Break clause taken up by one sharer?

by Readers Question

15:44 PM, 10th February 2020
About 7 months ago

Break clause taken up by one sharer?

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Break clause taken up by one sharer?

I have a property which is let on a 12 month AST jointly to 3 sharers. All are named on the tenancy agreement and are specifically jointly and severally liable for rent, compliance with terms of the lease, etc.

The break clause, which can be exercised after 6 months is written as follows “….that either party may invoke this break clause by providing a minimum of 2 months written notice.”

Does this effectively end the tenancy agreement for the other 2 parties as well? The clause seems, in hindsight, to be badly written.

As the market has improved round here we are minded to revert to a family letting (less rent but less hassle) but do we need to give 2 months notice to the 2 remaining tenants followed up by a Section 21 notice if necessary or can we go straight to a Section 21 without waiting the additional 2 months i.e. does the Notice act as 2 months written notice in accordance with the lease?

Many thanks

Nick



Comments

Luke P

11:09 AM, 11th February 2020
About 7 months ago

If it is the same as giving (regular) notice, this can be done by one tenant that would be effective for all tenants after the initial fixed term. Not certain as far as a break clause goes, though. I would suggest that going by the same logic, the fixed term part is important and protects all tenants status, so one tenant can probably not give notice for all as they're inside their fixed 12-months.

paul robinson

11:15 AM, 11th February 2020
About 7 months ago

I understood that a break clause is just 1 period in time, i.e at 6 months when parties can terminate, not just anytime after 6 months.

This was the advice/response from the Ministry of Housing (I different matter) but would be applicable to a joint tenancy:-

“If a joint tenancy enters the statutory periodic phase, any one tenant can serve notice to terminate. It is only during a fixed-term tenancy that all tenants must agree to end the tenancy together”

So effectively I would say as you are still in the 1 year fixed tenancy all tenants must agree to leave early. Failing that you would likely need to follow the assignment process, the leaving tenant needs to find a suitable replacement.

Luke P

11:17 AM, 11th February 2020
About 7 months ago

Re-sign remaining tenants on new 6 month AST, letting the third go...?

paul robinson

11:23 AM, 11th February 2020
About 7 months ago

Reply to the comment left by Luke P at 11/02/2020 - 11:17
If the rent between 2 doesn’t stack up (likely) best to assign the 3rd leaving tenant. They are responsible to find a suitable replacement (obvs for genuine reasons a landlord is best to assist) and they would have to pay reasonable costs for the landlord to assign the room, potentially vetting the replacement tenant.

Ian Narbeth

14:07 PM, 11th February 2020
About 7 months ago

"...but do we need to give 2 months notice to the 2 remaining tenants followed up by a Section 21 notice if necessary or can we go straight to a Section 21 without waiting the additional 2 months i.e. does the Notice act as 2 months written notice in accordance with the lease?"
During the first 10 months (12 minus 2) ALL tenants must give notice. One of the joint tenants alone cannot terminate and any purported notice will be invalid. That said if you receive a "break notice" from one of them, check with all tenants what their intentions are so you know where you stand. You don't want to assume the notice is a nullity and find that on the break date the other two say that the break notice was served on their behalf as well.
Is this an actual case or just hypothetical?

PJB

22:14 PM, 11th February 2020
About 7 months ago

In the past when one sharer wants to leave and the others don't, we have asked all the sharers to find an acceptable replacement, then before the new sharer takes up residence, all parties sign copies of a 'Deed of Assignment'. In other words, the departing sharer 'assigns' all rights, privileges and responsibilities to the incoming sharer.
It does not deal, however, with the state of the room(s) or the share of any deposit paid. This is a matter for the incoming/outgoing tenants to sort out.
MyDeposits do allow 1 or 2 'Deed of Assignment' changes to its deposit protection without charge.

Steve Masters

9:09 AM, 12th February 2020
About 7 months ago

Nick, I suggest you have a good conversation with all three tenants.
Find out why one wants to leave.
Find out if the other two want to leave or stay.
If they want to stay and if, as you have alluded, they have caused you issues, bring that up and say that you will only consider re-assigning the leaver if the remainers mend their ways and behave themselves.
With any luck you will get a win, win, win outcome.
The leaver gets to leave.
The remainers get to remain.
You get max rent and better behaved tenants.

Puzzler

8:00 AM, 15th February 2020
About 7 months ago

According to my agent one giving notice implicitly gives notice for all of them and a new tenancy is usually issued if another sharer is put forward. I don't think you can enforce the term if there is a break clause. If you wish to end the tenancy what's the problem? Since unusually your agreement says either party can invoke the break clause you can simply say that since one is leaving you plan to reclaim the property in any case. Do check this though, I'm not an expert.

Ian Narbeth

10:16 AM, 17th February 2020
About 7 months ago

Puzzler, your agent's answer is incomplete. See my earlier post for the legal position. You are missing the point that the purported notice is probably a nullity BUT the landlord should check in case the other tenants turn round later and ratify the notice and all leave.

Puzzler

7:41 AM, 21st February 2020
About 7 months ago

Reply to the comment left by Ian Narbeth at 17/02/2020 - 10:16
No, my reply was incomplete. They put it in the tenancy agreement.


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