Leases Flashcards
What is a lease?
A lease can be defined as a contract by which one party conveys land or property to another for a specified time, usually in return for a periodic payment. This specified period of time can be either fixed or may be periodically extended, and can be for any amount of years as per the Law of Property Act 1925, s 205(1)(xxvii). When the lease comes to an end, ownership of the property returns to the landlord (also known as the lessee).
Landland and tenant also known by?
Landlord = Lessor Tenant = Lessee
Leaseholder and freeholder the same?
Aside from the restriction on the period of time for which a leaseholder may own land, there is no substantial distinction in the rights between leaseholders and freeholders. As the court has observed, the tenant leaseholder is equally able to exercise rights over land as would a freeholder.
Key points established from Bruton v London & Quadrant Housing Trust [1999] UKHL 26
1) Leases can, but do not require, a term of years absolute.
2) Leaseholds at root only require exclusive possession at a rent.
3) As such, leaseholds are perhaps more contractual than proprietary.
Key characteristics of leases
1) Exclusive possession;
2) For a fixed or periodic term certain; and
3) In consideration of a premium – meaning a lump sum – and/or periodical payments.
What is the landlords reversion?
The landlord retains the freehold in the property, referred to as the landlord’s reversion. This can be assigned to another person who then becomes the new landlord.
The tenant can assign the lease to another person, called the assignee. Alternatively, the tenant can
grant a separate lease for a term less than the original lease, known as a sub-lease (if it is more than the original lease, this will be an assignment of the original lease – not a sub-lease).
Types of leases?
- Fixed Term Lease
This is where the length of the lease is specified in advance, e.g. “On 01/01/2012 A grants B a lease for 7 years by deed”. The lease automatically terminates when the fixed period expires, e.g. after 7 years.
- Periodic Lease
This type of lease automatically recurs until either the landlord or the tenant gives notice that they want the tenancy to end, e.g. it may be “year to year” which will continue year after year until either party gives notice to end it.
Equitable leases
An equitable lease is created where a purchaser of a registered legal lease failed to complete his or her purchase by registration as required
by s27 LRA 2002.
An equitable lease may also be created where there is a contract to create a lease – this may happen in two ways:
a) The parties entered into a contract to grant a lease and then simply never proceeded to the stage of actually granting the lease itself; or
The parties did proceed to the lease being granted, but the lease document failed to comply with the correct formalities under s1 LP(MP)A 1989 for the creation of a deed. The contract must comply with the requirements of s23 LP(MP)A 1989 in order to have validity and the remedy of specific performance must be available for it to be enforceable (discretionary remedy).
Leasehold covenants
Leases are both estates in land and contracts between the parties. It will set out the terms agreed between the parties such as the boundaries of the property and the duration. It will also include covenants that define obligations of the parties under th lease (e.g. who is responsible for repairing the premises).
Express Covenants
There is no definitive list as each lease can vary and different covenants will apply in different circumstances.
Typical covenants include:
• a covenant to pay the rent
• a user covenant (e.g. do not use for business purposes)
• a covenant not to assign, sublet or part with possession of the premises without landlord’s consent
Implied Covenants
Where the lease is silent on certain issues, implied terms will be added to the express terms of the lease. The following are implied into
every lease:
Implied Landlord Covenants:
• Landlord’s covenant to allow tenant quiet enjoyment (Markham v Paget)
• Covenant that landlord will not derogate from his grant - i.e. he cannot give with one hand and take with the other - if he gives a lease for a particular purpose he cannot behave in a way that prevents the tenant using the property for that specified purpose
(Aldin v Latimer)
- There is generally no covenant that the premises are fit for the purpose for which they are let or are habitable - and this is true even where the premises are domestic but unfit for human habitation (Lane v Cox) - but this rule is modified in the case of furnished houses and houses let at low rent, which must be fit for human habitation at the start of the term (Smith v Marrable).
- Landlord’s covenant to repair is implied in all residential leases for a term of less than seven years (s11 Landlord and Tenant Act 1985). It covers the structure and exterior of the property; as well as the facilities for the supply of water, gas, electricity, sanitation, and heating - but it does not cover general internal decoration. There is a general duty of care to make the property safe by dealing with defects arising from disrepair ONLY - not a general duty to make it safe, habitable, etc.
Implied Covenants
1) Covenant to pay rent
2) Covenant to pay rates and other taxes on premises
3) Liability for damage or disrepair
4) Allow landlord entry in the event of repair
