Leases

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Leases

Freehold estate/fee simple= indefinite duration 

Leasehold estate= definite duration.

LPA 1925 (1)- fee simple and leasehold estates are the only two estates in land 'capable of subsisting or of being conveyed or created at law.' 

LPA 1925 (1) (b)- 'term of years absolute'. Can range from weeks to thousands of years.

Terminology- term of years/leasehold estate/tenancy/demise= lease. 

The reversion expectant upon the lease= the landlords remaining interest, the right to the possession of the property when the lease ends. 

Leases allow two or more people to enjoy the benefits of owning an estate in the same piece of land at the same time. All leases contain covenants- these are promises eg to pay rent, not to have pets etc. 

Leases are simply a form of contract that grant estate in the land and proprietary rights. 

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Leases

Granting permission to enter or to use land= licence. Simply a form of contract. Leases and licences often look identical in practise. Law needs way to distinguish. 

Exclusive possession- this the main way to differentiate a lease from a licence. If a landlord enters a tenants house without permission they are a trespasser. Leases have exclusive possession, licences dont. In a lease you have a right to exclude all others from the land including the landlord. 

History- The Rent Acts. These protected tenants not licencees. This was contractual regulation by statute. After WW2 landlords started to only give licences to get around act. This was done because tenants didnt have a choice but to move in due to housing shortages. They needed security and prices were going mad. 

Two approaches at looking at leases and licences- objective approach- determined by looking ath what is confered in reality. Doesnt look at the form, it looks at the substance of the agreement. 

Subjective approach- looks to the intentions of the parties as expressed in the agreement. So doesnt look at the rights as confered in practise. If stated as a licence then it is. 

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Objective or subjective?

The objective approach- Facchini v Bryson 1952- 'the occupation has all the features of a tenancy, and the parties cannot by mere words of their contract turn it into something else. Their relationship is determined by the law and not by the label which they choose to put upon it.' 

Changed the approach because instead of providing tenant protection the Rent Act had become a burden on landlords, which was a disincentive to rent. Caused a stagnating rental market. 

The subjective approach-Somma Hazlehurst 1978- 'share the room with such other licensees or invitees whom the licensor shall from time to time permit to use the room.' Section in a licence contract.

Reassertion of the objective approach- Street v Mountford 1985 (very important case)- the agreement described itself as a licence. Despite contrary intention this was a lease. The 3 necessary elements for a lease are 'exclusive possession, for a rent, at a term.' 

'The court must decide whether upon its true construction the agreement confers on the occupier exclusive possession. If exclusive possession at a rent for a term does not constitute a tenancy then the distinction between a contractual tenancy and a contractual licence of land becomes wholly unidentifiable.' 

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Objective approach

'The manufacture of a five pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language insists that he intended to make and has made a spade.' 

Arguments for the objective approach- protects the Rent Act so the original intention of Parliament. Problem with implementation. 

What is exclusive possession? This is a legal, not factual construct. There is a right to exclusive possession under a lease. How do you show this? The rights are intangible. 

The three elements for a lease are 'exclusive possession, for a rent, at a term.'

1) exclusive possession- the right to exclude all others, including landlord. Rebuttable presumption that there is this. Is the sole and exclusive use of the premises. 

Street v Mountford 1985- 'an occupier of residential accommodation at a rent for a term is either a tenant or a lodger. The occupier is a lodger if the landlord provides services or attendance which require the landlord... to exercise unrestricted access to and use of the premises.' 

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Elements of a lease

Street v Mountford 1985- 'a lodger is entitled to live in the premises but cannot call the place his own.' 

Shared/multiple occupation- unity of possession=a joint tenancy. This is where 2 or more people jointly share exclusive possession even under separate agreements. 

AG Securities v Vaughan 1990 (HoL)- if occupiers were joint tenants and had under a lease, and one died, then the 3 left would have been entitled to exclusive possession of the whole.

Antoniades v Villiers 1990- handed down on the same day as AG and contrasts. Once cut out the clauses what was left was a lease. Clauses couldnt seriously be intended to take place. Only reason it was done was to avoid a lease. 'Not have been seriously intended... to have any practical purpose or serve any other purpose than to avert the ordinary legal consequences attendant upon letting the appellants into possession at a monthly rent.' 

Retention of keys by the owner? Aslan v Murphy 1990- 'provisions as to keys, if not a pretence (which they often are) do not have any magic in themselves... what matters is what underlies the provision as to the keys. Why does the owner want a key?' May need for emergencies etc. 

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Elements of a lease

Genuine services- if owner retains key to provided these for the occupier eg making beds and towels, then the occupier is purely a licencee. 

Residents of hotels, homes for the elderly, hostels? Appah v Parncliffe Investments 1964-hotel room.

Abbeyfield (Harpenden) Society v Woods 1968- old peoples home.

R v South Middlesex Rent Tribunal ex p Beswick 1976- hostels= licences.

Bruton v London and Quadrant Housing Trust 1999- 'the trust has the property on licence from the council who acquired the property for development... and pending this development it is being used to provide temporary housing accomodation. It is offered to you on the conditon that you will vacate upon recieving reasonable notice from the trust, which will not normally be less than 4 weeks.' 'The trust did not retain such control over the premises as was inconsistent with Mr Bruton having exclusive possession...The only rights which it reserved for itself and the council were to enter at certain times and for limited purposes.' Had a lease even though the grantor only had a licence. 

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Elements of a lease

Nemo dat quod non habet- normally cant grant what you dont have, but wasnt the case here. In Bruton the result was that a lease is not always a proprietary right. Hoffmann says it may be a contract between landlord and tenant without property. This would normally be a contractual licence but not in this case. Questionable judgement. What about legal certainty? 

Difference between 1) Bruton, non proprietary lease and 2) contractual licence. 

Doctrine v Utility- Kay v London Borough of Lambeth 2006- 'The Bruton lease is a non estate tenancy'- Lord Scott. 

London Borough of Islington v Green 2005.

These do not have any third party effect. Leases havent been destroyed so dont overstate the effects. 

London Development Agency v Nidai 2009.

Mitchell v Watkinson 2013- 'the agreement of 10th of June 1947 created a contract of tenancy... however the contract of tenancy was not at that point binding on anyone who was not a party to it.'

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Shams and pretences

Appears you cant discount Bruton entirely. Affirms a contract of tenancy cannot have third party impact. Contract of tenancy sounds like a contradiction. 

Shams and pretences- terms that would argue against finding exclusive occupation. But if owner has inserted them to avoid a lease, then court looks to the realities of parties actions. 

Street v Mountford 1985- 'the court should in my opinion be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and avoid the Rent Act.' 

Crancour v Da Silvaesa 1986- clause not to use the property between 10.30-12pm each day. 

Aslan v Murphy 1990.

Not necessarily the case that you have exclusive possession if you have exclusive occupation. Rebuttable presumption, may be rebutted in some circumstances.

Street v Mountford 1985- 'it may be difficult to discover whether on the true construction of the agreement exclusive possesion is conferred. Sometimes it may appear from the surrounding circumstances that there was no intention to create legal relationships. 

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Service occupancy

Service occupancy- if an occupier of some premises has exclusive occupation as a result of his or her employment they will not have a lease. 

  • Street v Mountford 1985- 'a service occupier is a servant who occupies his masters premises in order to perform his duties as a servant.' 
  • Glasgow Corp v Johnstone 1965
  • Facchini v Bryson 1952

Norris v Checksfield 1991- 'an employee can be a licensee, although his occupation of the premises is not necessary for the purposes of the employment, if he is genuinely required to occupy the premises for the better performance of his duties.' Then will be a service occupier without a lease. 

Family relationships and friendships- Cobb v Lane 1952

  • Nunn v Dalrymple 1990
  • Heslop v Burns 1974 
  • Rhodes v Dalby 1971
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A certain term

Charity and generosity- if occupation is allowedon this basis then there obviously is no lease. Gray v Taylor 1998. 

Element 2) A certain term (Street v Mountford) 

Marshall v Berridge 1881- 'there must be a certain beginning and a certain ending, otherwise it is not a perfect lease and a contract for a lease must contain those elements.' Judge Lush. 

Certainty of Commencement- not normally an issue- Brilliant v Michaels 1945- 'enforceable not withstanding that the commencement of the term may be expressed by reference to the happening of a contingency which is at the time uncertain, provided that, at the time of the contract is sought to be enforced, that the event has occurred and the contingency has happened.' 

Reversionary leases- can specify date that it is to begin. 

LPA 1925 s149(3)- 21 years, this is the limit to the point at which you can stipulate the lease to take place in the future. 

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A certain term

Certainty of maximum term- when defined by happening of an event rather than a fixed date. 

Lace v Chantler 1944.

Ashburn Anstalt v Arnold 1989- 'the arrangement could be brought to an end by both parties in circumstances which are free from uncertainty in the sense that there would be no doubt whether the determining event had occured.' 

Prudential Assurance v London Residuary Body 1992- confirms lease must have certain ending from the offset. Could overturn the rule. Browne- 'This bizarre outcome of results from teh application of ancient and technical rule of law which requires the maximum duration of a term of years to be ascertainable from the outset. No one has produced any satisfactory genesis of that rule. No one has been able to point to any useful purpose that it serves at the present day.' 

 Berrisford v Mexfield Housing Co-op 2011- B's lawyer never said that Prudential should be overuled as they knew the SC wouldnt. 'The law is not in a satisfactory state... there is much to be said for changing the law, and overruling what is called the certainty requirement which was affirmed in Prudential, on the ground that, in so far as it had any practical justification, that justification has long since gone.' 

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A certain term

Berrisford v Mexfield Housing Co-op 2011- 'However I would not support jettisoning the certainty requirement, at any rate in this case. First as the discussion earlier in this judgement shows, it does appear that for many centuries it has been regarded as fundamental to the concept of a term of years that it had a certain duration when created. It seems logical that the subsequent development of a term from year to year (ie a periodic tenancy) should carry with it a similar requirement and the law also seems to support this.' 

Applied Doe on the demise of Warner v Brown 1807- ancient common law rule that before the LPA 1925 a lease for an indeterminate period would be treated as a tenancy for life. Leases for life were no longer allowed under LPA 1925. 

LPA 1925 s149 (6) automatically converts all tenancies for life into a fixed lease for 90 years. This is what they did in the Berrisford case. 'For the reasons given, I accept the case that i) the arrangement contained in the agreement could only be determined in accordance with clauses 5+6, ii) such an arrangement cannot take effect as a tenancy in accordance with its terms but iii) by virtue of the well established common law rule and s149(6) the arrangement is a tenancy for a term of 90 years determinable on the tenants death by one months notice from the land lord, determinable in accordance with its terms, ie pursuant with clauses 5 and 6'. 

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A certain term

'Ms Berrisford is still alive and it is common ground that she has not served notice under clause 5 and Mexfield is not relying on clause 6. In those circumstances it follows that Ms Berrisford retains her tenancy of the premises and that Mexfield is not entitled to possession.'

This just seems like legal acrobatics to get a lease to work. SC says there is no justification for the rule of certain terms but yet wont get rid of it. 

Element 3) rent (Street v Mountford). 

Is rent necessary for a lease? Ashburn Anstalt v Arnold 1989- says no. Says rent is good evidence of a lease but is not a requirement. 

Do all these steps when attempting a problem question on leases. 

Types of lease- Fixed term lease- a lease that is entered into for a fixed period of time. No restriction on how long term can be. But once term has been set and entered into, it cant be ended early unless lease has break clause. 

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Types of lease

Periodic tenancy- a tenancy in which rent is payable at fixed intervals and which continues indefinitely from one period to the next until being terminated by notice. Can get express periodic tenancy although not v common. 

Javad v Mohammed Aqil 1991- 'a periodic tenancy is one which continues from period to period indefinitely, until determined by proper notice. For example from year to year, quarter to quarter, month to month or week to week.' 

Implied periodic tenancies- more common. When someone given exclusive possession in return for periodic payment of rent, in absense of anything else the court will imply a periodic tenancy. Javad v Mohammed Aqil 1991- 'parties frequently proceed with an arrangment whereby one person takes possession of anothers land for payment without having directed their minds to the fundamental aspects of the transaction.' 

Prudential Assurance v London Residuary Body 1992- lease may be void so in absense of valid agreement it implies periodic tenancy instead. Work out period in reference to what rent is paid eg monthly. Dont know when it ends. 

 

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Types of lease

'I consider that the principle in Lace v Chantler reaffirming 500 years of judicial acceptance of the requirement that a term must be certain applies to all leases and tenancy agreements.' Should apply to periodic tenancies. As contractually renew itself when one stops it doesnt appear that you know how long it lasts. 

'A tenancy from year to year is saved from being uncertain because each party has power by notice to determine at the end of each year. The term continues until determined as if both parties made a new agreement at the end of each year for a new term for the ensuing year.' Each period is certain in the tenancy as both parties know they can end the lease, the whole period is certain. 

Equitable lease- a contract to create a lease but where the parties have not satisfied the relevant legal requirements for its creation and validity. Equity sees as done that which ought to be done- doctrine of anticipation. This is a specifically enforceable contract for the grant of a legal lease.

Authority for this is Walsh v Lonsdale 1882- where an equitable lease is versus an implied tenancy the equitable lease wins. 

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Termination

Need to expressly put a forfeiture clause in a lease. It is very unusual for T to be given a right to terminate for L's breach. 

The lease will be rendered voidable, not void from the breach. The landlord has a choice of whether to forfeit. 

Residential occupiers have greater protection from the Protection from Eviction Act 1977. It is unlawful to enforce a right to forfeit a lease of a dwelling house other than by court proceedings, and an offence to deprive occupiers of their occupation by unlawful means. 

Protections were also in the Commonhold and Leasehold Reform Act 2002. Covers leases over 21 years. Protections are grouped as- i) ensuring that a clear breach has taken place prior to forfeiture ii) restricting thereafter when forfeiture can take place and iii) establishing publicity and procedural requirements to protect tenants. 

i) where there is arrears of rent s116 requires L to notify T of the sum due and the date it is due. The notice must specify a date for payment within 30-60 days. Without this notice rent is not due. For other breaches L must make an application to a leasehold valuation tribunal for a determination that there is a breach under s168. 

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Termination

ii) restrictions- CLRA s167 requires that at least £350 is due or the sum has been unpaid for more than 3 years. 

iii) publicity- may include a duty to investigate T's circumstances. 

Waiver- courts are generous to tenants in saying that waiver has taken place. L must have notice of the breach and also act in a way to indicate that the lease in treated as continuing. Mainly done by reciept of rent. An unequivocal act of waiver must happen. The waiver only applies to past breaches. 

Relief- non payment of rent- i) before this can proceed L must make a formal demand for the rent. This isnt necessary if there are more than 6 months arrears. Virtually every lease excludes the need for formal demand now. 

ii) relief before trial- absolute right to relief where arrears and costs are paid before trial. Minimum of 6 months arrears before this applies. 

The effect of relief- T holds under the original lease. There is no need for a new lease. 

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Termination

If a lease is forfeited an subordinate property rights fall with it. This is disasterous for sub tenants and mortgagees. 

Relief: non rent breaches- s146- the L must give T a notice specifying the breach and demanding remedy of it and damages. If T remedies in a reasonable time there is relief. The notice need not be required when the breach is unremediable. 

In Expert Clothing Service v Hillgate House it was said that most breaches of positive covenant can be remedied. 

Peaceable re-entry- notice must be given before this. s146. 

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