Leasehold Flashcards
Registration of Leases
Leases three years or less do not need to be made by deed or registered. They will be an overriding interest anyway.
Leases for a term of three to seven years need to be made by deed but do not need to be registered to be an overriding interest.
Leases for more than seven need to be by deed and registered. Failure to do so would create an equitable lease, rather than a legal lease.
Essential characteristics
- Exclusive possession
- A fixed duration
- Comply with formalities to be legal
Exclusive possession
Tenant has right to control the use of the property. They can control who goes into the property and can exclude others from it, even the landlord.
Lease or licence?
A licence the occupier permission to stay in the property and does not grant them legal or proprietary interest. If occupier has exclusive possession then they will have a lease - it doesn’t matter whether the document is labelled a licence.
Fixed duration
Term must not exceed landlord’s duration
Periodic tenancy
Agreement likely to continue on a month by month basis until either landlord or tenant gives notice.
Express Covenants
Promises to do something between landlord and tenant which are written into the lease.
Implied Covenants
These will be implied into the lease unless the lease specifically states that they do not apply.
Landlord implied covenants
- Quiet enjoyment
- Non-derogation from grant - if tenancy is granted for a specific purpose, landlord cannot do anything to undermine that during the lease
- repair
Tenant implied covenants
- to pay rent and taxes
- repairing - everyday wear and tear should be expected but tenant should not do anything that could significantly reduce the value of the landlord’s land
- not committing waste - not to anything which would permanently change the landlord’s land
Privity of contract
Only those who are parties to the contract can sue or be sued of the clauses in the contract.
Privity of estate
Rights and duties that apply between the current owners of the different legal estates in the same piece of land.
Successors in title of the freehold - pre 1996
Only bound by covenants which touch and concern the land.
Successors in title of the freehold - post 1996
Original landlord may write to tenant asking to be released from the liability. If tenant agrees or does not reply in four weeks, the landlord will be released from that on-going obligation.
Successors in title in leasehold estate - pre 1996
Privity of estate is between current landlord and tenant. Privity of contract still applies to original parties of the lease.
Successors in title in the leasehold estate - post 1996
Tenant automatically released from liability, unless it has been excluded in the assignment.
Alienation Covenants
A clause in the lease preventing the assignment or sublet of a property. If breached, landlord can seek a remedy to rectify the breach.
Remedies for landlord
- action for debt/ damages
- injunction - stopping tenant from continuing the breach
- specific performance - require tenant to carry out something they would not have done I.e repairs
- forfeiture - allows landlord to terminate the lease and take control of leasehold estate
Forfeiture for non-payment of rent
Landlord must:
- make a formal demand for payment, unless there is express exemption of this in lease or the rent is in arrears for six months or more
- ensure there is a forfeiture clause in the lease
If these are satisfied, landlord can either renter the property forcefully or apply to the county court for possession proceedings.
A tenant may be given relief from forfeiture if they can pay the outstanding rent within 5 days of the hearing
Forfeiture for any other breach of covenant
There must be a forfeiture clause in the lease and the landlord must consider whether the breach is remediable. If it is remediable. Landlord must serve a notice specifying this and wait 14 days before making an application to court for forfeiture.
A tenant may be given relief from forfeiture if:
- they can show the court that they remedied the breach or
- they can persuade the court the lease can continue even though there has been a breach
Damages available to tenant
- Damages
- Injunction
- Specific performance
- Recoup the cost of repairs from future rent - tenant must give notice on the landlord specifying the repairs. Ensure this is carried out as otherwise landlord may be able to claim forfeiture for non- payment.
Ending a lease
- Expiration
- Forfeiture
- Surrender
- Merger - apply to purchase the freehold in reversion to merge the freehold and leasehold legal titles.
