U5. Leases Flashcards
What are the two types of legal estates and what is their legal definition ?
- Leasehold - Term of years absolute (Lease must be for a fixed period of time)
- Freehold - Fee Simple Absolute In Possesion
-Fee simple (can be inherited by anyone)
-Absolute (Cannot be given on any restrictions, must last forever)
-In Possesion - Must be current ownership, not sometime in the future.
How is a lease or a sub lease derived from the freehold?
- The landlord creates the leasehold estate out of the freehold estate, and assigns this lease to the tenant.
- This will be for a fixed term and the landlord will retain the legal interest in the freehold estate, known as the freehold reservation.
- As long as not prevented by an alienation covenant, the tenant is able to sublease the land.
On a subleasing, the lease granted to the tenant from the landlord becomes the headlease and the new lease is a sublease.
What are the types of Leases?
- Fixed Term Lease
These cannot be indefinitely, there must be an agreed maximum term.
- Periodic Tenancy
These may last indefinitely. It could run from week to week, month to month. The tenancy keeps being renewed at the end of the agreed term and is only ended when either the landlord of tenant gives notice to the other.
What are the 3 lengths of leases?
Do they need to be by deed? Do they need to be registered?
- 3 Years or Less
-No Deed
-No registration, overriding interest
- 3 to 7 Years
-Deed needed
-No registration, overriding interest
- 7 or more Years
-Deed Needed
-Must be registered
- If not registered, an equitable lease would be created.
What are the 2 (3) essentail characteristics of a lease?
- Exclusive Possesion
- Fixed Duration
(3. it must also be registered correctly depending on its length)
What is exclusive posssion? What is its importance with regards to a lease?
For there to be a lease, there must be exclusive possession, rather than just a license for exclusive occupation.
Exclusive possession means the tenant has the right to control the use of the property. They decide who goes in, and can exclude anyone from the property, including the landlord.
It does not matter if the document is called a license, it matters if they have exclusive possession.
What is a fixed duration with regard to a lease?
The lease must be for a fixed term, with a maximum duration.
Whilst there is no prescribed maximum duration, and it is for the landlord to decide, it cannot be longer than the term of his own lease.
What is a covenant?
A covenant is a promise between the landlord and tenant that they will either do something on the land or will not do something.
There will be landlord covenants or tenant covenants, depending on who is making the promise.
What is the landlord and tenant bound by?
If the landlord sells his freehold estate, what is the new landlord bound by to the original tenant (leaseholder)
- Privity of Contract
- Privity of Estate
If the orignal landlord sells his freehold estate to a new landlord, and the new landlord breaches a term, how would the tenant go about enforcing this pre 1996?
The tenant would sue the orignal landlord for breach of contract.
The original landlord should then seek to recover from the new landlord. Thus, the orignal landlord should always put an indemnity agreement in place with the new landlord.
What covenants are enforceable between sucessors of the freehold or leasehold?
Give example of covenant that would be enforcebale v one that wouldnt.
Only those covenants that ‘Touch and Concern’ the land will be enforceable.
For example, a covenant to maintain the drains could pass.
But, a covenant that the tenant provides the landlord with a basket of fruit each week would not pass as this is a personal covenant.
Whats the diffrence in liability for the freeholder between leases granted pre 1996 v post 1996.
Pre 1996, the original landlord will remain liable for the breach of the new tenant, and should seek idemnity from the new landlord.
This means if there is a breach, the tenant will sue the old landlord, and they will seek indemnity from the new landlord.
Leases granted post 1996 allow for the orignal landlords liability to be removed, meaning if there is a breach the original tenant will sue the new landlord.
For the landlord to remove their liability, they must write to the tenant seeking their agreement. If the tenant does not reply within 4 weeks, their liability is removed.
What is the diffrence of tenants liabilty after selling there leasehold for leases granted pre 1996 v post 1996
- Pre 1996 - The original tenant is liable for any breaches by the new tenant.
Thus the landlord would sue the original tenant, and the orignal tenant will seek indemnity from the new tenant.
(Unless For payment of rent, the new tenant can be sued directly)
- Post 1996, the old tenant is automatically removed from being liable. Thus the landlord would sue the new tenant directly via privity of estate.
What is the diffrence in liabilty for leases granted post 1996 for new landlords v new tenants.
- New tenants - The old tenant is automticlly removed from being liable.
- New freeholders - The orignal freeholder is only removed from liability if they write to the tenant and the tenant agrees, or does not respond within 4 weeks.
What is an alientation Covenant?
An Ailenation Covenant will prevent the tenant from the assignment or sublet of a property.
The tenant is still physically able to do this, but a breach can result in action being taken against them.
