Week 9

Question 1

explain leases, what are they?

Answer 1

Lease involves the grant of an interest in land by the lessor to the lessee. The granting of the interest must give the lessee a right of exclusive possession to the land for a period of time. A lease is both an enforceable interest in land and a contractual relationship between lessor and lessee.

Leases commonly provide for: quiet enjoyment, payment of rent, repair and cleaning, payments of rates and charges, insurance, purpose of use, alterations, damages, insolvency by either party, review of rent during term, options for renewal, inspections, assignments, subletting, expiration and termination

Question 2

what is the laissez-faire principle in relation to leases

Answer 2

o The general rule is that the parties are free to agree on such terms as suit their particular needs.

o Rights and duties are expressly provided for in the lease document
o Statutory encroachment – need for consumer protection in instances where one party is in superior bargaining position and able to dictate terms.

Question 3

explain the essential characteristic of a lease “exclusive possession”

Answer 3

Important to identify if exclusive possession has been created as if it has there is evidence the leasehold estate in land has been grants as opposed to a license which simply creates a relationship between the landlord and tenant in which remedies for breach will be contractually based rather than proprietary (license give access to only contractual

remedies, where as leasehold interest gives access to both proprietary and contractual remedies

Question 4

explain term of lease

Answer 4

Must be certainty as to when the lease is to commence and it’s term (duration). If the date of the commencement or the term of the lease is not specified, the commencement and term must be able to be calculated to meet the requirement of certainty.
A lease in which the commencement, duration and expiration of the lease is known by the parties is regarded as a fixed-term lease
o Certainty of commencement
o Certainty of duration

Question 5

explain formalities

Answer 5

To create an enforceable and legal leasehold interest in land, the lease must be evidenced by written agreement by the parties. However, oral (parole) leases are permitted by statute provided that the term does no exceed 3 years.
For longer leases, a legal interest in land will be created once the lease is registered, once registered the lease will gain protection of indefeasibility –
if a lease fails to meet the formal requirements or is unregistered it may be enforceable in equity if the parties have agreed to essential elements, e.g. names of parties, subject property, rental amount, terms of lease

Question 6

explain periodic tennancy

Answer 6

A periodic tenancy will arise by operation of the law and may arise where a fixed-term lease has been found to be invalid or has terminated and the tenant remain in possession
A periodic lease is one that is classified by the period or length of the tenancy e.g. one year
Termination will depend on the duration of the tenancy e.g. year to year tenancy requires a 6 month notice period, whereas a tenancy as will can be terminated with notice period of 1 month

Question 7

explain termination of periodic tennacnies

Answer 7

Termination will depend on the duration of the tenancy e.g. year to year tenancy requires a 6 month notice period, whereas a tenancy as will can be terminated with notice period of 1 month

Question 8

explain lease covenants

Answer 8

Covenants contained in the written lease are regarded as express terms. Where the lease is silent on an issue necessary for the ability of the relationship, a term must be implied into the lease. Terms can be implied into the lease by operation of statue or common law

Question 9

explain express terms

Answer 9

o A term written into the lease
“Usual” lease terms include:
o Lessor –covenant to give quiet enjoyment
o Lease – duty to pay rent, rates and taxes
o Lease – duty to keep and deliver up the premises in good repair
o Lessor – right to enter premises for inspection where there has been a breach of lease terms

Question 10

explain implied terms

Answer 10

o An agreement not written into the lease agreement itself but nevertheless part of the agreement via stature or common law
o A term may be implied into the lease to give business efficiency to the lease
o Common law – implied terms such as the landlords duty of care
o Statute implied terms in each jurisdiction such as
Lease – duty to pay rent, tax and rates
Lease – duty to keep and return the property in good and tenable repair
Lessor – right to entry for inspection purposes
Lessor – right of entry for non-payment of rent and breach of lease

Question 11

explain assignment of sublease

Answer 11

o Assignment: transfer of lease’s interest to another person referred as the assignee. The original ease is referred to as the assignor

o Sublease: grant of new but lesser lease to another person referred to as the sublease the original lease is no the sub lessor

o Process: prior approval of the lessor is required before an assignment or sublease will be consented to

o Enforcement: privity of contract does not exist between original lessor and the incoming assignee or sublease which means that the lease covenants are not automatically enforceable between the parties without further contractual arrangements. Covenants that “touch and concern the land” will be enforceable

Question 12

explain residential leases

Answer 12

Residential leases:
Tenancies: housing and accommodation
o Regulated by legislation – consumer protection in orientation (tenant)
o Legislation regulates such areas as payment and deposit of bonds, rental increases, termination and eviction procedures, and dispute resolution

Question 13

explain security bonds

Answer 13

o Legislation in each state details the maximum amount of bond that the landlord is able to demand – in some states the bond is required to be held by an independent government agency
e.g. Vic – no more

Question 14

explain rent and tenants security of tenure

Answer 14

o If rent is to increase during the term, the legislation requires notice to be given to the tenant. Generally, the rent cannot increase until the expiration of 60 days from the date of notice
o In all states the tenant has the right to quiet enjoyment of the premises. The landlord retains the right to enter the premises for specific purpose, which differ between jurisdictions

Question 15

explain residential termination

Answer 15

o A residential tenancy can be terminated if there has been a breach of obligation by either party – generally speaking a notice must be issued to the defaulting party specifying the breach and providing the defaulting party with an opportunity to remedy the breach. The landlord can recover the premises if the breach is still unsolved

Question 16

explain realestate shop leases

Answer 16

Tenancies: commercial based leases specifically tailored to retail space
o Regulated by legislation – consumer protection of retail tenants
o Legislation enacted to promote true negotiations as opposed to take-it-or-leave-it type arrangements previously seen in large shopping centers
o “a premise that is used for sale or hire of goods by retail or the retail provision of service” – VIC retail leases act 2003

Question 17

explain entry into a retail shop lease

Answer 17

o Prior to entering into a retail shop lease a lessor must provide the lessee with certain information in a disclosure statement.
o Each state details the information must be contained in the disclosure statement and generally this must include such key information as the rent, rent review mechanisms and the lessee’s obligations to pay outgoings.
o Failure to provide the disclosure statement may enable the lessee to resort to a number od remedies including the ability to terminate the lease

Question 18

retail lease requirements

Answer 18

o	Advice reports – financial and legal
o	Annual estimate of outgoings
o	Assignment 
o	Disclosure requirements
o	Dispute resolution processes
o	Defective statements

Question 19

explain methods of determination

Answer 19

1. Expiration of the term – the lease term has come to an end
2. Forfeiture
   o Non-payment of rent: lessor has right to termination and re-entry
   o Other breaches; notice of breach to be issued with opportunity to remedy the breach/pay compensation
   o Lessee has ability to claim relief against forfeiture
3. Surrender – lessee returns leasehold interest to lessor
4. Frustration – Where the lease of the contract cannot be performed in a way that that was originally intended by both parties

Question 20

types of remedies

Answer 20

Remedies for the lessee:
o	Damages
o	Frustration
o	Repudiation
o	Set of rent

Remedies lessor:
o Damages – monetary compensation for loss
o Forfeiture – continued breach that is un-remedied
o Frustration
o Repudiation

Question 21

explain a lisence

Answer 21

o	A license is a right to do something
Three types of licenses
1.	 Bare
2.	 Contractual
3.	 Coupled with an Interest

o Is it a personal or property right?
o Depends primarily on the intentions of the parties

Question 22

types of leases

Answer 22

o Residential leases – tenancies: housing and accommodation
o Regulated by legislation – consumer protection in orientation (tenant)
o Legislation regulates such areas as payment and deposit of bonds, rental increases, termination and eviction procedures, and dispute resolution

o Retail leases – tenancies: commercial based leases specifically tailored to retail space
o Regulated by legislation – consumer protection of retail tenants
o Legislation enacted to promote true negotiations as opposed to take-it-or-leave-it type arrangements previously seen in large shopping centres

o Agricultural leases - often large tracks on land
o Regulated by legislation – consumer protection in orientation
o Need to provide longer notice periods

o Other leases – other commercial based leases (industrial, offices etc)
o Not regulated by legislation but the common law
 Freedom of contract