Leases and Licences (extended) Flashcards
What are the requirements of a lease?
The definition of a lease is outlined in s.205 (xxvii) of the LPA 1925 as a “term of years including any fixed period”. The requirements of a lease were outlined in the case of Street v. Mountford [1985]. The House of Lords held the requirements were; firstly the estate must be of a duration permitted for a leasehold estate (meaning it must be for a fixed term), secondly the grant must give exclusive possession, and thirdly that the grant must have the correct formalities. Rent and adequate consideration is not a requirement of a lease under Street v. Mountford, rather it is an aspect of the contractual nature of the lease.
Nomenclature of an agreement.
Street v. Mountford held that the nomenclature of the agreement is irrelevant due to public policy considerations.
Duration of Leases
Leases are capable of subsisting as either fixed term or a periodic tenancy. The case of Lace v. Chantler held that the when it is for a fixed term it must be stated within the agree, and the agreement in this case for the duration of the war could not amount to a lease. This was upheld in the case of Prudetial Assurence where the council leased a strip of land to an owner of a shop until they needed it to extend the road. In this case the court held the lease was void for uncertainty,
What is the concept of exclusive possession associated with?
The distinction between leases and licences
What are the main differences between leases and licences?
A lease is a property right that is freely alienable, whereas a licence is a personal right that arises specifically between the parties to the contract. As a result a lease will bind third party purchasers whereas a licence will not. This is because a lease is protected by legislation whereas licences are outside the scope of statute.
How is an agreement defined as either a lease or a licence?
In Street v. Mountford the House of Lords considered the factual matrix in established if a lease or a license was present. They considered: the relationship between the parties, the nature of the property, the real control retained by the landlord. They also considered the subjective intentions of the parties is broadly irrelevant. The main distinction which the court emphasised what the ability of the tenants to exclude all other parties from the party including the landlord.
Case law concerning exclusive possession and sole occupancy?
Marchant v. Chartes [1977]:
case concerning a single man in a bed sit with shared kitchen, the presence of a cleaner, who daily cleaned his premises ensured that the agreement was a licence. In this case Lord Denning considered that this was because the occupier was never intended to have a stake in the room, whereas this reasoning was updating by Lord Templeman in the case of Street v. Mountford, who stated this was because he was entitled to live in the premises but could not call it his own.
Case law concerning exclusive possession and sham transactions?
A landlord may enter into an agreement with the parties for a licence when in fact what the parties have is a de-facto lease.
Lord Templeman in Street v. Mountford as “a five pronged instrument for manual digging can be called a spade, nevertheless it is a fork”.
The case of Crancor v. Da Silvaesa where a married couple rented a one room apartment together, the landlord held he retained the right to introduce another party into the apartment, yet the court held this was a sham agreement.
Case law surrounding exclusive possession and shared accommodation?
In cases of shared accommodation, the four unities should be present. these are the unity of possession, interest, title and time.
In the case of Somma v. Hazelhurst, the landlord retained control of the occupants of the property, the occupants were not jointly and severally liable for the rent and they were not considered as one legal entity. However they were a couple who signed for a one bedroom flat. The C of A held in this case that they were not joint tenants, and they each had licences.
This should be contrasted to the case of Street v. Mountford where the court considered a very similar set of facts as a sham transaction.
The case of AG Securities Ltd Vaughn; Antoniades v. Villars [1990]
The case of Vaughn and Villars was a conjoined appeal where the House of Lords considered the difference between a lease and a license in considering the factual matrix. The case of Vaughn concerned a 4 bedroom flat, with individual agreements and rent was paid by each individual, as well as the period of occupation. It was also the landlord who was responsible for replacing each occupant. In this case the court held that they were licences.
In this case of Villars a quasi-married couple lived in a 2 bedroom apartment, however signed 2 separate agreements. The House of Lords held that the two agreements were interdependent, the occupants were also jointly and severally liable for the payment of rent. Therefore although the introduction of a third party was possible it was unrealistic therefore the court ruled it was a lease, as it was a sham transaction.
What are the formalities for creating a lease?
s.52 of the LPA 1925 (1) outlines that transferring or creating an interest in land must be done through a deed.
A lease can be made in three ways, these are; by express grant of a legal lease, a legal lease by operation of law and a equitable lease.
What are the formalities required for creating a legal lease by express grant?
s.54 (2) of the LPA 1925 holds that the s.52(1) requirement of a lease does not affect the creation of leases for less than three years at the best rent without the taking of a fine. The case of Long v. Tower Hamlets hold that the lease takes effect immediately, if it does not a deed is required.
What are the formalities required for a legal lease by the operation of law?
A legal lease by operation of law only applies to a periodic tenancy.
What are the formalities required for a equitable tenancy?
The case of Walsh v. Lonsdale held that “an agreement for a lease is as good as a lease”. An equitable lease will arise if there has been some written agreement of a lease but not a deed. The requirements for this are outlined in s.2 LP(MP)A 1989
What are the differences between a legal and equitable lease?
There are three main differences between a legal and equitable lease, these are: under equity the remedy is specific performance, on unregistered land the equitable lease must be registered as a land charge. Thirdly, on registered land an equitable lease will not be an overriding interest per sch 3 para 1 LRA 2002, however can be per sch 3 para 2.
The connection between an equitable lease and specific performance.
The case of Bell St. v. Wood holds that if the claimant does not come to equity with clean hands they may not claim the only remedy available to them which is specific performance of the lease. This can be compared with a legal lease which binds the world regardless of moral standing.
What was the effect of the 1925 legislation on the ruling of Walsh v. Lonsdale.
In the case of Walsh v. Lonsdale it was stated that under equity “an agreement to have a lease is as good as a lease”. Due to the 1925 legislation, it can be said that there are limits placed on this statement due to the need to register it on the title in the form of a notice or a land charge. However subject to this, the assertion is correct.
Quiet Enjoyment.
Quiet enjoyment is the manifestation of the requirement of exclusive possession.
Clauses within a lease.
If there is a clause within a lease about the onus of repairs of a property, then it will be upheld due to contract law principles.
In the absence of direction from a lease and no direction from the LTA 1985, then who is liable for repairs?
a fixed term leasee is liable for permissive waste, therefore they must maintain the property in the condition it was in at commencement of the lease. A periodic tenancy is under no liability to repair the property however he must use the property in a responsible manor. The landlord is under a responcibility to keep the common parts in good repair per the case of Barrett v. Lounova
