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Land > The nature of lease > Flashcards

The nature of lease Flashcards

1
Q

What happens in a lease?

A

Landlord is the legal title holder.
Lessee owns contractual rights to the property. Full ownership of the property reverts back to the landlord once the tenancy ends: this is called reversion.

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2
Q

A lease creates an estate in land… what does this mean?

A

It means that the tenant has an interest in the land.

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3
Q

Difference between a lease and a license?

A

A lease is stronger than a license. It offers more protection to the lessee.

A license does not offer security of tenure - this is something that a lease does offer though (means lessee is entitled to occupy the whole duration of the tenancy, and maybe even after).

A license does not give exclusive possession and control over the property (they cannot make a nuisance claim etc) - this is something that a lease can offer though.

Lease can also bind 3rd parties, such as purchasers of the freehold - so that they are also bound by the lease.

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4
Q

What should a lease include?

A
  1. The term of the tenancy - fixed, periodic or tenancy at will etc.
  2. Exclusive possession and the intention to create legal relations
  3. What the rent will be
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5
Q

When will a lease trigger first registration?

A

When the lease term is more than 7 years

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6
Q

Does a lease that is 3 years or less need to be registered?

A

No. Will count as an overriding interest.
Can be orally made or written down.

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7
Q

What is an implied periodic lease?

A

When tenant has moved in and is paying rent… it will be assumed that there is a tenancy here even though there is no formal lease.

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8
Q

When a lease is more than 7 years, it must be…

A

registered. Also there must be a deed.

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9
Q

When a lease is 3-7 years, there must be a …

A

deed. Does not need to be registered.

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10
Q

When is an equitable lease created?

A

When the legal lease fails (aka after the 3 years tenancy and there is no deed).

But also equitable lease can fail if there is an impied periodic lease … this is a legal lease.

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11
Q

What are the types of covenants that exist between landlord and tenant?

A

Express agreed covenants.

And

Implied by statute.
Some implied covenants override express covenants.

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12
Q

Is the tenant subject to a repair covenant?

A

Only if included in express covenants.

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13
Q

Is an alienation covenant (aka the right to sublet and assign etc) an express or implied covenant?

A

Express.

The landlord cannot withhold consent unreasonably and must respond to such a request by tenant in a timely manner.

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14
Q

If landlord refuses to allow assignation of tenancy etc, do they need to give a reason as to why?

A

Yes. And this must be in writing. Should state why and this must not be unreasonable - reasonable is landlord not being certain if the new tenant that the current tenant wants to assign to will be able to pay the rent etc.
Unreasonable reasons = using the landlords personal reasons or opinions, discrimination or not like the tenant etc.

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15
Q

When can landlords discriminate and not need to have a reasonable reason for declining an ASSIGNMENT?

A

Commercial leases entered on or after 1 Jan 1996.
Usually, landlord will also use an AGA to keep original tenant on the hook for the misbehaviours of assignee.

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16
Q

What were things like pre-1996 for assignment and who is liable for the performance of covenants?

A

Landlord could easily sue original tenant for the non-compliance of the assignee.

Assignee only liable for the covenants that touch and concern the land.

To make assignee also bound to fulfill the covenants, landlord would have asked for a license to assign.

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17
Q

Nowadays (aka post-1996) how are leasehold covenants fulfilled on assignation?

A

Original tenant no longer liable for the leasehold covenants.
Assignee liable for all the covenants.

Landlord may want protection that these covenants will be respected and will want an AGA usually. Authorised Guarantee Agreement. With original tenant.

18
Q

What is an ‘old lease’?

A

Made before 1996

19
Q

How are leasehold covenants upheld and maintained in sub-lettings?

A

The same for ‘old leases’ and ‘new leases’.

Only RESTRICTIVE COVENANTS can be enforced against the sub-tenant.

For all other covenants:

(1) L can sue T. T can create an indemnity contract between the subtenant and them.

(2) L can make the subtenant liable by contracting a license to sublet with the subtenant.

20
Q

What remedies are available to a tenant who’s landlord is an asshole?

A

Specific performance - making L do the repairs for example

Injunction - to prevent L from breaching a covenant

Damages - can claim for any breaches of covenants, taking into consideration any loss in value of the lease.

Repudiate: T can repudiate the lease, terminate it and claim for damages.

Set off: T can do what L was suppsoed to do in the lease and then set off the costs against the rent. But, this is something the landlord can exclude and prevent T from doing by removing it from the lease.

21
Q

How can the landlord forfeit the lease upon tenant’s non-payment?

A

MUST HAVE AN EXPRESS RIGHT TO TERMINATE ON FORFEITURE IN THE LEASE.

For the failure of payment, there is NO NEED FOR NOTICE to be served to tenant.

(1) L must make formal request of payment
(2) Automatic right to entry when tenant is 6 months behind on arrears.

22
Q

How can the landlord forfeit the lease for the failure to follow any other covenant, other than the payment one?

A

MUST HAVE AN EXPRESS RIGHT TO TERMINATE ON FORFEITURE IN THE LEASE.

MUST SERVE s146 NOTICE.

Must issue proceedings in the court.

23
Q

What is a s146 notice?

A

Served by landlord to a tenant that has breached a covenant that is not about payment of rent.

It states what the breach is.
And if it can be remedied.
Requires T to pay compensation.

However, if lease was for more than 7 years and there is at least 3 months left in the lease, a SPECIAL s146 NOTICE must be served. This one allows T to counter-notice within 28 days. HOWEVER, on long tenancies, only if T accepts that there has been a breach or there is evidential proof that there has been a breach, can a s 146 notice be effective.

24
Q

Once a s146 notice has been served and the landlord specifies how the issue can be remedied, how long does T have before the landlord can forfeit the lease?

A

14 days

25
Q

In either the forfeiture rights the landlord has, what right does T have?

A

They have the right to relief.

26
Q

What other remedies does a landlord have for their tenant’s breach of covenants?

A

Action for debt

Commercial Rent Arrears Recovery - debt must exceed 7 days worth of rent

Damages for the breach of repair - and how the lack of covenant observation = the value of the property has gone down

Self-help: Jarvis v Harris - to use this, this needs to be included as a clause in the contract

Specific Performance

Pursue Guarantors

Take the rent deposit

Bankruptcy and winding up

27
Q

When does a lease come to end?

A

Expiration - term ends

Break clause - allows either party to terminate after a period of time after a notice has been served

Surrender - T gives up lease with L’s consent

Merger - T acquires (purchases) the freehold

Frustration -destruction of freehold property

Repudiation - L terminates and claims damages for T’s covenant breaches

Forfeiture - done by L

Bankruptcy or insolvency - trustee etc will disclaim a lease.

28
Q

How can a business tenancy protected by the LTA 1954 be terminated? Since it is special

A

Only by merger, repudiation, surrender, forfeiture and break clause, or T’s notice to quit OR ss25 or 26 notices.

29
Q

Do all tenancies need to be validated and made via leases?

A

No. Periodic tenancies can be made without a valid lease. Just the tenant moving in (exclusive possession + paying rent) is enough.

30
Q

How is a lease validly created?

A

With signature, signature must be witnessed by a 3rd party and the lease must include all the terms of the lease.

31
Q

What is a qualified covenant when it comes to assignation?

A

The landlord can withhold its consent to the assignment if it is reasonable to so.

32
Q

Post 1996 assignations: what does an AGA mean?

A

Means each previous tenant is released from their duties, UNLESS an AGA is provided: this measn they will be held liable. The benefit and burden of all covenants pass to the assignee .

SO. The current tenant and the tenant that assigned to them (the assignor) will be held liable for the observation of the covenants.

33
Q

What does the Commercial rent arrears recovery (CRAR) remedy (to a breach in covenants) do?

A

Commercial rent arrears recovery (CRAR) enables the landlord to enter the premises in order to seize the tenant’s goods and sell them. CRAR may be the best option in this case as there is a large amount of unsold stock on the premises

34
Q

When may an action for debt not be a good remedy for the tenant’s breach in covenant?

A

If they are having financial difficulties - unlikely that they can pay.

35
Q

Does a tenancy of less than 3 or 3 years need to be registered for it to be binding and legal?

A

No.
A short tenancy like this does not need to be registered. There just needs to be exclusive possession; rent being paid.

This will be an overriding interest and will be binding on the buyer of a freehold that has such a tenant.

36
Q

When landlord puts a clause in the lease that says that the property can only be used to sell clothes, can the tenant sell other things?

A

No. This is an absolute covenant/ prohibition.
Landlord does not need to give reasons for refusing the sale of anything else other than clothes.

37
Q

When do landlords not have to give reasons for refusal of things?

A

In the case of absolute prohibitions.

38
Q

When there is a changing of hands between landlords, what covenants are passed to the new landlord?

A

ONLY THOSE WHICH TOUCH AND CONCERN THE LAND.

NOT personal ones.

39
Q

How can a s146 notice be made valid for a long tenancy? (7yrs+)

A

on long tenancies, only if T accepts that there has been a breach or there is evidential proof that there has been a breach, can a s 146 notice be effective.

40
Q

What does s 141 of the Law of Property Act do?

A

S141 of the Law of Property Act 1925 gives the current landlord the benefit of the tenant covenant to pay rent.

41
Q

Tenant:
Agreed residency of 3 years
Exclusive possession
Has paid a premium
Pays rent

A

This is a license for a fixed term of 3 years.

This is not a lease because T paid a premium and this defeats s54 LPA (which allows a parol lease (lease without deed)).

42
Q

What is the s54

A

the s54 parol lease exception (3 years or less, market rent, no fine or premium and right to immediate possession)

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