6. Leases Flashcards
What two types of leases are registrable?
- Lease granted for greater than seven years
- Lease assigned with greater than seven years remaining
An oral tenancy is valid if for less than how long?
Three years
In a long term lease, what is required for the rent to be adjusted?
The lease must provide for it, i.e., it must contain a Rent Review Clause
What is a reversionary lease?
A lease under which the tenant does not take possession until some time in the future. For example, it is possible to enter a lease today which is to take effect, in two years’ time.
What is the maximum period between the lease being entered into and the tenant taking possession for a reversionary lease to be valid?
21 years. Comparable to the perpetuity timeframe.
If there is no notice provision in a periodic tenancy, how much notice must be given to terminate it?
An amount of time equivalent to one period in the tenancy
In an implied periodic tenancy, how is the period determined?
Based on the intervals between the payment of rent.
If the tenant pays a yearly rent, then the courts will normally infer a yearly tenancy, even if rent is actually paid weekly or monthly. If the rent is expressed to be paid weekly or monthly, then the tenancy will be a weekly or monthly tenancy as the case may be.
What arises and what does not arise if an owner of land allows a buyer to take possession of land before a written agreement is entered into?
A tenancy at will (not a legal interest) may arise, but no estate in land is created
In the case where a tenancy at will arises, what is the effect of the prospective buyer in possession attempting to assign?
It operates as notice to terminate the tenancy, as soon as the tenant notifies the landlord of such
In the case where such a tenancy at will arises, what is the effect of the prospective buyer in possession beginning to pay rent?
The court to treat it as a periodic tenancy unless there is very clear evidence that the parties intend the tenancy at will to continue
In what two situations is a lease void for uncertainty?
- A term is uncertain
- Starting/ending date (if fixed) is uncertain/not knowable
What two things are required to create a legal short lease of three years or less in writing or orally without a deed?
- Tenant takes possession of leased premises
- They pay at least market rate rent and are not required to pay any upfront sum or premium
Even though a short lease can be created without a deed, what is the only way one can be assigned, even if created without a deed?
By deed
Even if a lease is not created by deed and is not an eligible short lease, equity will recognise such as a contract for the disposition of land if what two conditions are met?
- Lease in writing incorporating all terms expressly agreed
- Signed by all parties
Therefore this exception does not apply to oral leases
Where equity recognises such a contract, what is the usual remedy if the other party breaches?
Specific performance
What is required before an equitable lease will bind a purchaser of the landlord’s reversion?
Registration in the appropriate way, depending on whether the land is unregistered or registered
How is an equitable lease which was recognised due to the failed creation of a legal lease appropriately registered in (1) the unregistered system and (2) the registered system?
Unregistered: Class C(iv) estate contract land charge
Registered: Notice on the charges register
Without this protection, a purchaser of the landlord’s interest for value will not be bound by the equitable tenancy.
What is the consequence if an equitable lease is not registered?
A bona fide purchaser of the landlord’s interest for value will not be bound
How is the situation different if the tenant of the equitable lease has begun to pay rent?
As discussed, the court will likely imply a periodic tenancy, and because this is a legal interest it will bind a purchaser of unregistered land and will be an interest that overrides first registration and a registered disposition
What is a licence and what does it not create?
A personal right to use land in some way, and creates neither an estate nor an interest in land.
What are the three characteristics of a lease, and what is likely created if any is missing?
- Exclusive possession
- Fixed or periodic time certain
- In consideration of a premium (lump sum or periodic payments)
In case any of the above are missing then it is likely a Licence.
What is the covenant of quiet enjoyment?
An obligation imposed on the landlord to not interfere in any way with the tenant’s enjoyment of the property nor allow the lawful activities of other tenants to do so
What is a qualified alterations covenant?
A clause allowing a tenant to make non-structural alterations after receiving the landlord’s written consent
What is an absolute bar on alterations?
A clause prohibiting alterations entirely.
Where an absolute bar is in place to make alterations, can the tenant still ask for the landlord’s specific consent?
Yes
What is Commercial Rent Arrears Recovery?
Statutory procedure allowing landlords of commercial premises to recover rent arrears by taking control of tenant’s goods and selling them
What is forfeiture with regard to a lease?
The right of the landlord to re-enter the premises and bring the lease to an end due to default by the tenant, usually rent not paid
What is the tenant’s right in a forfeiture situation?
Right to settle the arrears instead of losing premises
How might a landlord waive his right to forfeit?
By being aware of the default and then:
- Accepting or demanding payment
- Serving notice on tenant of repairs to be done
- Carrying out distress for rent (re-entering and seizing tenant’s goods in lieu of rent)
Basically any act suggesting landlord has looked beyond forfeiture and wants to solve the issue another way. After this, they can’t then go back and try to forfeit.
What is a Jervis v Harris clause?
Self-help clause, enabling landlord to re-enter to make repairs and recoup costs as a debt if tenant breached covenant to maintain after serving notice on tenant to carry out repairs
What is the significance of the costs being recoverable as a debt?
They are recovered in a more straightforward debt action, rather than a damages action
What are the remedies for breach of the covenant to pay rent?
- Commercial Rent Arrears Recovery
- Forfeiture
What are the remedies for breach of the covenant to repair/maintain?
- Damages
- Specific performance
- Self-help
- Forfeiture again
- Debt action
What is a section 146 notice?
The notice served on a tenant by a landlord for breach of repairing obligations when landlord wishes to forfeit the lease
What is the position under a lease made before 1996?
The original landlord and original tenant remain liable to one another, even after assignment, unless expressly released
What is the position under a lease made from 1 January 1996?
Tenants are automatically released from their covenants upon assignment
In determining which approach applies, is it the date of the grant or the date of the assignment which controls?
Date of the grant of the lease.
!!Do not be distracted by the date of assignment!!
In an on or post 1 January 1996 situation, what is the assignor still liable for?
Breaches of covenant which occurred before assignment.
What is an Authorised Guarantee Agreement?
An agreement, usually required by a landlord as a condition of assignment, whereby the original tenant will act as guarantor for his immediate successor in title, meaning only the last party to give an AGA is liable
Whilst an AGA can be in a commercial lease, is one allowed in a residential lease?
Not allowed in the lease and if the landlord tries to impose such in an assignment situation, it must be imposed lawfully
What should a tenant do if they feel the refusal of consent was unreasonable?
Seek a declaration of such from the court
Is a sublease affected by the assignment of a head lease?
No
What happens to a fixed period lease which has an option to renew which is not exercised by the end of the period?
It expires
Who may serve notice to terminate where there are multiple landlords and multiple tenants?
Any of them
What are the two ways the parties can mutually agree to bring a tenancy to an end?
- Surrender (Aufhebungsvertrag): Parties agree tenant will give up possession to the landlord: Surrender is the acquisition by the landlord of the inferior (leasehold) estate.
- Merger: Parties agree landlord will transfer reversion to the tenant. A merger occurs where the tenant acquires the superior estate from its landlord.
If a head lease is ended by expiry, notice to quit, or forfeiture, does any sublease existing under it come to an end?
Yes
What happens to a sublease if the headlease and the landlord’s reversion merge?
The new owner of the estate (usually the headlease tenant) will hold the estate subject to the sublease, and the subtenant’s position will be the same as with surrender
If a head lease is ended by surrender, does any sublease existing under it come to an end?
No, the subtenant will become the tenant of the head landlord on the terms of the sublease and will have to pay rent due under the sublease to the head landlord
Only applies to surrender, and also merger but in a different way.
In a surrender situation in the absence of a written contract, what is the effect of the landlord accepting possession of the property at the tenant’s request, but in the absence of a written contract?
Both sides are estopped from denying that surrender has taken place
What is the effect of an assignment by a tenant made in breach of the landlord’s consent requirement?
The assignment is legally effective, but there is a breach of covenant on the part of the original tenant as with the landlord
What is the required form of the assignment of a lease?
By deed, even if the lease is made orally
Where a tenant requests written consent for an assignment from a landlord, the landlord must do one of what two things and within what timeframe?
Within a reasonable time, the landlord must:
- Give consent, or
- Give written reasons for refusal
Are the covenants in the head lease usually enforceable against a subtenant, and why?
No, because there is no privity of contract or estate between the landlord and the subtenant
What occurs when a tenant tries to create a sublease which is longer than his own lease?
No new lease is created, but the tenant’s full lease will be assigned instead
What is the first determining factor in whether covenants of a lease bind the original parties after assignment?
Whether the lease is granted before 1 January 1996
What is required for forfeiture to be an option to a landlord, no matter the reason?
It must be expressly provided in the lease. It can never be implied.
What are the three requirements of a section 146 notice?
- Specify the breach
- Require the breach to be remedied within a reasonable time
- Require tenant to pay compensation in any event
