Nature and Creation of Leases

Question 1

What is a lease

Answer 1

• Originally a purely contractual relationship
  
  • Used to be in personam – a lessee’s rights were personal rights that gave rise to an action in damages against the lessor on his covenant to give enjoyment of the land
• A contract between two parties – the lessor and the lessee, but it is a contract that also has a proprietary character
• Leases are now contractual and proprietary in their nature
  
  • Relationships between the parties - privity of contract and privity of estate

Question 2

Definition of a lease

Answer 2

“A term of years absolute”

LPA s1(1b)

Question 3

Freehold v Leasehold

Answer 3

• The freehold estate is what that which the first leasehold interest is granted on
• Leases are for a finite period that is either fixed or determinable on notice
• All leases are a derivative interest of the freehold and/or a superior leasehold interest of greater length

Question 4

Elements of a lease

Answer 4

An occupier of land for a term of years absolute, at a rent, is a tenant provided that the occupier is granted exclusive possession [Street v Mountford]

Question 5

Lease v Licence

Answer 5

• A licence consists simply of a permission to make some use of another’s land and does not count as a legal estate or interest in land, nor as an equitable interest
  
  • Even if A is under a contractual duty not to revoke a licence, the licence still gives B only a personal right against A
• A licence is a personal right, whilst a lease is almost always a property right
• If B has only a licence of A’s land, then B cannot bring a claim in nuisance against X [Hunter v Canary Wharf]
• Street v Mountford – just because it is called a licence does not make it a licence
  
  • The courts will look to the substance, not the form
• Leases are proprietary – they are legal and bind third parties (e.g. successors in title) whilst licenses only bind those that create them

Question 6

Types of lease by term

Answer 6

Fized term

Periodic

Tenancies at will

Question 7

Periodic tenancy

Answer 7

Tenancies that are granted on a periodic basis

Not tenancies for the period specified, but tenancies that continue from period to period indefinitely until determined by notice to quit [Leek and Moorlands Building Society v Clark]

May be created by oral agreement [Hammon v Farrow]

Statutory period tenancies occur at the end of the fixe period for an assured shorthold tenancy

Question 8

Tenancies at will

Answer 8

“Where the tenancy is on terms that either party may determine it at any time” as opposed to a periodic tenancy [per Nicholls LJ in Javad v Aqil]

Can be terminated simply by asking the tenant to leave, or by serving possession proceedings and no special form of notice is required

Question 9

Common types of tenancies

Answer 9

Assured tenancies

Assured shorthold tenancies

Rent Act or ‘regulated’ tenancies

Question 10

Assured tenancies and assured shorthold tenancies

Answer 10

• Created by the 1988 Housing Act
  
  • All private sector tenancies created on or after Jan 15 1898 are either assured or assured shorthold tenancies
• Similar to a regulated tenancy under the 1977 Rent Act in that the landlord may not recover possession unless he can prove a ground for possession contained in Sch2 HA 1988
  
  • The grounds are more favourable to the landlord than those that apply in Rent Act cases
• ASTs limited security of tenure and can be terminated either under one of the grounds contained in sch2 or by service of a notice in accordance with s21 HA

Question 11

Rent Act or ‘Regulated’ Tenancies

Answer 11

It is not possible to create these tenancies any longer

Question 12

Formalities to create a lease

Answer 12

• Must be by deed [s52 LPA]
  
  • Exception: where the lease is for less than 3 years for immediate possession [s54(2) LPA]
• Assignment must be by deed (including short tenancies)
• Contract: s2 + s5 LP(MP)A 1989
  
  • Walsh v Lonsdale: “equity looks on that as done which ought to be done.”
    
    • A contract for a lease is as good as a lease [Allhusen v Brooking]

Question 13

Walsh v Lonsdale

FACTS

Answer 13

The landlord agreed in writing to grant a 7-year lease of a mill to the tenant at a rent which was to vary with the number of looms on run. It was agreed that T would pay a year’s rent in advance

No lease was executed but T was let into possession and paid rent in arrears for about a year and a half, thereby becoming a yearly tenant at law

L demanded a year’s rent in advance and, on T’s refusal to pay, levied distress

T brought an action for damages for wrongful distress, for an injunction and specific performance of the agreement, and he applies to an interim restraining the landlord’s distress pending trial

Question 14

Walsh v Lonsdale

HELD

Answer 14

• If all the formalities of creating a lease are followed, then the parties are entitled to an order for SP and/or damages at law
  
  • In equity, the parties were treated as if the lease had been granted without proper formalities by application of the principle that “equity looks on that as done which ought to be done”. There is no such principle at law because the transaction was void as a lease, and as a contract for a lease the only remedy was an action for damages
• At law where proper formalities have not been followed a party is entitled only to damages and has no rights in the land
  
  • A person who is entitled to specific performance is entitled to demand the land itself; in the eyes of equity the person is entitled to the land itself

Question 15

When to register a lease

Answer 15

If the lease is for a term of more than 7 years from its grant,

If the lease is to take effect in possession after the end of a period of three months beginning with the date of grant

Where the right to possession is discontinuous

For certain secure tenancies where there is a right to buy under the Housing Act 1985

Where a secure tenant’s landlord disposes of his interest and the tenant is no longer a secure tenant

Question 16

Content of a lease

Answer 16

Exclusive possession

Term certain

Rent

Question 17

Exclusive possession

Answer 17

The ability to exclude the world

• Westminster City Council v Clarke
• Aslan v Murphy
• AG Securities v Vaughn
• Antoniades v Villiers

Question 18

Exclusive possession

Street v Mountford

Answer 18

Street v Mountford: the landlord reserved the right to enter to carry out repairs to the property. The HoL ruled that this supported the claimant’s argument that she was entitled to exclusive possession and was therefore a tenant not a lodger

Question 19

Exclusive Possession

Westminster City Council v Clarke

Answer 19

The construction of the term that Westminster could oblige C to change rooms defeated the exclusive possession claim

In this case, had Westminster given exclusive possession of the room to C they would have been in breach of their statutory duty to make the property available to others

Question 20

Exclusive Possession

Aslan v Murphy

Answer 20

the clause denying exclusive possession had no purpose other than to defeat the claimant’s exclusive possession

Question 21

Exclusive Possession

AG Securities v Vaughan

Answer 21

there were four tenants, who had not moved in as a group – each moved in as another moved out. AG Securities attempted to terminate the agreement of the fourth and he claimed that acting together, they all jointly held a lease and thus they qualified for statutory protection

The HL held that they were all licensees

Question 22

Excusive possession

Antoniades v Villiers

Answer 22

Two tenants moved in at the same time and signed a tenancy agreement each at the same time. They were a couple.

The HL held that they were tenants jointly because their tenancy agreements were interdependent: either they would have moved in together or not at all

Question 23

Street v Mountford

FACTS

Answer 23

Mr Street, a solicitor, owned a house. He entered a signed written agreement with Mrs Mountford, allowing her a right to exclusive occupation of two rooms in that house. The terms of the agreement were that Mrs Mountford would pay to Mr Street £37 a week and either party could terminate the agreement by giving 14 days’ notice. The agreement consistently described itself as a ‘licence’

At that time, the Rent Act 1977 gave leasehold tenants a right to a fair rent, as set by an independent officer or tribunal, which the landlord was required to accept. It also required a longer period of notice from the landlord before they could terminate the tenancy

Mrs M claimed that the agreement was a lease, and she applied for a fair rent to be assessed. Mr S then applied to the County Court for a declaration that the agreement was a license

Question 24

Street v Mountford

HELD

Answer 24

(per Lord Templemann): Mrs M had a lease

The terms of the agreement (exclusive possession, for a certain term, at a rent) created a lease even if the agreement did not describe it as such

The court will look to the substance and not the form

It would not be a desirable state of affairs if Landlords could circumvent the protection given to lessees by Parliament simply by writing ‘licence’ on what would otherwise be a lease

Question 25

Street v Mountford

Requirements for a lease

Answer 25

Exclusive possession – the ability to exclude the entire world, including the landlord, from the property

For a certain term – must have a fixed maximum duration

At a rent

Question 26

Street v Mountford

Effect of a lease

Answer 26

• A lease gives rights of ownership to the tenant – this is consistent with the act that a lease can count as a legal estate in land, as it confers rights of ownership of land
• The ownership held by B is temporary, as it is limited in time
• B may still have exclusive possession even if his temporary ownership of the land is subject to certain restrictions
  
  • Contractual limits will not stop the land from being in possession
  • A specific limited restriction is not inconsistent with ownership

Question 27

Exclusive possession in practice

Answer 27

• B would have only a licence (and be a lodger) if “the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises [per Lord Templeman in Street v Mountford]”
• It is exclusive possession, rather than intention to create a lease, that will create a lease [Street v Mountford]
  
  • Once it is found that B has a lease, then any relevant statutory protection will apply even if the agreement between A and B attempts to exclude the statute; you cannot contract out of the Rent Acts
• In Westminster CC v Clarke, it was ruled that B did not have exclusive possession and hence no lease because:
  
  • B was not entitled to any particular room
  • B had to have the prior approval of the council staff for any visitors
  • B was obliged to comply with any instructions from the warden in charge of the hostel
  • B was told he might have to share accommodation

Lord Templeman said that “these limitations confirmed that the council retained possession of all the rooms”

Question 28

Sham doctrine

Answer 28

Allows a court to disregard apparent contractual terms if those terms were in fact intended by A and B “to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations which the parties intended to create” [per Diplock J in Snook v London and West Riding Investments]

Question 29

Law commissions recommendation

Answer 29

The scope of any future protective legislation should not be limited to those occupying under a lease

This has not been followed in England, but in Wales future residential leases and licenses will be ‘occupation contracts’

Question 30

Exclusive possession and multiple occupation

Answer 30

• It is possible for two or more parties, acting together, to acquire a lease [Antoniades v Villers]
• In AG Securities v Vaughan, the HoL held that in any case where two or more occupiers attempt to establish a joint lease, it is necessary to show that they acquired their right to exclusive possession as joint tenants, rather than as tenants in common
  
  • A JT is harder to establish than a TC because it involves unity of possession, time, title and interest

Question 31

Certainty of term

Answer 31

• Must have a fixed maximum duration
• The parties must be able to ascertain the date of commencement and the duration of the term at the outset of the tenancy. If not possible to do so it is void [Mexfield Housing Co-operative v Berrisford]
• Lord Templeman: if B has a lease, B is “able to exercise the rights of an owner of land which is in the real sense his land, albeit temporarily and subject to certain restrictions”
  
  • B’s right to exclusive possession must be for a limited time
• As a rule, it is very easy to comply with
• In the case of Lace v Chantler, it was held ‘the duration of war’ was not a term certain
• For 10 years or until B gets married, whichever is earlier – valid

Question 32

Why must a lease have a tie limit

Answer 32

• A lease has a time limit because it is necessary to maintain a distinction between a lease and a freehold, and there is no time limit imposed on a freehold
• There must be another party (the grantor of the lease) with a prior estate, either a freehold or a longer lease
  
  • It would be inconsistent with A’s ownership of the land if there were no certain point when A would be able to regain the right to exclusive possession

Question 33

What happens if a tenant takes possession and pays rent on a periodic basis, re certainty

Answer 33

If a tenant takes possession and pays rent on a periodic basis in accordance with the terms of the agreement a periodic tenancy is created, on the terms of the agreement so far as they are consistent with the periodic tenancy

Such a tenancy is certain because each party has the power to determine it by service of an appropriate notice to quit [Prudential Assurance Co v London Residuary Body]

Question 34

Criticisms of certainty of term

Answer 34

• A rule about the required content of a lease may operate to defeat the intentions of the parties
  
  • The requirement places a limit on the freedom of A and B
  • The interests of third parties must be borne in mind when considering if A and B have successfully created a property right. The law gives effect to the will of third parties by placing limits on the freedom of A and B to create property rights
• It is a rule that “requires the maximum duration of a term of years to be ascertainable from the outset” [per Lord Browne-Wilkinson]
• The HoL has indicated that this requirement may not last much longer in Mexfield Housing Co-Operative v Berrisford

Question 35

Prudential Assurance v London Residuary Body

Answer 35

Shows that the requirement that a lease be for a limited period can frustrate parties’ intentions

‘Until land needed for development’ was not a term certain

Question 36

Prudential Assurance v London Residuary

Lord Browne-Wilkinson

Answer 36

Lord Browne-Wilkinson said that the requirement for a certain term led to a “bizarre outcome” and was an “ancient and technical rule of law” for which “no one has produced any satisfactory rationale”

He applied on the rule simply to avoid judicial change to the rule, which would be retrospective and thus would potentially unsettle existing titles to land

He urged the Law Commission to see if legislation could be introduced to reform the rule

Question 37

Prudential Assurnace

Lord Neuberger’s clarification of the ruling in Mexfield

Answer 37

An agreement for a term, whose maximum duration can be identified from the inception can give rise to a valid tenancy

An agreement which gives rise to a periodic arrangement determinable by either party can also give rise to a valid tenancy

An agreement could not give rise to a tenancy as a matter of law if it was for a term whose maximum duration was uncertain at the inception

(a) a fetter on a right to serve notice to determine a periodic tenancy was ineffective if the fetter is to endure for an uncertain period, but (b) a fetter for a specific period could be valid

Question 38

Mexfield

FACTS

Answer 38

A mutual housing association granted a monthly tenancy which it was only able to terminate on grounds of arrears of rent or breach of covenant (the tenant had a right to break). By virtue of its status, the landlord housing association could not grant an assured (under the 1988 Housing Act) or secure tenancy (under the 1985 Housing Act). as the term was effectively indefinite, it claimed it could not amount to a lease, and gave notice to terminate

Question 39

Mexfield

HELD

Answer 39

The Supreme Court unanimously held it amounted to a common law tenancy and was governed by s149(6) LPA.

Before the LPA, indefinite leases were treated as leases for the life of the tenant. the 1925 LPA converted these to leases for 90 yeas, but determinable on the death of the tenant

There was a valid tenancy, and the landlord could only terminate it upon the death of the tenant (or after 90 years if earlier)

Question 40

Why do we have the requirement for certianty of terms?

per Neuberger in Mexfield

Answer 40

For many centuries it has been regarded as fundamental to the concept of a term of years that it had a certain duration when it was created

the 1925 LPA supports this conclusion, as if defines a term of years as “a term of years … either certain or liable to determination by notice or re-entry”

The house of Lords confirmed the certainty requirement in Prudential

Changing the law may upset long-established titles

Where there is a grant to an individual, rather than a company, the effect is that there is a tenancy for life

Question 41

Rent

Answer 41

• In Street v Mountford, Lord Templeman refers to the “grant of land for a term at a rent with exclusive possession” as the hallmark of a lease
• However, payment of rent is not a requirement of a lease
  
  • S205(1) xxvii LPA defines a term of years absolute starting with “taking effect either in possession or in reversion whether or not at a rent”
  • The tenant could pay an upfront payment / premium
  • Some cases, as in Ashburn Anstalt v Arnold, do not require payment at all
• A leasehold can be given as a gift
• Whilst a lease almost always involves a contract, there is no requirement that it must
  
  • A lease can arise simply by way of a grant, without any need for a contract [Ingram v IRC]

Question 42

Tenancy rebutted

Answer 42

• No intention to create legal relations [Marcroft Wagons v Smith; family relations]
• Exclusive possession because of a different relationship [Gray v Taylor; charitable]
• Service occupancy: if occupation is necessary for better performance of job [Street v Mountford]
• Sharers [AG Securities v Vaughan]

Question 43

Intention to create legal relations

Answer 43

• The grant of a lease involves the creation of legal rights, and so it depends on the parties having an intention to create legal relations
• Burrows v Brent LBC: the HoL held that no lease was created when a local authority with the benefit of a possession order allowing it to remove a tenant agreed with the tenant that they could remain in occupation if they complied with certain conditions
  
  • This is an example of the court manipulating the concept of intention to crate legal relations in order to reach a particular result

Question 44

Intention to create a lease, or to give B a stake in the land

Answer 44

• The intention to create a lease, or to give the tenant a stake in the land, is not required
• If the agreement between A and B gives B a right to exclusive possession for a term, B has a lease, even if the agreement between them was intended to only give B a licence [Street v Mountford]
• Thus, a lease can arise in the absence of an intention to give B a property right, or a ‘stake in the land’
  
  • It is for the courts to determine whether the rights produced by the agreement do or do not fall within the definition of a lease
• A right to exclusive possession of specific property for a limited period is necessarily a property right

Question 45

Bruton Lease

FACTS

Answer 45

• The council gave the London and Quadrant Housing Trust, a charitable association, a licence to use land to accommodate the homeless. For a place at Flat 2, Oval House, Rushcroft Road, in Brixton, London, Mr Bruton agreed with the Trust to pay weekly rent for a flat. There was a provision that the council and LQHT had access to the property at limited times. Then he claimed he was a tenant, and the Trust had an obligation to repair the flat under the Landlord and Tenant Act 1985 section 11.
• The Housing Trust argued that under orthodox property law principles, nemo dat quod non habet (literally meaning “no one gives what he does not have”), so because they had no lease, they could not grant a lease to Mr Bruton, and therefore they had no obligation to repair the property

Question 46

Bruton Lease

HELD

Answer 46

The Housing Trust gave Mr Burton a right to exclusive possession, which was a lease, and thus were under a statutory repairing duty

Note that the Bruton lease does not give an estate in land [per Lord Scott in Kay v Lambeth], nor does it give a property right [per Lord Hobhouse in Bruton]

Question 47

Tenancy or lease in Bruton

Answer 47

• The key question was whether the agreement created a lease or a tenancy within the meaning of the Landlord and Tenant Act 1985
• Although the agreement consistently referred to Mr Bruton as a licensee, it was found that overall the agreement amounted to exclusive possession
  
  • So, in the normal case where the Trust itself had a freehold or a lease, Mr Bruton would have had a lease and so would have qualified for the statutory protection under the 1985 Act
• Lord Hoffmann: it is the nature of the contract between the parties which determines whether B had a lease or not
  
  • If A has an estate in the land, that lease will also give B an estate in the land and thus a property right. But if A does not have an estate, B will still have a lease

Question 48

Explanation of the ruling in Bruton

Answer 48

The basic effect of Bruton is to split leases into two types

Tenancy by estoppel

Relativity of title

Mr B did not have a lease in the usual sense of the word

Question 49

The basic effect of Bruton is to split leases into two types

Answer 49

• The standard lease (which gives B an estate in land and a property right capable of binding third parties)
• The Bruton lease, which gives B only contractual rights against A
  
  • The difference between a Bruton lease and a license is that with the Bruton lease the terms of the agreement between A and B would give B a standard lease if A had an estate in the land

Question 50

Bruton

Tenancy by estoppel

Answer 50

Depends on the idea that, if A purports to give B a lease, then A cannot rely on their own lack of title to deny that a lease exists between A and B

The application of this was rejected on the facts of Bruton on the basis that the Trust had made no representation that Mr B had a lease, and so no estoppel could arise

However, as Routley argues, this confuses the doctrine of tenancy by estoppel with the doctrine of estoppel by representation

Question 51

Bruton

Relativity of title

Answer 51

• Even if its agreement with Lambeth only amounted to a licence, if the Trust then in fact took possession of the land, it could thereby independently acquire a freehold, just as a squatter taking possession acquires such an estate
• Just as a squatter can grant a lease (one that does not bind any parties with a better title to the land), so can the Trust grant Mr B a lease (albeit one that cannot bind any other parties)
• An analogy between a lease granted by a squatter and a Bruton lease was made by Lord Scott in Kay v Lambeth
  
  • It provides an explanation of how a licensee, if it also has possession in fact, may grant a lease
  • In practice, it is difficult to show that the Trust did act I this way to acquire its own independent freehold
• This explanation makes the position of Mr B dependent on the rights of the trust, and so differs from the requirements in the first and second explanations

Question 52

Burton

Mr B did not have a lease in the usual sense of the word

Answer 52

• The question in the case was whether Mr B had a lease or a tenancy within the meaning of the 1985 Act.
  
  • It is thus a question of statutory interpretation whether the Trust should be able to escape a repairing duty simply because it did not have an estate in land
• The most likely reason for imposing a repairing duty is that it is unfair for a party with only a short-term right to occupy to have to bear the cost of work which will benefit someone else in the long term
  
  • On this view, the decision in Bruton just means that we have to interpret the 1985 in a specific way
• The Law Commission (2006a) recommended that future legislation protecting residential occupiers should apply whether or not the occupier has a property right capable of binding third parties; this approach has been adopted by the Welsh Assembly
• However, this explanation is in contrast with Street v Mountford, in which the was ruled that courts should simply apply the traditional definition of a lease and not allow that definition to be influenced by the statutory consequences of B having a lease
  
  • This is why the HoL rejected Lord Denning’s attempts to limit the scope of the protective legislation by narrowing the definition of a lease

Question 53

Impact of Bruton

Answer 53

• The decision does not cast into doubt the fundamental divide between a lease and a license
  
  • The Bruton decision simply means that a very limited class of agreements will be regarded as leases rather than licenses, even though it is accepted that the agreement only gives B a personal right against A
• The main impact of the decision rests in the application of statutory protection
  
  • The controversy shows why there should be reform

Question 54

Creating a legal lease

Answer 54

• S52 LPA: general requirement that a deed must be used to create a legal estate or interest in land
• S4 and s27 LRA: requirement that, if B’s lease is for more than 7 years, it must be registered if it is to be a legal lease
  
  • Leases that are hard for a third party to discover are also to be registered
• S54(2) LPA: a legal lease can be created without any writing at all if
  
  • The lease is less than three years
    
    • This allows relatively short leases to be created informally
  • It gives B an immediate right to exclusive possession [Long v Tower Hamlets LBC]
    
    • Increases the chances of a third party being able to discover B’s lease
  • It must be at a reasonable market rent [Fitzkriston LLP v Panayi]
    
    • Protects third parties who might acquire land from A after A has granted an oral lease of that land to B

Question 55

Requirement of a deed and registration

Answer 55

Question 56

Implied periodic tenancy

Answer 56

• No formality requirements apply to the implied periodic tenancy because this lease is implied from the conduct of the parties where B offers, and A accepts, payments of rent
• The consent of each of the parties is necessary for each renewal of the tenancy
  
  • Hammersmith & Fulham v Monk: each renewal of the periodic tenancy involves a contract between the tenants and the landlord, and all the tenants have to agree if such a contract is to exist

Question 57

Transferring a legal lease

Answer 57

• Where A attempts to transfer an existing legal lease to B, a deed must be used [s52 LPA]
  
  • Even if the lease was created orally, a deed is necessary for its transfer [Crago v Julian]
  • The s54(2) exception is limited to the creation of leases
• Where A’s lease is registered, any transfer of that legal lease to B will also require B to be registered in place of A [s27(2a) LRA]

Question 58

Acquiring a new equitable lease

Answer 58

• An equitable tenancy only arises in certain specified circumstances recognized by equity [Alexander-David v Hammersmith & Fulham LBC]
• If B’s right does not count as a legal lease because it does not have the required content, then it cannot be an equitable lease
  
  • However, if B’s planned right does have the required content, but B has not met the requirements for the acquisition of a legal lease, it may be possible for B to show that, instead, he or she has an equitable lease
• In Walsh v Lonsdale, the absence of any formal grant of a lease did not prevent the creation of an equitable lease
  
  • This does not mean that formality rules are irrelevant when considering equitable leases. They are relevant if B bases the claim for an equitable lease on A’s being under a contractual duty to grant B a lease
• S2 LP(MP)A: a contract for the sale or other disposition of an interest in land must be in writing, signed by both parties and must contain all the terms expressly agreed by the parties.
  
  • In this case, if the dealings between the parties were purely oral, B cannot claim that A is under a contractual duty to grant B a lease
  • An exception is made for a lease that meets the conditions imposed by s54(2) LPA
• If it can be shown that A is under a non-contractual duty to grant B a lease, an equitable lease can arise
  
  • S2 LP(MP)A applies only to contracts; it does not prevent B from arguing that A’s duty arises from some other source, such as proprietary estoppel [Whittaker v Kinnear]
  • Whilst s53(1a) LPA states that writing is required for the creation or disposal of an interest in land, it also allows for such creation or disposal to occur by operation of law
• Proprietary estoppel can, even in the absence of writing, lead to A’s being under a duty to grant B a lease [Yaxley v Gotts]
• When B relied on a contract with A as the source of A’s duty to grant B a lease, an equitable lease will only arise if a court would order specific performance of A’s contractual duty [Coatsworth v Johnson]
  
  • There is no sound foundation for this supposed requirement (Gardner)
  • The key point is whether A’s duty is in general of a type where SP might be ordered

Question 59

Transferring an equitable lease

Answer 59

In cases where A already holds an equitable lease, A may transfer it to B

B must take care that A’s agreement with A’s landlord does not impose any relevant restriction on A’s power to assign a lease

Even if A’s lease arose purely orally, the transfer of the lease must be made in writing [s53(1a) + s53(1c) LPA]

Question 60

Defences for C where B has a pre-existing legal lease

Answer 60

• It is very difficult for C to have a defence against a pre-existing legal property right
• If B has a legal lease of registered land, it will be impossible for C to use the lack of registration defence (provided by s29 LRA) against B’s legal lease
  
  • If B’s lease is for more than 7 years, or is an exceptional short lease, then it can only be a legal lease if it has been registered – C will not be able to rely on the lack of registration defence
  • If B’s lease is for 7 years, it can be a legal lease in the absence of registration
  • This kind of legal lease counts as an overriding interest [p1 sch3 LRA] and so is immune to the lack of registration defence

Question 61

Defences for C where B has a pre-existing equitable lease

Answer 61

• If B has an equitable lease, B may protect that right by the entry of a notice on the register
  
  • This will ensure that C, if later acquiring a competing right, will not be able to use the lack of registration defence against B’s equitable lease
• If there is nothing on the register recording B’s equitable lease, and C meets the requirements of s29 LRA, then C will be able to take free from B’s right, unless B is in actual occupation of the land at the relevant time
  
  • An equitable lease can be an overriding interest only if it is protected by B’s actual occupation in land
• P1 sch3 LRA protects only legal leases, as it refers to a lease granted to B [City and Permanent Building Society v Miller]

Question 62

Normal or early termination of a lease

Answer 62

• The most natural way for a lease to end is the expiry of its period
• A lease will end if one of the parties exercise a power to terminate the lease early
  
  • Break clause: a term giving the tenant a power to end the lease early, which is useful to the tenant if the premises prove to be unsuitable or a lower rent is available elsewhere

Question 63

Forfeiture of a lease

Answer 63

Berrisford v Mexfield: the terms of the lease can give the landlord the power to terminate if certain events occur

When a landlord exercises such a power, it is said to forfeit the lease

Because forfeiture can have severe consequences for a tenant, equity and statute impose limits on the landlord’s power to forfeit the lease

Question 64

Doctrine of frustration

Answer 64

If a change in circumstances means that the tenant will no longer receive the essential benefit for which they bargained, the lease will be terminated

A sufficiently radical change in circumstances could, in theory, lead to a lease’s being discharged by frustration [National Carriers v Panalpina]

Question 65

Ending of a lease

breach

Answer 65

The continuation of B’s right to exclusive possession may not always suffice to give B the essential benefit of their bargain, and thus the lease will be terminated [Hussein v Mehlman]

Question 66

Contract or property

Answer 66

• A contract is a means of acquiring rights, whereas property relates to the content question, as a property right is a type of right
• Consent is crucial to the transfer and creation of property rights even if no contract is involved (e.g. a gift of land or when a trust of land is declared)
• The doctrines of frustration and of termination for breach reflect the fact that, where an arrangement takes effect because of the parties’ consent, that consent may be given on a particular shared basis
  
  • The basis of the arrangement does not consist solely of B’s acquiring a right to exclusive possession of land
  • The fundamental shared basis of the lease agreement may be possession plus provision of land fir for use, as Bright argued
• A lease is both a contract and a property interest, so liability can derive either from the contractual relationship (privity of contract) or the estate-based relationship of the parties to the lease at the relevant time (privity of estate)