The Court of Appeal has overturned a decision of the High Court which implied a term into a lease by which a tenant could recoup "overpaid" sums after exercising its break option.
The High Court's original decision did not entitle tenants to apportion payments due before the break date. However, the introduction of the implied term created a degree of uncertainty for landlords and tenants. Was this a term to be implied into all leases or just that lease?
Effect of the decision -
The Court of Appeal's decision reinforces best practice:
(1) If parties want to be able to claim back "overpaid sums", then they should ensure the lease includes apportionment or recoup provisions that entitle them to do so.
(2) Parties exercising break options should follow the terms of the break option to the letter.
(3) If you are in any doubt as to what is required to exercise a break option and/or your rights after the break date, seek specialist legal advice.
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