Last edited 29 Jun 2017

Derogation from grant

Derogation from grant is an obligation that is automatically implied into leases and is typically referred to in the context of landlord and tenant agreements.

It is the general legal principle that if A agrees to give a benefit to B, then A should not proceed to do something that substantially deprives B of the enjoyment of that benefit. In the context of landlords and tenants, the landlord is said to have derogated from its grant if they do something that renders the property materially less fit for the purpose for which the lease was granted to the tenant and, as a result of that change, the tenant’s enjoyment of the benefit has been negatively affected.

Usually, a breach involves the landlord having taken positive steps or granting rights to a third party that render the property unfit for the purpose of its grant. The factors that need to be considered in relation to these obligations are as follows:

The term of the lease.
The purposes that were contemplated by the parties at the time of grant.
The circumstances that resulted in its grant.

Whilst the principle offers protection to tenants, it is limited in scope. If the landlord takes positive steps or grants rights for uses they had not contemplated when the lease was granted, then they will not be seen to have derogated from grant. Similarly, if the landlord’s actions have an adverse economic impact on the tenant but there has been no physical impact on the use of the premises. The obligation cannot be excluded or limited by the fact that an express quiet enjoyment covenant has been included.

An example case is that of 'Aldin v Latimer Clark, Muirhead & Co.' (1894). Land was let for use as a timber yard and included a shed that was used for drying timber. As such it required air to have free flow through the shed. The landlord built on neighbouring land that he owned in such a way as to obstruct the free flow of air. This was found to have prevented the timber merchant from using the land for the purpose he had leased it for and therefore the landlord's action amounted to a derogation from his grant.