Licence to Assign and Underlet

The correct answer is B. The burden of the tenant covenants does pass to the buyer on the assignment (Landlord and Tenant (Covenants) Act 1995, s.3), so the director is not wrong about the lease. The direct covenants give the landlord something additional: a claim against the buyer under the licence itself, on terms the landlord has chosen, which does not depend on the lease. The confirmation of inspection does related work, heading off any later suggestion that the buyer took the premises on the strength of something the landlord said about their condition. There is one limit on a new tenancy: a direct covenant cannot keep the buyer liable after it has itself lawfully assigned, because s.25 avoids anything that would frustrate the release the Act gives it. On an old lease, direct covenants from each successive assignee were the landlord's normal way of building a chain of liability for the whole term.

A is incorrect because liability is not transferred by covenant; the burden of the tenant covenants passes on the assignment itself. C is incorrect because nothing requires direct covenants; they are a matter of bargain, taken because the landlord wants them. D is incorrect because the lease covenants remain exactly what they are; the licence covenants sit alongside them. E is incorrect because on a new tenancy a covenant purporting to do that is void so far as it would frustrate the buyer's own statutory release.