Essential requirements of a lease?

Question 1

What is a lease? V a license?

Answer 1

A lease is created when one person with an estate in land grants the temporary right to another person (the tenant) to use and enjoy that land exclusively.
- If lease granted out superior lease, it will be called sublease or underlease
License
- Is personal permission to be on someone’s land

Lease is:
a proprietary right in the land
capable of being enforced against third parties
tenant can sue a third party for nuisance of trespass
a lease can confer the right of security

License
personal permission to be on someone else’s land
can only be enforced against the grantor
a licensee is not entitled to sue for tress pass
no security of tenure

Street v Mountford test
- For a lease to exist there must be
certainty of term
exclusive possession
correct formalities
rent is not essential

Question 2

Certainty of term?

Answer 2

Granted for certain duration – need to know when arrangement will end.
Can be shown in fixed term or periodic term.

Fixed term
- Maximum duration of arrangement is known from outset
- Once fixed term created – neither party can unilaterally bring lease to an end earlier unless there is a break clause present enabling them to do so.
Periodic lease
- Technically a lease for one period – like monthly – and keeps extending until either landlord or tenant gives notice to terminate it. (like a storage locker)
- Express periodic tenancy – written agreement documenting it
- Implied periodic tenancy is – nothing in writing but if you look objectively at all relevant circumstances – its on a periodic basis

Question 3

Exclusive possession?

Answer 3

The right to exclude all others from property including landlord
Its question of fact in each case

Substance of lease has to be examined
Courts will look at reality of situation – so if a clause appears to defat exclusive possession but only has been inserted to make it look like a license it will be thrown out as a sham
- Following situations indicate where they may not have exclusive possession
- Landlord retains a key and has right of access – BUT MUST LOOK AT WHY THEY HAVE KEYS. ALSO look at whether the right of access is restricted or not
- Landlord provides services – like cleaning – then becomes lodger
- Sharing clauses – if occupier can exclude then cannot be. MUST SEE IF GENUINE CLAUSE
- Landlord retains a right to relocate tenant
BUSINESS TENANCIES
- A business tenant must show it has a certain term and exclusive possession in it to establish it as tenant
- This result in security of tenure – entailing them to hold over – give more quality in bargaining power
- The degree of physical control over their premises and conduct of business was deemed to be very important

Question 4

Multiple occupancy of a lease?

Answer 4

Legal issue with multiple occupiers
- If occupiers together have right to exclude all others – prima facie there is a lease agreement
- Question is where they have one single lease – or several individual leases
- If joint tenancy – one collective unity – hold 4 unties – unity of possession (entitled to occupy whole of premises – possible for them to have individual leases of their own part), unity of interest (same term and same donations and jointly liable for rent), unity of time (interest must start at same time) and unity of title. (from same document)
Look to substance.

Question 5

Factors that defeat a lease?

Answer 5

Intention to create legal relations
- Where there is family arrangement an act of friendship, an act of generosity – presumed there is lack of such intention
- But if there is a degree of formality to agreement and market rent is paid – this is evidence of intention to create legal relations

Service occupancies
- Only arises where its an employer/employee relationship between landowner and occupier
- Where occupier is required to live in premises for better performance of his duties as employee – there is no tenancy

Question 6

Formalities to create a lease?

Answer 6

Legal leases
General rule
To create a lease – a deed must be used –
- If over 7 years the lease must also be registered
- Leases for seven years or less do not need to be registered – create overriding interest
- Certain short leases do not even need to be in writing
3 years of less – don’t need to be created by deed provided:
- Lease takes effect in possession – immediately
- Lease is granted at best rent – market rent
- Lease is not subject to a fine or premium
These short leases are also known as parole leases

Equitable leases
- Maybe created deliberately
- May have tried to create a legal lease but failed
Courts will recognise tenant as having an equitable interest in land on same terms as defective legal lease provided
- There is a document that complies with LM1 s2
- Remedy of specific performance is available