Once all the essential elements of a lease have been established, the next thing to note are the covenants in the lease agreement. Every lease agreement should contain covenants because it spells out the obligations of the landlord and tenant. There are three main types of covenants applicable to a lease:
- Implied covenants (covenant in law)
- Express covenants
- Usual covenants
Under each covenant, there are a lot of important points to note so we will be focusing on the covenants one after the other.
IMPLIED COVENANT
For implied covenants, there are certain covenants that the law implies into the relationship between the landlord and tenant. These implied covenants towards the tenant are:
- Implied covenant for the tenant to enjoy quiet enjoyment: The landlord is obligated to adhere to this covenant; he or she must not barge in or bring visitors to your premises without your prior consent. The landlord must take care not to do any act that will disturb the quiet enjoyment of the tenant. For example, constant maintenance work that exceeds the initial length of time, barking dogs, harassment, frequent visits, and inspection of tenant’s premises. All of these are disturbances to the tenant’s quiet enjoyment.
- Implied covenant for the landlord not to derogate from grant: This covenant provides that the landlord should not grant a lease of land to a tenant on terms which negates the utility of the grant. To determine whether there is a derogation of grant, there has to be substantial interference with the tenant’s reasonable use of the proprietary right in question. For example, if Mr. A grants Mr. B a benefit in the lease to build or erect a water storage tank, Mr. A should not do anything to hinder the erection of the tank. He should not turn the other way and build a fence instead or grow some crops. This will deprive Mr. B from enjoying the benefit. The court, in the case of Overseas Union Enterprise Ltd v Three Sixty Degree Pte Ltd [2013] SGHC 71, held that ‘the implied covenant of non-derogation of grant provides that the landlord should not grant a lease of land to a tenant on terms which effectively or substantially negate the utility of the grant.’
- Covenant to pay rates and taxes: This covenant is also known as covenants to pay outgoings and in most cases, it is the owner of the property that pays these outgoings. However, in some cases, it depends on what the parties agree to. Where the leasee, that is, the tenant is the one to pay the outgoings, and he defaults in the payment, the landlord has the right to sue and seek an order of repossession of the premises but as stipulated under the law, the landlord is required to pay rates and outgoings.
- In certain cases, there is an implied covenant that the house is fit for habitation. For example, a property to be leased should not have weeds growing inside the premises or mold on the walls nor lack of the basic amenities that a property should have. The house should be fit for a reasonable man to occupy.
- Implied covenant that the landlord wishing to recover the house must comply with the recovery of premises legislations. In the case of a breach of terms or covenant of the lease by the tenant, and the landlord seeks to recover the premises, he or she must comply with the recovery of premises legislation.
On the other hand, the tenant also has implied covenants towards the landlord.
- Implied covenant to pay rent: Rent is seen as the tenant’s consideration for the use and occupation of the leased property. Although this covenant is always stated as an express covenant, it is the tenant’s implied covenant to pay rent to the landlord for the leased property. The rent should be paid before or when due to avoid legal consequences. After the tenant has paid rent, a rent receipt should be issued by the landlord to show evidence that the rent for the specific period has been paid. Failure to pay rent when due will result in the breach of the implied covenant. The landlord, if after several demands have been made to recover the rent but to no avail, has the right to either terminate the lease or enforce payment either by forfeiture and re-entry into the property or an action for recovery or rent in court.
- Implied covenant not to commit waste: This covenant implies that the tenant is not to cause any damage, injury or disfiguration to the leased premises, the building’s common areas or any equipment located in or on the building. The tenant is also obligated not to commit waste as waste affects the substantial part of the property and may change its appearance or use.
- Covenant to pay rates and taxes as well: As earlier stated, the landlord is expected to pay rates and outgoings but in the case of future rates and outgoings, not payable by the landlord, the tenant is required to pay. These rates include electricity bills, service charges, water bills, etc. Some landlords add these rates in the rent while others require the tenant to pay when the need arises. The breach of this covenant include an action to recover the outgoings and rates that have accumulated over time, an action for damages or an action for forfeiture and re-entry.
- Implied Covenant to keep and deliver the property in a tenantable condition: The property leased to the tenant must be well kept and properly maintained. To avoid issues, it is advisable to deliver it back to the landowner in the same manner it was leased except as otherwise agreed with the landlord. If after the lease comes to an end, the property is delivered up with so many issues needing repairs, which was not there when the property was leased, issues may arise.
- Implied Covenant to allow the landlord a right to enter and view the leased property where there is a covenant that landlord is to repair damages in the property
Lastly, the tenant also has an implied covenant to yield up possession of the premises at the end of lease granted and must fully comply with the covenants stated above to prevent an action from being instituted against him or her.
