FORMAL REQUIREMENTS FOR CREATION OF LEASE Flashcards
What is the difference between a short and long term lease?
A short term lease is for 3 years.
What are the relevant sections of the PLA?
- s10 PLA
- s11 PLA
- s59 PLA
What are the requirements for a long Term lease?
- s11(1)(a) it must be in writing and signed by the person making it.
- s59, for it to be enforceable, it must be in writing and signed by all parties who have obligations
What are the consequences of failing to comply with formal requirements?
- No LEGAL lease passes.
- If s59 is satisfied, then the contract is valid, but it is a contract FOR a lease.
- The document may be an equitable lease
What are the requirements of an equitable lease?
- Specific Performance must be available; and
- Pursuant to s11(1)(c)
If these are fulfilled, the principle in Walsh v Lonsdale applies.
What happens if the equitable lease is not written as pursuant so s11(1)(c)?
- If sufficient acts of Part Performance can be proven, then it can be classified to be an equitable lease.
Note: equity rules prevail over s129.
What is the effect of s129?
Where the tenant is in possession and paying rent, the common law will imply a yearly tenancy.
What s129 does is: converts this to a tenancy at will determinable by 1 month’s notice.
What is the relevance of Leitz’s case?
The parties signed a lease for 6 years but they never registered it.
The tenant goes into possession and pays rent for a number of years. The T gives 1 months notice to quit and is given pursuant to NSW s1229 equivalent.
The landlord is unhappy as the term of the lease is for 6 years and so claims breach of contract and wants rent for due balance of the fixed term.
Held:
- There was no passing of legal lesehold.
- But entry into possession and paying rent, the common law did imply a tenancy, which s129 converts into a tenancy at will determinable upon 1 month’s notice.
- The 1 month’s notice did terminate the tenancy at will, however did not terminate the whole relationship.
- The lease operated as a contractual agreement and this was separate from the tenancy at will implied at law.
What happens if there is a short term lease created orally?
S12(2) covers this. The lease need not be in writing, but:
- The it must be “taking effect in possession” which means the Tenant must be in possession of the land
- The agreement must be capable of Specific performance (fulfil the requirements see before).
- There must be consideration.
This section allows the oral agreement to take effect as a legal lease.
Is possession relevant at all to a formal legal lease?
S102(2) - no, it does not matter when entry into possession occurs.
What happens where the lease has been created orally, but is a long term lease and falls out of s12(2)?
Prove Acts of Part Performance!!
What is a lease?
A leasehold interest is generally an interest in land for a fixed period of certain duration granted in consideration for the rent reserved.
What are the requirements for a lease?
- Exclusive possession of the land
- Certainty of duration with a certain commencement and ending date
- Proper Creation
What does Exclusive possession mean?
This means the Tenant has a right to exclude the whole world including the landlord (unless there is a specific clause).
What is the test for exclusive possession?
The test is one of substance of the agreement and not of form
Radaich v Smith
It matters not what the agreement is called.
Smith had a written agreement with Radaich giving her exclusive right and license to lock up shop. The agreement was for 5 years and she had various responsibilities such as:
1.Locking up shop
2. Securing premises
3. Clause said R had to give up possession at one point (why have this if she does not have legal exclusive possession?)
The agreement was called a “License”.
Courts held:
- This was a lease, even though it was called a license.
- Exclusive possession was given, and the terms of the agreement contained that right.
What is certainty of duration?
The lease must have a certain date of commencement and a certain date of ending. Without either, the lease is void.
What are examples of certainty of duration?
- Prudential Assurance v London Residuary Body
2. Greco v Swineburne
What is the relevance of Prudential Assurance v London Residuary Body?
In this case, the land was for until it was required by the council for road widening purposes.
This was held not to be sufficiently certain and was void
What is the relevance of Greco v Swineburne?
A period for a life, or lives is NOT VOID for uncertainty.
What is required for property creation?
FORMAL REQUIREMENTS FOR LEASES. GO BACK
What are the types of Leases?
- Fixed Term Lease
- Periodic Tenancy Lease
- Yearly Tenancy
- Tenancy at will
- Tenancy at sufferance
- Tenancy by estoppel
What is a fixed term lease?
A fixed term lease is for a DEFINED period of time.
What is a periodic Tenancy
Periodic tenancies are defined by the period of the tenancy and is repeated on a cyclic basis without the need for any new, fresh agreement.
The tenancy is valid until a notice to terminate has been given.
When can a periodic Tenancy be created?
- By express agreement either written or oral
2. By legal implication: a periodic tenancy can be implied from terms agreed and surrounding circumstances.
Under what sections of the PLA is a valid notice for termination of Periodic Tenancies?
- Appropriate form and content under s131 PLA
- Manner prescribed in s132 PLA
- Correct Time Period s133-136
What is the minimum notice that must be given?
- For one cycle of the tenancy, expiring on the end of the cycle
What is a Yearly Tenancy?
This is a form of periodic tenancy.
When can a Yearly Tenancy be created?
- By express agreement
- By implied agreement: where rent is paid by reference to year
- Where Tenant holds over and the tenant pays rent in reference to year
- If terms are too vague, common law can imply this
What is the relevance of Moore v Dimond?
A lease has expired but the parties agreed for another 5 years. It was an informal lease.
Dimon left the premises, LL sued on the basis there was a yearly tenancy.
Dimond argued it was a weekly tenancy because rent was paid weekly.
Court sheld:
It was a long term agreement and the weekly rent was compensation for the entire period. The intention was rent was to be calculated on a yearly basis
HOWEVER, S129 WOULD HAVE TREATED THIS DIFFERENTLY.
What is the effect of s129?
A yearly tenancy is no longer implied. Where a tenancy is implied by the payment of rent, with no certainty of period (Dockrill v Cavanagh), s129 deems this to be a tenancy at will determinable upon 1 month’s notice.
What is the minimum notice for Yearly tenancies?
It must be 6 months notice, expiring on the completed cycle of the tenancy
What is at tenancy at will and when does it arise?
A tenancy at will arises where the person occupies land with the consent of the landlord.
Where is a tenancy at will created?
- Where parties are still in negotiations of a proposed lease
- Where the occupant is to complete a contract to purchase property
- Rent has not been paid on are regular basis so as to create a periodic tenancy
- Tenant remains in occupation after expiry of lease, but remains to pay rent.
How does one terminate a Tenancy at will?
- Give a notice under s137PLA; or
2. Turner v York Motors - can give 1 month’s notice to leave.
What happened in Turner v York?
The T entered into possession while there were discussions about a formal, long term lease
Negotiations went nowhere and a fixed term was never signed.
Initially, the T pays rent weekly, but later pays monthly.
L sells property, but the Tenant continues paying rent monthly.
The new LL wants the tenant out and gives 1 months notice.
Held: he was a tenant at will, however as rent became payable monthly, a monthly periodic tenancy arose and notice to terminate was not for adequate period.
What is tenancy in sufferance?
This is created where a person holds over after termination/expiry of a lease.
The T stays in possession and the LL does not consent NOR does he object.
What is the action where a tenant in sufferance fails to pay rent?
There is no lease, so the LL would not sue for recover of rent, but sue for compensation for occupation of the premises.
What is tenancy by estoppel?
This arises where the LL does not have property to grant and made a mistake of title.
Both the Landlord and the Tenant are estopped from denying the existence of a lease: Industrial Properties v Associated Electrical Industries.
