LEASES + LICENCES

Question 1

What is a lease?

Answer 1

A lease is a property interest that grants exclusive possession of land for a specific term, usually in return for rent, creating a legal estate that can bind third parties.

Question 2

What is a licence?

Answer 2

A licence is a personal permission to use land that does not grant exclusive possession or create a proprietary interest, and therefore cannot bind third parties.

Question 3

Why is the distinction between a lease and a licence important?

Answer 3

Leases create property rights that can bind third parties and come with statutory protections and obligations. Licences are personal rights and do not bind third parties or carry statutory protections.

Question 4

What are the three essential characteristics of a lease as identified in Street v Mountford (1985)?

Answer 4

(1) Exclusive possession, (2) a term certain, and (3) rent (although the necessity of rent has been questioned in subsequent cases).

Question 5

What is exclusive possession?

Answer 5

Exclusive possession means the right to exclude all others, including the landlord, from the property, subject to limited rights of entry for specific purposes.

Question 6

What constitutes a term certain in a lease?

Answer 6

A term certain means the lease must be for a definite period or for a period that can be ascertained from the outset, as established in cases like Lace v Chantler (1944).

Question 7

Is rent required for a lease?

Answer 7

While traditionally considered essential, the necessity of rent for a lease has been questioned, as in Ashburn Anstalt v Arnold (1989), but it remains a strong indicator of a lease.

Question 8

What formalities are required to create a legal lease?

Answer 8

Leases must be created by deed for terms over three years (Law of Property Act 1925, s52). Shorter leases can be created orally, by written contract, or by deed (s54(2)).

Question 9

What is required for the grant of an equitable lease?

Answer 9

An equitable lease arises from a specifically enforceable agreement, usually in writing and signed by both parties, as per the Law of Property (Miscellaneous Provisions) Act 1989, s2.

Question 10

What was the significance of Street v Mountford (1985)?

Answer 10

The House of Lords held that exclusive possession, for a term, and at a rent are indicative of a lease, regardless of the label given to the agreement.

Question 11

What did the case Bruton v London and Quadrant Housing Trust (2000) establish?

Answer 11

The House of Lords held that a lease can exist based on exclusive possession, even if the landlord does not have an estate in the land, creating a “Bruton lease” which is contractual rather than proprietary.

Question 12

How did the case Aslan v Murphy (1990) clarify the concept of sham agreements?

Answer 12

The court held that if terms of an agreement are not genuinely intended (e.g., retention of keys for non-essential purposes), they can be deemed a sham and the occupier can have a lease despite the label.

Question 13

What are the key characteristics of a licence?

Answer 13

Licences do not grant exclusive possession, can be revoked at will, and do not bind third parties. They may or may not involve the payment of rent.

Question 14

What did the case Thomas v Sorrell (1673) establish about licences?

Answer 14

A licence is permission to use land in a way that would otherwise be a trespass, and it does not create any proprietary interest in the land.

Question 15

Huwyler v Ruddy (1986)

Answer 15

The case held that services provided by the landlord, like cleaning, indicate a lack of exclusive possession, supporting the existence of a licence rather than a lease.

Question 16

What is the objective approach to distinguishing leases from licences?

Answer 16

The objective approach, as seen in Antoniades v Villiers (1990), assesses the substance of the agreement over its form, focusing on the actual rights granted rather than the labels used.

Question 17

What role does intention play in creating a lease or licence? +case

Answer 17

Intention is assessed objectively, looking at whether the agreement grants exclusive possession and the overall circumstances, not just the expressed terms, as seen in National Westminster Bank v Jones (2001).

Question 18

How should you structure an answer to a problem question on leases and licences?

Answer 18

Problem Question Structure: Leases and Licences
1. Introduction
Identify the Main Issue: State whether the issue is determining if an agreement is a lease or a licence.
Mention Key Statutes and Case Law: Reference the Law of Property Act 1925, Street v Mountford (1985), and other relevant cases.
2. Define Lease and Licence
Lease: Exclusive possession for a term certain, typically in return for rent (Law of Property Act 1925, s1(1)(b)).
Licence: Personal permission to use land without exclusive possession or creating a proprietary interest (Thomas v Sorrell).
3. Apply Street v Mountford Test
Exclusive Possession: Determine if the occupier can exclude others, including the landlord.
Term Certain: Check for a clear duration of the agreement.
Rent: Identify if rent is payable and its significance.
4. Examine Intention and Labels
Substance Over Form: Focus on the actual rights granted, not just the labels used (Antoniades v Villiers).
Sham Agreements: Identify any terms designed to disguise leases as licences (Aslan v Murphy).
5. Consider Formalities
Legal Leases: Requirements for a deed (s52, LPA 1925) and exceptions (s54(2), LPA 1925).
Equitable Leases: Enforceable agreements in writing (Law of Property (Miscellaneous Provisions) Act 1989, s2).
6. Case Law Application
Apply principles from key cases such as Street v Mountford, Bruton v London and Quadrant Housing Trust, and Aslan v Murphy.
7. Additional Considerations
Periodic Tenancies: Creation through regular payments and continued occupation.
Public Sector Landlords: Special circumstances (Westminster City Council v Clarke).
8. Conclusion
Summarize Findings: State whether the agreement is a lease or a licence.
Justify Conclusion: Provide reasons based on analysis and case law.

Question 19

What is the significance of exclusive possession in leases?

Answer 19

Exclusive possession is crucial as it distinguishes leases from licences, granting the tenant control over the property and protection under various statutes, as affirmed in Street v Mountford.

Question 20

What are periodic tenancies and how are they created?

Answer 20

Periodic tenancies renew automatically at regular intervals (e.g., weekly, monthly) and can be implied from the payment of rent and continued occupation, as confirmed in Prudential Assurance Co Ltd v London Residuary Body (1992).

Question 21

How do formalities for leases differ based on the term length?

Answer 21

Leases over three years require a deed (s52, LPA 1925), while leases under three years can be created orally or in writing (s54(2), LPA 1925).

Question 22

What did the case Mexfield Housing Co-operative Ltd v Berrisford (2011) establish regarding uncertain terms?

Answer 22

The Supreme Court held that a lease for an uncertain term could be treated as a lease for life, converted to a 90-year lease under s149(6) LPA 1925.

Question 23

How did Westminster City Council v Clarke (1992) illustrate the concept of sham agreements?

Answer 23

The case held that genuine conditions for hostel accommodation, such as room changes and terminations for rule breaches, could negate exclusive possession, confirming a licence rather than a lease.

Question 24

What is the significance of the case Bruton v London & Quadrant Housing Trust (2000)?

Answer 24

The House of Lords held that Bruton had a lease due to exclusive possession, despite London & Quadrant only holding a licence from the local authority, introducing the concept of “Bruton leases.”

Question 25

What was the outcome of McDonald v McDonald (2016)?

Answer 25

The Supreme Court held that private sector landlords do not need to assess proportionality under the Human Rights Act 1998 when evicting tenants, affirming the supremacy of statutory provisions like the Housing Act 1988.

Question 26

What did Camelot v Roynan (2017) illustrate about property guardianship agreements?

Answer 26

The court held that despite the agreement being labeled as a licence, the guardian had exclusive possession and the agreement constituted a lease.

Question 27

How did Camelot v Khoo (2018) differ from Roynan regarding property guardianship?

Answer 27

The court held that Mr. Khoo did not have a lease because the terms of the agreement and the control retained by Camelot indicated a licence rather than exclusive possession.

Question 28

What does Susan Bright argue about the distinction between leases and licences in her work?

Answer 28

Susan Bright argues that the critical factor in distinguishing between leases and licences is the concept of exclusive possession. In “Leases, Exclusive Possession and Estates,” she emphasizes that despite how an agreement is labeled, the substance of the rights granted—particularly the right to exclude others—determines its nature.

Question 29

How does the case Antoniades v Villiers (1990) impact the interpretation of leases and licences according to academic sources?

Answer 29

Academics highlight that Antoniades v Villiers demonstrates the courts’ readiness to look beyond labels to the actual substance of the agreement. This case reinforces that if exclusive possession is granted, a lease will be recognized even if the agreement is termed a licence. “Land Law: Text, Cases, and Materials.”

Question 30

What did Elizabeth Cooke state about the objective approach to determining leases and licences?

Answer 30

Elizabeth Cooke explains that the objective approach, endorsed by the courts, involves assessing the real intention and substance of the agreement rather than merely its form. This approach ensures that the rights and obligations reflect the true nature of the relationship between parties.

Question 31

What did Nicholls LJ conclude about the requirement to leave the premises each day in Crancour Ltd v Da Silvaesa?

Answer 31

Nicholls LJ held that a clause requiring tenants to leave the premises daily indicated a licence, not a lease, as it negated exclusive possession. This clause was seen as a way to disguise the true nature of the agreement, emphasising the importance of substance over form.

Key Points:

Exclusive Possession: Daily leave requirement undermines exclusive possession, crucial for a lease.
Disguised Agreements: Such terms often mask what would otherwise be a lease.

Question 32

What was the key issue in Colchester Borough Council v. Smith [1992]?

Answer 32

The case dealt with whether Mr. Smith’s occupation of a property amounted to a lease or a licence. The court held it was a licence, as Smith did not have exclusive possession, which is essential for a lease.