Land IV Leases Flashcards
Who is a lessor and who is a lessee?
In a leasehold transaction, the landlord (Lessor) will grant from his freehold estate a term of years absolute in favour of the tenant (Lessee)
Meaning of reversion
After granting a lease, the landlord still retains the legal freehold estate. the landlord’s interest in the land is known as the reversion, and, should the landlord assign the interest, the person who buys the reversion is called the assignee of the reversion.
What is a virtual freehold?
With a long lease of 999 years the tenant is effectively in the position of a freeholder and the lease is mainly aimed at ensuring that certain burdens attach to the land and can be enforced.
The typical length of a lease for commercial property?
3 years, 7 years or 21 years
Rules on break clause
A long lease might include a break clause allowing one or both parties to terminate the lease before the full term has expired. In the absence of such a clause, the term must generally be allowed to run its course
Rules on rent review
A rent review clause is required to increase rent in a long lease
Meaning of a reversionary leases
If the tenant is to enter a lease today but take possession of the property later, then the lease providing that the tenant is not to take possession until some date in the future is known as a reversionary lease.
A reversionary lease is invalid if there is a 21 years or more gap in between.
Meaning of tenancy at will
The owner of land may allow a buyer to take possession of the land before entering into any written agreement to sell. This may create a tenancy at will.
This action 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, the will operate as a notice to terminate the tenancy as soon as the tenant notifies the landlord of the fact.
Paying rent will convert the tenancy at will to a periodic tenancy unless there is very clear evidence that the parties intended otherwise.
Two situations where lease will be void for uncertainty
if the length of the term is uncertain
if the length of the term is certain but the starting date is uncertain
Meaning of
‘best rent which can be reasonably obtained without a fine ‘
the lease is at market price and the tenant does not have to pay any upfront lumpsum or premium.
How can a short lease be assigned?
a short lease may be created without a deed or any formality but it can be assigned only by deed.
Rules on equitable leases
For leases that are not recognized legally, equity may help to recognize such interest as an agreement as a contract for the disposition of land.
if one party breaches the contract, the other party can seek specific performance.
For a lease
how to protect an equitable interest in a registered/unregistered system
in the case of unregistered land, this should be done by the registration of Class C(iv) land charge.
In the case of registered land, by a notice on the charges register. The tenant’s occupancy will mean that his interest is an interest that overrides first registration and a registered disposition.
The distinction between lease/license
if the agreement is a lease, the tenant has a raft of statutory protection available and potentially can leave the leasehold interest to another party or sell it.
A tenant will also have the security of tenure, which is the right to stay in the premises at the end of the lease term.
A licence offers none of those rights.
What is a licence
A licence is a personal right to use land in some way. A licence creates neither an estate nor an interest in land.5 4
What makes a tenancy a lease but not a licence?
Exclusive possession: the legal right to exclude all others from the demised property, including the landlord
For a fixed or periodic term certain; and
In consideration of a premium (such as lumpsum) or periodic payments: rent indicates a lease but is not necessary for a lease to exist.
Meaning of not to derogate from grant
The covenant not to derogate from the grant is a landlord covenant which an obligation not to frustrate the purposes for which the premises were let.
ex: A landlord let a unit in a high-class development to a pawnbroker. The landlord may be held to have derogated from his grant.
Meaning of forfeiture in terms of the lease
Forfeiture is the right for the landlord to bring the lease to an end in the event of default. Note that a forfeiture clause will not be implied into a lease.
For commercial property, what is the remedy for non-payment of rent
Commercial rent arrears recovery (CRAR) is a statutory procedure that allows landlords of commercial premises to recover rent arrears by taking control of the tenant’s goods and selling them for leases from 6 April 2014.
A landlord must provide seven days’ notice of enforcement and after this time, a certificated bailiff or enforcement agent can enter the property seize the tenant’s goods.
the property must be wholly commercial and it cannot be used to recover any service charge arrears.
How to stop a forfeiture application
There is statutory protection for the tenant, and the tenant has the right to settle the arrears and to apply for relief from forfeiture to avoid losing the premises.
in what situation where a landlord may impliedly waive his right to forfeit
if a landlord is aware of the breach and then accepts or demands payment, this will waive the right to forfeit.
serving notice on the tenant requiring repairs to be done
carrying out distress for rent
Self-help clause and Jervis v Harris Clause
A self help clause entitles a landlord to enter the premises and make repairs if a tenant has breached their covenant to maintain or repair the property.
the landlord can serve notice on a defaulting tenant requiring them to do the work, specifying any breaches of covenant. if that fails, the landlord can enter to carry out the works and then recover the costs.
a self-hlep clause is called Jervis v Harris clause regarding the 1995 case that landlord after carrying out repair works for dilapidations, could recover these costs from the tenant as a debt
Explain s146 notice
A section 146 notice of the Law and Property Act 1925 is served by a landlord who wishes to commence forfeiture proceedings against a leaseholder following a breach of a lease. This notice must
specify the breach complained of,
importantly if the breach is capable of remedy, require the leaseholder to remedy the breach, and
in any case, require the leaseholder to make compensation in money for the breach.
Explain continuing liability for covenants-landlord and tenant (covenant) act 1995
Under a lease made before 1 January 1996, the landlord can pursue either the original tenant or the new tenant unless one of them expressly releases the other
For leases made after 1 January 1996, tenants are automatically released from their covenants upon assignment. it is the date of the grant of the lease and not the date of the assignment that determines which rule applies.
