On the PainSmith helpline we are often asked about rented properties that have been destroyed by a fire. The question usually posed is what is the tenant’s legal rights if the rented property is destroyed? The answer in most cases is that if the rented property has been destroyed, the tenancy is at an end.
The reason for this is the legal doctrine of frustration. In National Carriers v. Panalpina (Northern) Ltd, the House of Lords held that a lease was capable, in principle, of being ended by the occurrence of a frustrating event. In that case, however, the lease was for a fixed term of 10 years. On the facts, the tenant had lost less than two years’ use of their warehouse (due to the closure of a street providing the only vehicular access to the premises) and the lease would still have nearly three years left to run after the interruption had ceased. Essentially, the closure of the street was not serious enough as to go to the whole foundation of the lease rendering the leasehold estate “worthless or useless.”
Looking at assured shorthold tenancies, where the term is usually a lot shorter, the tenancy is capable of frustration provided the frustrating event is sufficiently serious and prolonged to render the relevant period of occupation useless or worthless. This is applicable whether the term is within the fixed or periodic period of the tenancy.
In Prince v Robinson, a flat had been damaged by a serious fire caused by squatters living in the building at the time. Although not reaching any definite conclusion on the frustration point, the Court of Appeal reiterated the view that the doctrine would end a tenancy only in wholly exceptional circumstances. In particular, it was seriously doubted whether frustration could apply to a weekly (or other periodic) tenancy in circumstances where fire damage could be repaired within a matter of weeks or months. On this reasoning, where the fire damage is sufficiently extensive and the repairs could take several months, the lease is likely to be frustrated.
Where there has been a fire it is always best to refer to the tenancy agreement to determine whether fire or uninhabitability is covered by an express provision. If it is then parties should comply with such a provision. Usually these provisions mean that the tenancy will end if the property cannot be restored within a month. If there is no such provision, then the above cases will mean that most assured shorthold tenancies will be terminated if the damage is rendering the property uninhabitable for more than two or three months.
Where the fire begins due to the tenant’s negligence, the landlord’s insurer, assuming there is an insurer may pursue the tenant to recover any monies that they have paid out to the landlord. This is beyond the scope of this blog, but advice can be sought from us should this become a concern.
Where the property has been partially destroyed, the lease may not be frustrated. These cases will need to be discussed on a case by case basis and as such, again advice should be sought at the earliest opportunity.