Street v Mountford: confer exclusive possession for a rent or premium, for a certain term'
Rent or premium
Arguably not relevant anymore after Fox LJ's reference to s.205(1)(xxvii) LPA 1925 'for a certain term, whether or not for a rent' in Ashburn Anstalt v Arnold
For a Certain Term
The term end must be certain when the lease is created, otherwise it will be rendered void for uncertainty and only operate as an in personam licence, as in Lace v Chantler (WW2)
The agreement must confer on the occupant exclusive possession of the land. There will be no exclusive possession where there are multiple occupants (unless joint tenants), where the owner reserves the right to enter into occupation alongside, or where the owner retains extensive access (e.g. for cleaning purposes).
Where there are multiple occupants, they will not be excluded from having exclusive possession where they are joint tenants. They will be joint tenants where they satisfy the 'four unities' - unity of possession, interest, title, and time: AG Securities v Vaughan.
'Pretence': any clause in the contract on which the owner never intended to act upon, simply there to prevent the agreement operating as a 'lease'.
Where the owner reserves the right to access the property, this will only prevent exclusive possession where it is 'extensive', so entry for 1hr on the first Monday of each month is arguably not extensive and would thus not prevent exclusive possession.
However, in cases where the owner has extensive access rights, the court will look to whether these were intended to be acted upon when the agreement was made, and whether they ever were acted on, if not, they will be struck out as pretence. In Aslan v Murphy the owner never actually came and cleaned as provided in the contract, so there was exclusive possession.
Reserving the Right to Join Occupation
The court will determine whether it was actually ever likely to happen, if it did happen, and whether it was possible e.g. by examining the layout of the property. If not, then it will be struck out as pretence. For example, in Antoniades v Villiers the court struck out the clause allowing occupation where the flat only had one bedroom, so occupation alongside the couple was impossible.
Legal Lease - Formality Requirements
A lease is capable of being legal: s.1 LPA 1925. The requirements for a legal lease depend on the duration of the tenancy.
Leases of three years or less: can be legal even if concluded orally, provided they have immediate possession and are paying rent.
Leases over three years: can be legal when they are created by 'deed' (s.52 LPA 1925) - 'deed' requires it to state it is so on its face, be in writing, signed by both parties, and witnessed by someone else (s.1 LP(MP)A 1989).
Leases over seven years: can be legal when they are by 'deed' (s.52 LPA 1925) - 'deed' requires it to state it is so on its face, be in writing, signed by both parties, and witnessed by another party (s.1 LP(MP)A 1989) - and be registered (s.27 LRA 2002).
Equitable Lease - Formality Requirements
Where the formality requirements for making a legal lease are not met, the lease can take effect in equity provided it is concluded by a valid pre-conferment contract (s.53 LPA 1925) - in writing and signed (s.2 LP(MP)A 1989)/ Parker v Taswell.
Where the right is not conferred in contract meeting the requirements for equity, it will not be a lease, and will simply be a in personam licence.
Effect on a Transferee
Whether the lease binds a purchaser is dependent upon whether the 'priority rule' in s.29 LRA 2002 is engaged. The rule is engaged where there is a registrable disposition, of a registered estate, for valuable consideration (not marriage or nominal monetary consideration), where the new owner has registered as proprietor.
Where the conditions are not met to engage s.29, the 'basic rule' in s.28 LRA 2002 is engaged as all pre-existing rights in rem are binding on the purchaser.
Where s.29 is engaged, the right is binding provided it has been registered (s.27 LRA 2002) or is overriding under Schedule 3.
Overriding Interests - Schedule 3 LRA 2002
Where the right is not registered, it can override under Schedule 3 LRA 2002. In relation to leases, paragraph one and two are relevant.
Paragraph One: any legal lease of less than seven years is binding.
Paragraph Two: (relevant to legal leases over seven years, and all equitable leases)
The right is binding when the right holder is in actual occupation, which is objectively obvious at the time of the disposition.
'Actual Occupation' means 'physical presence': Williams & Glyn's Bank v Boland. It can be from leaving your car in the garage, or the presence of an agent will count as actual occupation for the right holder (e.g. presence of builders). It is not merely a 'fleeting presence' (Abbey National v Cann).
Recent authority shows that you need not be in actual occupation provided you have a continuing intention to possess: Thompson v Foy.
'Objectively obvious' - this is arguably not too relevant, since it was completely ignored in the cases of Thompson v Foy and Link Lending.