Former tenants and guarantors may remain liable for breaches of covenants by their successors, either because the lease was from before 1 January 1996, or because the tenant or guarantor gave an Authorised Guarantee Agreement to the landlord.
Where this is the case, the landlord can only pursue the former tenant or guarantor if it first serves notice (known as a 'Section 17 Notice') on the tenant or guarantor within 6 months of the debt falling due. If the landlord fails to serve notice within the 6-month period, its claim is barred.
Many tenants paid rent due on the March quarter day; fewer paid the rent due in June. As we are now nearly 6 months on from the June quarter day, landlords should urgently consider whether they should serve a Section 17 notice to preserve any claims they may have against former tenants and guarantors.
They should also consider whether any other liabilities have arisen over the last 6 months, such as service charge or insurance rent payments, which may also need to be protected.
As we noted in June, serving notice does not commit a landlord to taking further action, but may entitle the former tenant or guarantor to call for an overriding lease. Landlords should therefore consider carefully, over the coming days, whether to serve notice or not.