Landlords keep rent paid in advance, rules Court of Appeal

The overturning of a High Court decision concerning rent paid for a period after the end of a lease has restored the status quo in such cases – to the relief of landlords.

The case concerned a tenant which exercised the break clause in its lease having already paid rent for a period beyond the break date.

The tenancy was on the normal basis requiring payment of the rent due quarterly in advance. The tenant applied to the landlord for a refund of the rent paid for the period after the termination of the tenancy and the landlord refused on the ground that there was no express provision in the lease to refund a proportion of the quarterly rent paid where notice was given during the period for which rent had been paid.

The High Court held that the ‘overpayment’ should be refunded to the tenant as it was a reasonable term to imply into the lease. This decision flew in the face of earlier judgments in similar cases, so it was no surprise that the landlord appealed against it.

The Court of Appeal accepted the landlord’s assertion that in the absence of a term in the lease giving the tenant the right to a repayment in such circumstances there was no such right. It would, in the Court’s view, have been obvious that the possibility existed of a loss due to a ‘broken period’ and thus the wording of the lease meant what it said – or, more correctly, did not mean what it did not say.

The case illustrates how important it is to make sure that the wording of a lease is clear and precisely reflects the wishes of the parties to it. The Court of Appeal is a very expensive place to resolve disputes over the meaning of a document.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.

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