Leases: essential requirements of a lease MCQs Flashcards
An occupier entered into a four year agreement by deed with the owner of a registered freehold building to rent a first floor flat. The agreement contains a clause in which the owner of the registered freehold agrees to clean the flat once every two days. The occupier moved into the premises 2 years ago and the freehold owner has not cleaned the premises once.
Which of the following statements best describes whether the occupier has a lease or licence?
The occupier has a licence because the deed has not been substantively registered
The occupier has a licence because the cleaning clause defeats exclusive possession
The occupier has a lease because the agreement was created by deed
The occupier has a lease because the cleaning clause is a sham clause
The occupier has a licence because there is no certain term
The occupier has a lease because the cleaning clause is a sham clause
This is correct. Sham clauses are those which owners of land may insert into a lease to make it look like a licence (defeating the requirement of exclusive possession) and to deny the occupier certain statutory rights which attach to a lease. The cleaning clause, if genuine, would defeat exclusive possession as it means the tenant is not able to exclude the landlord from the premises ‘once every 2 days’. Whether the cleaning clause is a sham or not depends on whether it is being exercised by the owner of the registered freehold, amongst other factors.
On the facts, the cleaning clause hasn’t been exercised once in 2 years. The court would therefore ignore the clause. On the facts there is a certain term and nothing else to suggest the occupier doesn’t have exclusive possession. The agreement has been created by deed, which are the correct formalities for a 4 year lease. The occupier would therefore have a lease.
A freehold owner of an indoor market gives a jewellery maker a written “licence” to sell jewellery in a space in the market on weekdays from 9am to 5pm, for a weekly payment. There is no fixed term. The terms of the “licence” give the freeholder the right to choose the space each week, and also impose detailed restrictions on what the jewellery maker can sell and the layout and use of the space. The freeholder usually gives the jewellery maker the same weekly space, but on two occasions has moved them to another space.
Which of the following options best describes whether the jewellery maker(the occupier)is a tenant or licensee?
The occupier is a licensee because it does not have exclusive possession
The occupier is a licensee because there is no fixed term
The occupier is a tenant because it is a business context, not a residential context
The occupier is a tenant because the relocation clause would be thrown out by the court as a sham
The occupier is a licensee because the agreement is called a “licence”
The occupier is a licensee because it does not have exclusive possession
Correct answer. Caselaw shows that a moving/relocation clause, and control by the landlord, are likely to preclude exclusive possession in a business context, so the best answer is that they are likely to have a licence and be a licensee.
The other options are incorrect. It is not correct to advise that it is a licence just because it’s called a licence, or to advise that they are likely to have a lease just because it’s a business context. The lack of a fixed term does not make it a licence, because it could still be an implied periodic tenancy due to the weekly payment. There are no facts given that show the court will ignore the terms as a sham, the reality is that the relocation clause is exercised.
A freehold owner of a shop grants a lease of the shop to a company. The document granting the lease is headed “deed”, signed by the freehold owner and the company, witnessed and dated. The duration of the lease is specified as “until the freeholder requires the shop for redevelopment.” The rent is specified as £100,000 per annum, payable in monthly instalments. The company goes into possession and pays the rent every month.
Which of the following options best describes what type of lease (if any) the company has?
The company has a fixed term lease
The company has an annual periodic tenancy
The company do not have a valid lease
The company has an equitable lease
The company have a monthly periodic tenancy
The company has an annual periodic tenancy
Correct answer: The fixed term is void for uncertainty, but because they go into possession and pay rent calculated on an annual basis, they have an implied annual periodic tenancy. The other options are incorrect. The periods (term) of an implied periodic tenancy depend on how the rent is calculated, not how it’s paid. The fixed term is void for uncertainty, so it cannot create a valid legal or equitable fixed term lease.
An owner of a registered freehold house comprising a living space, kitchen, bathroom and bedroom, enters into two separate agreements with two occupiers which purport to grant them a two year licence of the house.
In which of the following scenarios are the occupiers most likely to have entered into a joint lease agreement with the owner of the registered freehold?
The occupiers pay the same licence fee and their agreements started on the same day.
The owner and occupiers are related and they pay licence fees which are significantly lower than the current market rate.
The owner has a right of access to provide cleaning services to the occupiers every other day.
The owner and the occupiers are employer and employees respectively and the occupiers are required to live in the house to perform their employment roles.
The occupiers pay different licence fees and their agreements started on different days.
The occupiers pay the same licence fee and their agreements started on the same day.
This is correct. On these facts, the occupiers appear to have the four unities (possession, interest, title and time) as required by AG Securities v Vaughan (1990). On the facts, the separate licence agreements are likely to be read interdependently as per Antoniades v Villiers (1990). If the agreements are exactly the same, placing each occupier under the same terms, they will be considered to be ‘artificially separate’ as per Antoniades and this will not defeat the 4 unities from being present. The occupiers would be joint tenants of the property pursuant to a lease.
If the occupier are employer and employee and the occupiers are required to live in the house to perfrom their employment duties, this would defeat a lease as it would be a service occupanies.
Two years ago on June 7th, a landlord purported to grant a five-year lease of a house to a man and woman by deed. The rent had been advertised at £1,000 per month. The man and woman signed identical documents on the same day, each stating that the rent was £1,000 per month, although the man signed at 11am and the woman at 2pm on 6th June.
Which of the following option best describe if this is a joint lease or not?
This is not a joint lease because man and woman do not have unity of possession
This is not a joint lease because the man and woman do not have unity of title
This is a joint lease because the man and woman have the four unities
This is not a joint lease because the man and woman do not have unity of time
This is not a joint lease because the man and woman do not have unity of interest
This is a joint lease because the man and woman have the four unities
This is correct. There is no indication that the man and woman do not have unity of possession. They have unity of interest as they both have a five year lease on the same terms with a joint obligation to pay £1000 rent; they have unity of title as they sign identical documents and they have unity of time as the interest of both started on June 7th. It is irrelevant that they signed the documents at different times.
On the facts the the separate licence documents are likely to be read interdependently as per Antoniades v Villiers (1990).
The freehold owner of a block of flats orally allows a person to occupy one of the flats at the market rent of £800 per month. The freehold owner orally reserves the right to enter the flat once a month to carry out any repairs that are needed. Nothing is put in writing and no fixed term is agreed.
Which of the following options best describes what type of lease (if any) the occupier has?
The occupier has a legal periodic tenancy
The occupier only has a licence because the freehold owner’s right of entry will defeat exclusive possession
The occupier has an equitable periodic tenancy
The occupier only has a licence because of the lack of formalities
The occupier only has a licence because there is no certainty of term
The occupier has a legal periodic tenancy
Correct. A monthly periodic tenancy will be implied by the common law from the monthly rent and the LPA 1925 s.54 (2) short lease exception applies, which means no formalities are required to create the lease.
The other options are incorrect. A monthly periodic tenancy is implied by the common law, not equity, and doesn’t need formalities (if market rent) or a fixed term. The limited /restricted reservation of access indicates exclusive possession, and therefore a lease.
Question 1
A freehold owner grants a five-year lease to a tenant. The document creating the lease is described as a deed but the freehold owner’s signature is not witnessed and the document does not contain all the terms agreed by the parties. However, the tenant immediately moved into the property and has paid the freehold owner a regular monthly rent at the market rate.
Has a legal lease been created?
A Yes, as a five-year lease can be created without any formality.
B Yes, it is a legal periodic tenancy created by parol due to exclusive possession and payment of rent.
C No, in order to be a legal lease a deed is always required.
D No, the document is not a deed but equity may recognise the agreement.
E No, it is a licence as the agreement does not contain all the expressly agreed terms.
Comment
The correct option is B.
The document creating the lease does not meet the requirements for a deed. However, certain leases do not require a deed. Therefore option C is wrong.
Equity would not intervene as the document does not contain all the expressly agreed terms. Therefore, option D is wrong.
The tenant immediately took possession and paid a monthly rent at market rent with no fine or premium, thus creating a monthly periodic tenancy. Therefore, option E is wrong and option B is correct.
A fixed term five-year lease cannot be created informally. Therefore, option A is wrong.
A woman is the owner of the registered freehold of a workshop.
She orally agrees to give an artist the exclusive right to occupy the workshop as his studio. They agree that the arrangement will last for 12 months and that the artist will take immediate possession. There will be no upfront payment but a monthly market rent will be payable.
The artist confirms the terms of the arrangement in an email which the woman reads but does not acknowledge.
The artist takes no further action in relation to the arrangement but, before the artist moves into the workshop, the woman tells him that she has changed her mind.
The artist claims the arrangement has created an enforceable agreement allowing him to occupy the workshop as his studio.
What has been created by the arrangement?
A. A legal lease, because the oral agreement is sufficient.
B. An equitable lease, because the email is in writing but not a deed.
C. A licence, because the email is not signed by the parties.
D. A licence, because the artist has not taken up occupation.
E. An equitable lease, because the oral agreement is not capable of registration.
A - A legal lease, because the oral agreement is sufficient.
