Arrears? Former tenant or guarantor? Think quickly!Property 23rd June 201623rd June 2016The important bitLandlords must not underestimate the importance of serving a notice under Section 17 of the Landlord and Tenant (Covenants) Act 1995 (the Act) when pursuing a former tenant or guarantor for arrears owed by the current tenant.Back to basicsThe Act introduced a distinction between ‘old’ and ‘new’ leases. Subject to exceptions a ‘new’ lease (for the purposes of the Act) is a lease granted on or after 1 January 1996. Leases granted before 1 January 1996 are known as ‘old’ leases. The main difference between the two relates to the ongoing liability of the original tenant.Old leases – irrespective of whether the original tenant has assigned its interest in the lease, it will remain liable throughout the remainder of the term.New leases – on any assignment, the original tenant will be released from liability, subject to any authorised guarantee agreement (AGA) guaranteeing the future performance of the lease covenants.Think quicklyIn any claim against a former tenant (under an old lease) or a guarantor (under an AGA) for ‘fixed charges’ owed by the current tenant, a landlord must serve a notice under Section 17 of the Act within six months of the fixed charge falling due. The former tenant/guarantor cannot be held liable if the landlord fails to serve within six months a valid Section 17 Notice.‘Fixed charges’ include:>> Rent;>> Service charges; and>> Any amount payable under a tenant covenant providing for the payment of a liquidated sum in the event of failure to comply with such a covenant.What to rememberLandlords – do not miss the six month deadline to serve a Section 17 Notice on a former tenant/guarantor. Even where a former tenant entered into an AGA on assigning its interests, a Section 17 Notice must be served.Former tenants and guarantors – always consider whether a valid Section 17 Notice has been served. If not any claim by the landlord for ‘fixed charges’ is likely to be unsuccessful.Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Related