The Law Commission

PART 11

OTHER RIGHTS AND OBLIGATIONS

11.1      In this final Part we deal briefly with a number of other matters in the Bill, not so far discussed.

OBTAINING A CONTRACT BY MAKING A FALSE STATEMENT

11.2      It is a fundamental provision of all occupation contracts that if a landlord is induced to make a contract by means of a relevant false statement, the contract-holder is to be treated as in breach of the contract. Thus the landlord may take possession proceedings against him.^[1] A false statement is relevant if it is made knowingly or recklessly by the contract-holder or another person acting at the contract-holder's instigation.^[2]

11.3      The effect of making this a fundamental term in the contract is that the occupier is clearly put on notice that such deception may lead to loss of the home, rather than any other consequences that might flow from the more general law on deception or fraud.^[3] An equivalent provision has been available to landlords for some years and, while not widely used, has on occasion been very effective.

PROTECTION OF THE RIGHT TO OCCUPY^[4]

11.4      A contract-holder has the right to occupy the premises to which the occupation contract relates. (This is the equivalent of what has traditionally been known, in landlord and tenant law, as the right to quiet enjoyment. The right to quiet enjoyment is currently implied into leases but not licences. We consider that the phrase "quiet enjoyment" is potentially misleading to contract-holders, so we do not use it in the Bill, especially as not all occupation contracts will be tenancies.) The Bill protects that right by prohibiting a landlord from doing anything that interferes with that right, or where an omission to do an act interferes with it, omitting to do that act.^[5]

11.5      Where a landlord reasonably exercises rights under the occupation contract, for example to gain access to the premises to assess damage or undertake repairs, the Bill provides that they do not interfere with the contract-holder's right.^[6] Nor does the landlord interfere with the contract-holder's right merely because of failure to comply with the landlord's repairing obligations.^[7]

LANDLORD'S NAME AND ADDRESS^[8]

11.6      A fundamental term in all occupation contracts is that the landlord must, within two weeks of the effective date, give the contract-holder written notice of an address in England and Wales to which the contract-holder may send documents that are intended for the landlord. Where the landlord uses an agent, the agent's name and address must also be provided within two weeks of when the landlord starts to manage the premises through the agent. Any changes in the landlord's or contract-holder's identity are also to be notified.^[9] If the landlord fails to comply with these obligations, they are liable to pay compensation to the contract-holder.^[10] The landlord under a periodic standard contract may not make a possession claim on the landlord's notice ground at any time when they are in breach of these obligations.^[11]

JOINT AND SEVERAL LIABILITY

11.7      Wherever there are two or more joint contract-holders, the Bill specifies that liability for the performance of the contract is joint and several.^[12] This means that each contract-holder is liable for the totality of the obligations under the contract, even if one or more of a number of joint contract-holders leaves the contract. A similar principle applies where there are joint landlords.^[13]

MANAGEMENT CODES AND CONSULTATION^[14]

11.8      The Bill makes provision for a community landlord to negotiate a "management code" with the contract-holders of its properties, dealing with how the landlord intends to exercise its rights or comply with its obligations. Such a code will not come into effect until and unless it is agreed by the contract-holders or their representatives. Once a management code is agreed, it must be taken into account by the court when considering a possession action or the withholding of consent by the landlord. Thus a community landlord can require a court to have regard to its management policies, but only if it is able to get its contract-holders to sign up to them. This approach should provide a modest but significant boost to contract-holder participation.^[15]

11.9      More generally, community landlords are required to make arrangements for consulting contract-holders on questions of housing management^[16] and to publish a statement of those arrangements.^[17] These arrangements, already in the existing law, are carried over into the new scheme.

TENANCY DEPOSITS

11.10      One issue, with which we have not been directly concerned, but which has been an important background issue during the time we have been engaged on our project has been whether and if so how to regulate tenancy deposits. After much debate, the Housing Act 2004 included provisions^[18] that require landlords who take deposits from assured shorthold tenants to secure those deposits in an approved tenancy deposit scheme. It is clear that regulation of the tenancy deposit scheme can be made easier through use of our recommended scheme.

11.11      Our Bill contains provisions dealing with tenancy deposits. The effect of them is to extend the current statutory system for the protection of deposits to all occupation contracts.^[19] It is a fundamental term of all occupation contracts that if a deposit^[20] is to be paid in connection with an occupation contract, the deposit must be dealt with in accordance with an authorised deposit scheme.^[21] The landlord must give the contract-holder and any interested third party sufficient information^[22] to enable them to ensure that the requirement has been complied with.^[23]

11.12      The contract-holder has the right to apply for a range of orders requiring a landlord who is in breach of the term to remedy the breach.^[24]

11.13      It is also a fundamental term of all occupation contracts that landlords may not require security to be given in any form other than money or a guarantee.^[25] The contract holder has the right to apply to the county court for an order requiring the landlord to return any non-monetary security.^[26]

11.14      Landlords under a standard contract, who are in breach of the requirements, are unable to claim possession using the landlord's notice ground.^[27]

(Signed) ROGER TOULSON, Chairman
HUGH BEALE
STUART BRIDGE
JEREMY HORDER
KENNETH PARKER

STEVE HUMPHREYS, Chief Executive

7 April 2006

Note 1    Cl 64(1).    [Back]

Note 2    Cl 64(2).     [Back]

Note 3    The existence of the statutory provision does not mean that use of the common law on fraud or deception is thereby prevented. There may be cases where the common law can be used. It is our view that experience of the law in practice suggests that the statutory provision we include here is an effective way of ensuring the occupier is aware of the consequences of any deception or fraud.    [Back]

Note 4    This is discussed in Part 8 of Renting Homes (2003) Law Com No 284.    [Back]

Note 5    Cl 65(1). The landlord also interferes with the contract-holder’s right if a person who claims under the landlord or has an interest in the premises that is superior to the landlord’s does a lawful act (or lawfully omits to do an act) that interferes with the contract-holder’s right: cl 65(4).    [Back]

Note 6    Cl 65(2).    [Back]

Note 7    Cl 65(3).    [Back]

Note 8    This is discussed in Part 8 of Renting Homes (2003) Law Com No 284.    [Back]

Note 9    Cl 68.     [Back]

Note 10    Cl 69. Compensation is assessed on the same basis as when a landlord fails to provide the occupier with a written copy of the agreement: cl 34. Discussed above, at para 3.55.    [Back]

Note 11    Cl 177(3).    [Back]

Note 12    Cl 71.    [Back]

Note 13    Cl 72.    [Back]

Note 14    This is discussed in Part 8 of Renting Homes (2003) Law Com No 284.    [Back]

Note 15    Cl 211, sch 4 para 6(8) and sch 7 para 8. The appropriate authority has the power to regulate the procedures for obtaining the agreement of contract-holders or their representatives to the management code: cls 211(3) to (5).    [Back]

Note 16    Cl 212.    [Back]

Note 17    Cl 213.    [Back]

Note 18    Ss 212 to 215 and sch 10 to the Act.    [Back]

Note 19    Part 2, ch 1, cls 36 to 42.    [Back]

Note 20    Defined to mean money paid as security: cl 37(4).    [Back]

Note 21    Deposit schemes are defined in cl 38.    [Back]

Note 22    To be defined in regulations: cl 39.    [Back]

Note 23    Cl 37.    [Back]

Note 24    Cl 41.    [Back]

Note 25    Cl 36.    [Back]

Note 26    Cl 40.    [Back]

Note 27    Cl 178. The landlord’s notice ground is discussed above, at paras 4.57 to 4.63.    [Back]

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