Transfer of the Lessor's Interest, and Computing the Term

In one line

When the landlord sells, the buyer steps into his shoes but the old landlord is not automatically released; and the Act says how to count a lease's term.

In exam wording: section 109 provides that if the lessor transfers the property leased, or any part of it, or any part of his interest in it, the transferee shall, in the absence of a contract to the contrary, possess all the rights and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property transferred so long as he is the owner of it; but the lessor does not, by reason only of the transfer, cease to be subject to the liabilities imposed on him by the lease, unless the lessee elects to treat the transferee as the person liable to him.

Section 109: the lessor's transferee

The rights pass automatically. The transferee gets all the rights of the lessor as to the property or part transferred, so long as he is the owner of it. He can sue for rent, enforce the covenants and take the reversion.

The liabilities pass only if the lessee elects. This is the part students state backwards. The transferee is subject to the lessor's liabilities if the lessee so elects, and the original lessor is not released by the transfer unless the lessee elects to treat the transferee as the person liable to him.

The reason is straightforward. The tenant chose his landlord and took his covenants; he should not have them exchanged for a stranger's, who may be less able to honour them, without his agreement. So the election is the lessee's, and until he makes it he may hold the original lessor to the bargain.

Two protections in the proviso.

Arrears. The transferee is not entitled to arrears of rent due before the transfer. Those stay with the transferor, which is the same rule as section 8.

Payment in ignorance. If the lessee, not having reason to believe that the transfer has been made, pays rent to the lessor, he is not liable to pay it over again to the transferee. This is section 50 wearing a lease's clothes: an honest payer is not made to pay twice.

Apportionment on a partial transfer. Where part only is transferred, the lessor, the transferee and the lessee may determine what proportion of the premium or rent is payable in respect of the part transferred; and if they disagree, the determination may be made by any Court having jurisdiction to entertain a suit for possession of the property leased.

Section 110: computing the term

Three short rules, each of which decides real disputes.