Land 7 Flashcards
What is a lease?
A contract underwhich the landlord (“the lessor”) will grant from his freehold estate ‘a term of years absolute’ (the “lease”/”tenancy”) in favour of the tenant (the “lessee”). * It will prevent the landlord from enjoying physical possession of the land; although they retain the freehold estate. * It will also include covenants (or promises) made by both parties e.g. tenant to pay rent
What is the difference between privity of contract and privity of estate?
- “Privity of contract” is a general principle of contract law according to which only the parties to the contract can enforce its terms for the duration of the contract. * “Privity of estate” exists when two persons have a relationship of landlord and tenant between them.
What is the ‘reversion’ in the context of a lease?
The landlord’s interest in the land. Should the landlord assign this interest, the person who buys the reversion is called the ‘assignee’ of the reversion.
What is the difference between a head-lease and an underlease?
- The main lease between the landlord and the tenant is then known as the ‘head-lease’. In relation to the sub- lease, the tenant is known as the sublandlord. * A tenant may grant another lease for a lesser term (an underlease, or more commonly a sublease or subtenancy)
A is the freehold owner of a field and grants a 10-year lease of the field to B so that he has somewhere for his horses to graze. The lease does not prevent B from subletting. After only four years, B has an accident and can no longer ride his horses. Therefore, B sells his horses and no longer needs the field. B decides to sublet the field to C, who was looking for a field for her horses, for a term of six years. What are the agreements between A and B, and B and C called?
The lease between A and B is the head-lease. The lease between B and C is a sublease.
What two types of leases are registrable?
- Lease granted for greater than seven years2. Lease assigned with greater than seven years remaining
For what reason are long leases of residential property of 999 years usually put in place?
The lease is mainly aimed at ensuring that certain burdens (obligations) attach to the land and can be enforced. Otherwise, the tenant is effectively in the position of a freeholder.
What are the 4 types of lease?
- Fixed term tenancies2. Reversionary leases3. Periodic tenancies (express and implied)4. Tenancies at will and Contractual Period Tenancies
What is a fixed term tenancy?
A term of years certain. * It may contain a break clause (common in commercial but not residential). In the absence of such a clause, the term must generally be allowed to run its course. * In a long-term lease, rent cannot be adjusted unless there is a rent review clause.
An oral tenancy is valid is 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. there must be a rent review clause
A leases to B the first floor of a building A owns so that B can operate his flower shop there. The lease term is for seven years and provides that B is to pay £1,500 per month as rent. After four years have passed, rents of comparable shops in the neighbourhood have risen to £2,000 per month. What is required for A to increase the rent?
A cannot raise B’s rent to £2,000 unless the lease includes a rent review clause providing a mechanism for periodic rent adjustment.
What is a reversionary lease?
A lease under which the tenant does not take possession until some time in the future (valid unless period between entering lease and taking possession is more than 21 years)
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
What is an express periodic tenancy?
A tenancy defined by a period of time such as a ‘yearly tenancy’ or a ‘tenancy from year-to-year’* The tenancy will last initially for a fixed period of a year, and when this has expired it will continue for another year, and then for another year, and so on, until one or the other party brings it to an end by serving the appropriate notice as agreed between the parties. * If there is no such provision, the lease usually ends by reference to the period of the lease; that is, the notice period must be at least as long as the period of the tenancy.
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
What is an implied periodic tenancy?
A tenancy implied by the courts where:* the parties have not entered into a written agreement, provided the tenant has gone into possession and started to pay rent* the parties have attempted to enter into a legal lease but the lease is void for some reason e.g. uncertaintyThe relevant period of the tenancy will depend upon the period by which the rent is quantified e.g. f the tenant pays a yearly rent, it will be a yearly tenancy, even if rent is actually paid weekly or monthly.
In an implied periodic tenancy, how is the period determined?
Based on the intervals between the payment of rent
What is a tenancy at will?
May arise if the owner allows a buyer to take possession of the land before entering into any written agreement to sell. * It does not create any estate in the land, but rather is a personal arrangement between the landowner and the prospective buyer which can be terminated at will by either party.* If the tenant attempts to assign the tenancy, this will operate as a notice to terminate the tenancy as soon as the tenant notifies the landlord of the fact. If the prospective buyer in possession begins to pay rent, the court may treat this as creating a periodic tenancy unless there is very clear evidence that the parties intend the tenancy at will to continue.
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 may arise, but an estate in land is not created
In the case where such 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?
- If the parties agree on a term which is uncertain and it is not possible to work out at the outset when it will come to an end (e.g. where termination of the lease depends on external circumstances over which the parties have no control)* If the length of the term is certain but the starting date is uncertain.
A lease is made for the life of a particular tenant. Is this a valid lease?
No, it is of uncertain duration and is invalid| s149 LPA 1925
A lease is granted to last until a war ends. Is this lease valid?
No. During the Second World War, many landlords granted tenancies which were expressed to last until the war had ended. Such a lease is void for uncertainty since, when the lease was granted, neither party could tell how long the term would be.| (Lace v Chanter (1944) KB 368 Court of Appeal).
What formality is usually required to create a lease?
A deed (because the granting of a lease involves the creation of a legal estate in land). This is known as an ‘express grant’.
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 premises2. They pay at least market rate rent and are not required to pay any upfront sum or premium i.e. “the best rent which can be reasonably obtained without a fine”
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 agreed2. Signed by all partiesIf these requirements are met, if one party breaches, the other party may seek the remedy of 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 such an equitable lease appropriately registered in (1) the unregistered system and (2) the registered system?
Unregistered: Class C(iv) estate contract land chargeRegistered: Notice on the charges register
What is the consequence if an equitable lease is not registered?
A purchaser of the landlord’s interest for value will not be bound (not exception where the tenant has begun to pay rent)
If the tenant of the equitable lease that has not been registered has begun to pay rent, will a purchaser of the landlord’s reversion be bound?
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
If a lease has not been created by deed, is not within the provision for short-term leases, and also fails to comply with the writing requirements, is there anything a court can do to save it?
No as the equitable estate depends upon the assumption that the failed grant operates instead as a contract to create the tenancy (which must be in writing)
Why is the distinction between a lease and a licence important?
Lease * Tenant has a raft of statutory protection available * Can potentially leave the leasehold interest to another party or sell it. * May also have “security of tenure’* Residential tenants will also have some protection in relation to the amount of rent that the landlord can charge. Licence* None of the above protection benefits the licence.
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 (i.e. right to exclude all others from the property, including the landlord)2. Fixed or periodic time certain3. In consideration of a premium (lump sum or periodic payments)If the above are not present, it is likely a licence, not a lease.If the substance of the arrangement between the parties is that a lease has been created, this will be conclusive, and the label given to it is not.
What are the 10 main covenants contained in a lease?
- Term* Payment of rent (amount and when payable)* Quiet enjoyment* Repair* Use of the premises (e.g. may prohibit business use)* Alteration of the premises* Insurance* Service Charge* Not to derogate from grant (landlord covenant not to frustrate purposes for which premises were let)* Other key terms e.g. access and landlord to enforce obligations against other tenants in buildingPrescribed clauses are included if registrable at HMRC and granted on or after 19 June 2006.
