Characteristics of a Lease
- A lease is an estate in the land which, therefore, gives a proprietary interest in the land. It must be distinguished from a licence which only gives a personal right in the land. Although the fact that licences only create personal interests has proved controversial in the past.
Consequences of the right being a lease and not a licence:
- It can bind 3rd parties e.g. purchasers of the freehold
- The holder of a lease has security of tenure created by statute but a licensee has not
- The parties to a lease are the landlord (lessor) and the tenant (lessee).
The essential characteristics of a lease
Street v Mountford
- Under a licence agreement, X was given exclusive possession of furnished rooms at a rent
- She signed a statement at the ened of the agreement that this was not intended to give rise to a tenancy under the Rent Acts
- It was held that she did have a tenancy
A least must have 3 characteristics
- Exclusive possession
- For a fixed or periodic term
- At a rent
The fact that the agreement is described as a licence does not prevent it from bring a lease if the characteristics are present.
The only intention of the parties which is relevant is the intention to grant exclusive possession.
Antoniades v Villiers
- A couple entered into 2 separate but identical agreements under which they were given the right to occupy rooms and each had separate responsibilities for payment of hald the rent
- The agreement provided that they were to use the rooms either in common with the owner or with other licensees permitted by him
- Despite the attempt to make this look like 2 separate licence agreements, it was a lease.
- A vital point was they had the choice of 2 singled beds or a double. They chose a double, so clearly they intended to occupy the rooms jointly.
- If a landlord retains a set of keys, this does not prevent a lease. (Aslan v Murphy)
- Do the circumstances show that there was no intention to create the relationship of landlord and tenant? (Heslop v Burns)
- In Bruton v London and Quadrant Housing Trust the House of Lords indicated that a lease could create purely personal rights between the parties and this 'personal' tenancy is binding on the immediate landlord but not on anyone with a superior title.
- Prudential Assurance v London Residuary Body - established the rule that a lease must be for a certain term. A lease was granted until a road required for road widening invalid.
Leases are classified by the length of time they last for and the main types are:
- Leases for a fixed term
- Periodic tenancies
Periodic tenancies arise from payment of rent at periodic intervals, there are 2 types:
- Express periodic tenancies - where a tenancy is granted but the precise length of it is not declared
- Impled pediodic tenancies - these are more likely in an exam question as they can be linked with a question where the formalities for the creation of an express legal or equitable lease were not observed.
Periodic tenancies are likely to be lega and will not require registration.
- Tenancy at will - the tenant, with the owner's consent, occupies land at the will of the owner, who may terminate it at any time. The tenant has no security of tenure and is really in no better position than a licensee except that as a tenant there is a right to exclusive possession
- Tenant at sufferance - the tenant, after the expiry of the lease, continues in possession without the consent of the landlord. A tenant at sufferance has no real tenancy and cannot even sue another for trespass (Schwartz v Zamri)
- A lease will be legal if created by deed, but there is an exceptionL
- S4(2) LPA 1925 - (in possession, best rent, no fine)
- Periodic tenancies - these will legal as the length of the lease will be less than 3 years.
- A lease can be equitable as an agreement for a lease but it must satisfy the 3 requirements for a valid agreement set out in S2 Law of Property (Miscellaneous Provisions) Act 1989
Walsh v Lonsdale
- A lease was granted but not by deed
- It was only equitable - an agreement for a lease can be enforced by equity on the basis of the equity maxim
An agreement for a lease can create a valid equitable lease.
Comparison between legal and equitable leases
- Created by deed except for leases not exceeding 3 years
- Not granted at the discretion of the couurt
- Tenant under a legal lease can claim implied easements under S62(1) LPA 1925
- Created by agreement which satisfied S2 Law of Property (Miscellaneous Provisions) Act 1989
- Granted at the discretion of the court - equitable remedies are discretionary
- Tenant under an equitable lease cannot claim implied easements under S62(1) LPA 1925 - equitable lease is not a conveyance
Registered and unregistered land (leases)
- Legal leases for over 7 years are registrable dispositions
- Legal leases for less than this period are overriding interests
- Equitable leases shoudl be registered but, if they are not, and if the leaseholder is in actual occupation, they may have an overriding interest under Sch. 3 para. 2 LRA 2002
- Legal leases are binding on all 3rd parties
- Equitable leases need to be protected on the register of land charges as estate contracts: Class C (iv)
Parties to a lease
- Lessor - grantor of the lease
- Lessee - grantee of the lease
- Headlease - lease granted by the lessor to the lessee as distinct from a sub-lease
- Freehold reversion - the rights retained by th elessor on the grant of a lease
- Assignment - disposition of the lessee's interest to the assignee who then takes over the assignor's interest in the land
- Underlease/sub-lease - creation of subsidiary estate out of the lessee's estate
Assignment of leases
- S19(1) Landlord and Tenant Act 1927 - the landlord must not withold consent unreasonably
International Drillig Fluids Ltd v Louisville Investments Ltd
The landlord is entitled to be protected from having the premises used or occupied in an underiable way by an undesirable assignee but consent to an assignment cannot be refused on grounds which have nothing to do with the relationship of landlord and tenant. A personal dislike would not be enough.
Reasonable refusal of consent
- Where the landlord reasonably believes that a proposed assignment would lead to a breach of covenant in the lease (Ashworth Frazer Ltd v Gloucester City Council)
- The assignee tenant's references were unsatisfactory
- The financial standing of the assignee is unsatisfactory
- Millett LJ 'Has it been shown that no reasonable landlord would have withheld consent?' (Den Norske Bank plc v Connie Investments Ltd)
Covenants in leases
- Covenants - promises in a deed
Implied covenants are implied in the lease unless excluded
- The tenant's covenant to repair. - if the premises are in disrepair at the start of the lease, then if the tenant covenants to 'keep them in repair' this means that he must put them in repair at his expense. (Payne v Haine)
- The landlord's covenant for quiet enjoyment - the tenant will not be distubed by 3rd party rights and acts of the landlord which disturb possession.
- The tenant's covenant not to commit waste - this means that 'the tenant must take proper care of the place' (Warren v Keen)
- Repudiation of the lease
- Specific performance - Posner v Scott - Lewis - granted in respect of an obligation to emply a resident porter at a block of flats
- Appointment of a receiver
For breach of the covenant to pay rent
- Action for arrears of rent - limited to 6 years
- Distress - allows the landlord to seize chattels found on the premises and sell them to raise a sum equivelant to the rent. No court action is necessary
- Forfeiture proceedings -
For breach of all other covenants
- Disctinction between a lease and a licence
- Types of leases
- Legal and equitable leases
- Extent to which leases are binding on a transferee of the land
- Parties to a lease
- When a landlord can refuse consent to an assignment of a leaes
- Distinction between express and implied covenants in leases
- Liability where the Landlord and Tenant (Covenants) 1995 Act applied and when it does not
- Remedies for breaches of covenants