L3: Leases Flashcards
What is a sham clause?
An impractical, meritless or purposeless clause that intends to avoid advantages a tenancy brings to occupiers
What does a leasehold ownership permit a freehold owner to do?
Permits the owner to grant to another person a right to occupy and use that freeholder’s land
What are the 2 types of leases according to the LPA 1925?
Legal & Equitable
What is a sublease, how does it differ from the headlease?
Sublease is a lease carved out from the original lease (headlease) creating a new lease with a shorter duration.
What does the landlord own in relation to the leased property?
Landlord owns the reversion expectant upon determination of the lease
What is reversion ?
The right to possession of the leased property when the lease ends
What is assignment?
The landlord/tenant’s proprietary rights can be assigned or sold to third parties
What happens where a landlord sells their reversion to a third party?
third party assignee becomes the new landlord
What are covenants?
Promises made between landlord and tenant either to do or not do particular things in relation to the land
What are the essential characteristics of a lease as seen in Street v Mountford?
The grant of exclusive possession for a certain term at a rent
What is exclusive possession?
The right to exclude others from the land (as opposed to ability to exclude others from the land)
How was exclusive possession defined in street?
a tenant with exclusive possession has the control rights commonly associated with ownership and is able to exercise the rights of an owner of land, which is in the real sense his land albeit temporarily and subject to certain restrictions.
Facts of street v mountford
S & M agreed that M would have exclusive possession of 2 rooms in a property S owned
Agreement described as a licence agreement, with a specific clause that the parties did not intend to create a lease
M applied for registration of a fair rent under the Rents act (applicable to leases not licences)
S brought an action in court seeking a declaration that M was a licensee, not a tenant
What was the legal issue in Street v Mountford
Was Mrs Mountford occupying the two rooms as a tenant or as a licensee and how far was the ‘licence agreement’ determinative of her legal relationship to the land?
Judgement in SvM
where accommodation was granted for a certain term with exclusive possession, the legal consequence of this was the granting of a lease notwithstanding the use of the words ‘licence’ or ‘licence agreement’ label used is a material consideration, not decisive- M was a tenant
Markou v De Silvaesa
where the landowner has arranged or agreed that regular services (‘attendances’) be provided to the occupier, this will prevent a finding of exclusive possession and thus prevent the finding of a lease.
According to the cases of Appah v Parncliffe Investments Ltd (1964) and Westminster City Council v Clarke (1992), why are hotel occupants considered licensees rather than tenants?
Due to the absence of exclusive possession
What is a lodger?
Someone who shares occupation of premises with the owner or receives services such as cleaning/laundry from landlord.
Do lodgers enjoy exclusive possession?
NO- considered licensees as they are unable to prevent access to the land by the landowner
Facts of Markou v De Silvaesa
- Several ppl occupied individual furnished rooms in a house owned by S
- Described as licences
- Licencor retained keys & absolute right to enter the rooms at any time & require occupiers to vacate premises
- Licencor agreed to provide services (cleaning, rubbish collection, laundering)
What was the judgement in Markou v De Silvaesa
Given the broad right to access the premises for the provision of services, and further rights reserved to the landowner, it could not be said that the occupiers enjoyed exclusive possession
Abbeyfield Society v Woods
Octogenarian deemed a licencee not a tenant when living in a care home which provided services
Westminster CC v Clarke
Homeless man occupied one of several single rooms in a homelessness hostel
- Held not to enjoy exclusive possession due to the night-time curfew and right reserved to move individuals to alternative accomm without notice
Is the retention of keys by the landowner inconsistent with exclusive possession?
No, a lease may nevertheless be found to exist despite retention of keys by the landowner.
Facts of AG Securities v Vaughan
-4 occupiers entered into separate licence agreements with the owner of a 4 bed property
- agreements granted to each at different times, on different terms, paying different licence fees = shifting population (l could replace occupiers to keep premises at capacity)
What did the courts find in AG Securities v Vaughan
- occupiers had no exclusive possession
- ‘A joint tenancy was one where the tenancy commenced on the same day for all, where the term was the same for all, where the rent should not be altered without due notice to all and, possibly, where all are jointly liable for the rent.’
- Absence of 4 unities = no JT or separate tenancies
Antoniades v Villiers
- Cohabiting couple occupied attic flat consisting of single bedroom with one bed
- L insisted couple signed separate agreements described as licences (were to pay 50% of rent)
- clause reserving the right of L to occupy the flat or nominate add occupiers
- Terms didn’t reflect true intention of the parties as to occupation of the flat
- intention for the couple to enjoy exclusive possession for a term at a rent = joint tenancy
What is the purpose of sham clauses?
To avoid the statutory protections afforded to tenants under a lease, unavailable to licencees.
Facts of Aslan v Murphy
- M owned a tiny basement room in london owned by A under a licence agreement
- Agreement expressly provided that M did not enjoy exclusive possession
- M retained a key, reserved the right to enter at all times, share occupancy, add further occupants, position furniture in room
Judgement of Aslan v Murphy
Mr Murphy’s access amounted to a pretence designed for the single purpose of defeating the existence of a lease and the application of the Rent Acts.
What will the court do if terms of an agreement are deemed wholly unrealistic and clearly pretence?
The court will strike down these clauses to ascertain the true bargain between the parties.
What is a property guardian?
Vacant property occupier- occupies empty premises at a rent below market value
What is the purpose of a property guardian?
Offers a degree of security for L’s asset, helps prevent squatting and vandalism
Roynon
R occupied 2 rooms of a vacant care home as a property guardian under a licence agreement
- Agmt did not provide for EP, included restrictions (no more than 2 guests at one time allowed in the rooms, no overnight visitors)
- R was able to choose his own rooms, given keys to which no occupier had access
- No staff on premises, no services provided
Court found that R was a tenant enjoying EP
When will there be no lease even though there is exclusive possession?
Street- where there was no intention to create legal relationships
What are the examples of an absence of an intention to create legal relations?
- Service Occupier - person occupying property as a consequence of her own employment (e.g. school teacher occupying school) Norris v Checksfield
- Where there is occupation based on familial relationship Cobb v Lane
- Occupation granted on the basis of friendship Booker v Palmer
- Occupation granted on the basis of charity Gray v Taylor
- Individual allowed into occupation over which there exists an enforceable contract for sale Bretherton v Paton
What is the distinction between a lease and a licence?
Leases are proprietary & can bind a third party whereas a licence is personal in nature (cannot bind)
- greater statutory protection afforded to tenants
- Tenants can bring action for trespass
What is certainty of term?
A lease must grant exclusive possession over land for a defined, limited, certain period of time
Marshall v Berridge
There must be a certain beginning and a certain ending, otherwise it is not a perfect lease
What are the 2 key aspects to certainty of term?
1) Certainty of commencement of lease
2) Certainty of max duration of lease
Harvey v Pratt
Purported lease failed for want of certainty of term where there was a clearly written agreement but no detail as to when the lease was to begin
Prudential Assurance V London Residuary Body
- Lease was to continue until the land is required by the council
- Evidence that agreement was intended to be short term in nature
- Highway widening programme did not materialise- N continued to occupy land for over 60 years
- No valid expressly granted lease as there was no certainty of max duration
Berrisford v Mexfield
- B owned and occupied a house
- She encountered financial difficulties, entered into occupancy agreement with Mexfield
- M would buy her property and lease it back to her at a rent
- Terms = M would have limited rights to seek possession if B met rental payments
- Despite no breach M sought possession
- Held: purpose of arrangement was to provide B with a home & right of occupation was not precarious in nature
- Creation of a tenancy for life under s 149 LPA 1925 converted into a lease
Which statutory provisions cure uncertain terms?
1) S149(6) LPA 1925- lease granted for the period of one’s life takes effect as a valid 90 year lease determinable on the death of that person
2) s149(6) LPA- lease granted to a person until marriage takes effect as a 90-year old lease
3) s145 & Sch 15 para 1 LPA 1925, lease which is perpetually renewable takes effect as a lease for 2000 years determinable only by lessee (akin to freehold)
What is a lease?
An agreement where a landowner permits another to use their land for a specified period, usually for payment of rent
Street v Mountford definition of a lease
To constitute a tenancy an occupier must be granted exclusive possession for a fixed or periodic term certain in consideration of a premium or periodic payments
What is rent?
Consideration paid by tenant in return for the lease & the rights it confers
What does Bostock v Bryant say in relation of the proviso of rent to find a lease?
Any financial sum of certain definition= payment of shifting utility bills was not regarded as rent
Is rent essential for the existence of a lease?
Ashburn- valid lease can arise where there is exclusive possession
Why might a lack of rent indicate non existence of a lease?
Lack of intention to create legal relations Colchester Council v Smith
What are the types of leases that exist?
- Fixed term
- Periodic tenancies
- Tenancies at will
- Tenancies at sufferance
- Tenancies by estoppel
- Bruton tenancy
What is a fixed term lease?
A lease running for a fixed period of time, made clear in the terms of the lease
What is a periodic tenancy?
A lease that continues from period to period (one week, one month, one year)
What happens where there is no reference period stipualated in a periodic tenancy?
The period is taken to be the period by which the rent is calculated, not the frequency with which rent is paid
Javad v Mohammed
- J&A were in the process of negotiating a ten year lease over business premises (both believed an agreement would be reached)
- A permitted to take possession of property
- 2.5k paid, expressed to be rent for 3 months in advance
- Negotiations broke down- J sought possession of property
- A refused to surrender property on the basis an implied periodic tenancy had arise (benefits from protection from eviction)
- A a tenant at will only
- J entitled to recover possession
- Rights are determined by reference to all surrounding circumstances
What is a tenancy at will
Where a person occupies land with exclusive possession and consent of the landowner but where either party is able to determine (terminate the lease) at any time- Errington v Errington & Woods
Examples of where a T-at-W arises
-Would be tenant permitted to take possession of land during negotiations (Javad)
- Existing lease expires or comes to an end and tenant remains in possession of land with the consent of landlord (Banjo v Brent LBC)
What is a tenancy at suffarence
Where a tenant remains in possession after expiry of lease without consent of landlord Wheeler v Mercer (where l subsequently consents, TAW arises)
What happens in a situation of tenancy at sufferance where the tenant continues to occupy land
Tenant becomes a trespasser- may be ordered to pay landlord twice the rental value of land for the period of possession Oliver Ashworth v Ballard
What is a tenancy by estoppel?
Where the party purported to have granted a lease holds neither the legal fee simple or superior leasehold estate to carve out the purported lease - grantor is estopped from denying the existence of the lease
What is the effect of a tenancy by estoppel
Behaves like a full legal tenancy Webb v Austin- if the landlord later acquires the legal fee simple or superior estate, acquisition feeds the estoppel (purported lease becomes an ordinary legal lease) First national bank v thompson
What is the bruton tenancy
-A local council owned a block of flats which it planned to demolish, in the meantime, the council gave D (the trust) licence to use to flats to provide accommodation to the homeless and those in need
-The council had no statutory power to give the Trust a lease
C was housed by D in the flats in an agreement stated to be a licence
-C sought to claim that the agreement with D was a lease, which would impose on D a statutory duty of repair under s11 Landlord and Tenant Act 1985
What did bruton establish?
Agreement gave rise to a lease even if LQHT had no proprietary interest- subject to implied repair obligations
Formality requirements for a legal lease of 3 years or less Ss52 (2)(d) & 54(2) LPA 1925
Provided the tenant is granted an immediate right to possession without proviso for a premium & granted at best rent (market value) :
legal lease can be created orally, by written contract or deed
What are the formality requirements for a legal lease of more than 3 years but under 7 years?
- Must be made by deed under s52(1) LPA 1925
- Deed is akin to a formal contract (s1 LP(MP)A 1989
- A doc only takes effect as a deed if it
a) makes clear on its face that it is intended to be a deed
b) it is signed and witnessed
What are the formality requirements for registered land of over 7 years?
S27(2) LRA 2002
- Lease must be substantively registered as a title at land registry
What if a lease is unregistered ?
S27(1) LRA 2002- cannot take effect at law- gives rise as an equitable lease only
What are the formality requirements for unregistered land of over 7 years?
S7 LRA 2002- equitable lease only
What is the effect of a legal lease on 3rd parties in registered land of 3 years or less?
Cannot be the subject of a notice on the charges register (S.33(b) LRA 2002)
- Sch 1&3 LRA = overriding interests
- Short legal leases binding on 3rd party purchasers ss28 & 29 LRA
What is an overriding interest?
Interests in registered land which, whilst not protected by an entry on the register, are capable of binding third parties acquiring rights in the land.
What is the effect of a legal lease on 3rd parties in registered land of more than 3 years but not exceeding 7?
- Can be voluntarily entered on the register
- Priority guaranteed by way of entry of notice
- Even if not done, are overriding interests binding on 3 rd party purchasers
What is the effect of a legal lease on 3rd parties in registered land of 7 years /more?
- Substantively registered in their own right s27(2) LRA 2002 binding 3rd parties
- if not substantively registered = equitable lease only
What is proprietary estoppel
An equitable doctrine which allows for a claimant to acquire rights in land despite a lack of formality. Where a claimant reasonably relies to her detriment on a representation that she is to have an interest in land and it would be unconscionable for the person making the representation to resile from it, that representation will be enforced.
What happens where parties to an agreement attempt to grant a legal lease but fail to satisfy necessary formality requirements?
May give rise to an equitable lease- Parker v Taswell
When will equity regard a contract as constituting an equitable lease according to walsh v lonsdale?
Provided there is a specifically enforceable contract between the parties for the grant of a lease
What conditions must be satisfied for an equitable lease to arise? Walsh
1) Valid contract for the grant of a lease in compliance with s 2 LP(MP)A 1989
2) Remedy of specific performance is available
S2 LPMPA 1989
the contract granting a lease must:
1.be made in writing; and
- incorporate all the terms expressly agreed by the parties; and
- be signed by both parties.
What is specific performance?
An equitable remedy by which parties are compelled to perform a contract
When is specific performance available?
1) Valuable consideration given for the contract
2) Damages is inadequate
3) Parties have not behaved unconscionably or inequitably
What is the effect of equitable leases on third parties in registered land
- entry of notice on charges register binding 3rd parties ss. 28, 29 LRA
- Bind 3rd parties as an overriding interest under sch 3, para 2 LRA 2002
What are the methods of terminating a lease?
1) Expiry of term
2) Notice to quit
3) Surrender of lease
4) Merger of leasehold and freehold
5) Disclaimer
6) Forfeiture by landlord
7) Repudiatory breach of contract
8) Enlargement of leasehold into freehold
9) Frustration
How does a notice to quit terminate a lease?
Lease may provide that either party can bring notice to end lease before contractual period
When can giving of notice be possible
Existence of a break clause in the agreement
What form must a notice take
Mannai Investment v Eagle star Life Assurance- a notice will suffice provided it is ‘quite clear to a reasonable tenant [or landlord] reading it’ and that she would not be misled by it
When can a notice be given in a periodic tenancy
by giving notice equivalent in duration to one period (monthly periodic tenancy = one month’s notice
If there is a joint tenancy, does the notice to quit have to be given by every tenant
No- only need to be given by one tenant
Hammersmith and Fulham LBC v Monk
giving of notice by one joint tenant is effective to determine a joint periodic tenancy. The court reasoned that it was effective as any joint tenancy requires the consent of all tenants if it is to continue.
Notice and TaW
A tenancy at will can be brought to an end by either party at any time. Equally, should either party conduct themselves in a manner inconsistent with the continuation of the tenancy, the tenancy will automatically terminate.
Surrender of lease to landlord
Return of lease to landlord- must be done with clear intention to terminate lease Charville Estates
Formality requirements for surrender of lease
As it is a conveyance of an interest, must be done by deed under s 52(1) LPA 1925
Merger of leasehold and freehold
Where the tenant acquires the landlord’s freehold interest in the land, this ‘merger’ of the leasehold and the reversionary estate necessarily brings the lease to an end.
Termination by disclaimer
Every lease contains an implied covenant that the tenant will not deny the landlord’s superior title. Should this implied covenant be breached, the tenant is said to ‘disclaim’ the landlord’s title entitling the landlord to forfeit the lease: Wisbech St Mary Parish Council v Lilley (1956).
Forfeiture
where a tenant is in breach of covenants (promises) contained within the tenancy agreement (called ‘leasehold covenants’) the landlord may be entitled to forfeiture of the lease. Where there is a successful forfeiture, this has the effect of bringing the lease to an end.
Repudiatory breach of contract
the remedy of repudiation should apply to leases on the ground that leases ought not be treated differently from other contracts.
Enlargement of leasehold into freehold
Under s. 153 of the LPA 1925, tenants of long leases of more than 300 years where there are at least 200 years remaining to run, have the right to ‘enlarge’ their leasehold interests into freehold interests. This naturally brings the lease to end.
Frustration
National Carriers Ltd v Panalpina (Northern) Ltd (1981), the House of Lords, by a bare majority, held that the doctrine of frustration of contract applies to the law of leases. The result is that if, after the lease has been granted, there is a fundamental change in circumstances which renders the lease impossible to perform or alters the rights and obligations of the parties, the whole lease will be discharged.
