Hogan Lovells Publications | Keeping It Real Estate | 30 June 2017

EMI and Frankenstein: Not dead yet

Last year, we blogged here on the case of EMI Group Limited v O&H Q1 Limited. EMI was a case in which an assignment of a lease was rendered void, as it offended the provisions of the Landlord and Tenant (Covenants) Act 1995 which require tenants and guarantors to be released on assignment. 

The Court confirmed that a tenant could not assign its lease to its guarantor. It rejected the idea that the guarantor could take the benefit of the lease without the tenant covenants (a “Frankenstein’s monster” of a tenancy). Instead, the Court decided that the entire assignment was void. In doing so, the case highlighted the “unattractively limiting and commercially unrealistic effect” of previous Court decisions which have in many circumstances hampered a tenant’s ability to assign its lease intra- group. To the frustration of many, these restrictions on the tenant’s ability to assign apply even where all parties are prepared for and fully advised of the consequences.

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