign the lease. The email also contained a disclaimer, stating that 'consent will only be provided on the completion and delivery of a formal licence executed as a deed' and that the landlord reserved the right to change the form of the draft licence and impose new conditions in light of any further information received.
Obviously no two cases are the same and much will depend on the provisions in a tenant's lease. The trend for the courts to infer consent, though, is clear. Therefore, unless the tenant's lease expressly states that the landlord's consent must be in the form of a deed, landlords should assume that the courts may interpret letters and emails – and, in some cases, even oral communications – as 'consents' for the purposes of a tenant's lease, despite any disclaimers attached to them.
Some simple dos and don'ts
- Wherever possible, make sure that all new leases stipulate that the landlord's consent must be given by deed;
- On receipt of an application for consent, check the provisions in the tenant's lease to see whether the lease stipulates that consents must be in writing or in the form of a deed;
- Be aware that if the lease is silent on the issue of consents then oral communication may suffice. If the lease stipulates that consents must be in writing, a letter or email may suffice;
- Make it clear to the tenant and its representatives, at the very outset, that the transaction remains subject to formal licence granted by way of a deed, and that no consent can be granted through correspondence between any of the parties or their representatives;
- Mark all correspondence 'subject to licence';
- Be very cautious in what you say and do. If tenants ask, make it clear that the landlord is still considering the application;
- Where solicitors are instructed, make it clear that they have been instructed to prepare the paperwork so that the parties are in a position to complete a licence quickly if, having considered the application, the landlord decides to consent to it;
- It is important to avoid any suggestion that 'the tenant's application is fine in principle' or that 'the landlord is minded to approve the tenant's application' as this could be interpreted as consent.
Remember that these safeguards may not always be effective and that, even if they are, other remedies may be available if a tenant has altered its position in reliance on what the landlord has said and done.
In cases where a landlord has unintentionally consented to an application, it may be possible to argue that the landlord's consent will not be effective until any conditions attached to that consent have been satisfied. However, legal action is expensive and the outcome is never certain.
Therefore, landlords need to tread warily when dealing with applications for consent, especially where the landlord needs contractual commitments or guarantees from tenants and their guarantors before the tenant proceeds.