Land Law - Easements, Covenants, Mortgages and Leases

Question 1

Easements

The three essential characteristics of an easement are:

Re Ellenborough Park

Answer 1

1. There is a dominant and servient tenement, that are not owned and occupied by the same person.
2. The easement accommodates the dominant tenement.
3. The easement is capable of forming the subject of the grant.

Question 2

Easements

In determining whether the easement accommodates the dominant tenement, the guidelines are:

Answer 2

1. Does the right improve the marketability of the land; and/or
2. Would any owner of the land see it as a benefit?

Must not be personal benefit.

Question 3

Easements

The easement must be capable of forming the subject matter of the grant. Four features of the easement will satisfy this criteria:

Answer 3

(a) Capable of reasonably exact description
(b) Does not involve any expenditure by servient owner.
(c) Is not so extensive as to amount to a claim to joint possession of servient tenement.
(d) Is not a new type of negative easement.

Question 4

Easements

In Batchelor v Marlow the respondent claimed the right to park six cars on land belonging to the appellant, covering the whole of the servient land. Was this right capable of being an easement?

Answer 4

No. Afforded the appellant “no reasonable use of the land” and was therefore too extensive.

Question 5

Is there a right to light?

Answer 5

There is no automatic right to light, but it can be created by easement.

Question 6

Harrison grants by deed the right for Mary, his neighbour, to park her large pizza van on a small area of a land next to his farm. She uses the van to cook and deliver pizza as part of her business.

Is this an easement?

Answer 6

(a) There is a dominant and servient land, owned by different people.
(b) Questionable whether the right acommodates the dominant land.
(c) Right may be too extensive.

Mary simply has a licence.

Question 7

Easements

What are the 6 ways that an easement can be created?

Answer 7

• Express grant/reservation
• Implied by necessity
• Implied by common intention
• *Wheeldon v Burrows *
• s.62 LPA 1925
• Prescription

Question 8

What is the difference between granting and reserving an easement?

Answer 8

Grant: Servient owner executes a deed granting dominant land right over servient land.

Reservation: Dominant owner reserves/retains rights over land they are selling.

Question 9

Easements: Implied by necessity

Does this apply to grants or reservations?

What is the requirement and when could a claim to necessity be defeated?

Answer 9

Both.
Requirement: The property cannot be used at all without the easement.

Can be defeated if there is an alternative route, even if dangerous.

E.g. no means of access other than the right claimed.

Question 10

Easements: Implied by common intention

Does this apply to grants or reservations?

What is the requirement?

Answer 10

Both.

Requirement: the land is conveyed for a common purpose known to both parties. The right claimed is needed for the common purpose to be fulfilled.

Question 11

Easements: Wheeldon vs Burrows

Does this apply to grants or reservations?

What is the effect of Wheeldon vs Burrows and what are the requirements for it to be created?

Answer 11

Grants only (the easement being in favour of buyer). Converts a quasi-easement into an easement.

Requirements:

(a) A quasi-easement exists prior to sale;
(b) The right is continuous and apparent;
(c) The right is necessary to the reasonable enjoyment of land sold;
(d) The right was in use at the time of sale.

Occurs when land owner sells part of their land. Any quasi-easement passes to the buyer subject to the conditions above being satisfied.

Question 12

Andrew owns land and builds a cottage on it to accommodate hotel guests. He and his guests regularly use a track running across the land to access the cottage to avoid use of a busy main road. Later, he sells the cottage to Helen.

Would Wheeldon v Burrow apply?

Answer 12

Yes:

(a) Quasi-easement exist.
(b) Use of track continuous and apparent.
(c) Necessary for reasonable enjoyment of land.
(d) Right of way may have been used at the time of sale.

Helen can claim that there is a grant of easement to her cottage.

Question 13

Easement: s.62 LPA

This is a word-saving provision. If nothing is stated in the deed, a conveyance will include any existing rights implicitly. The conditions are:

Answer 13

1. There is a conveyance (not merely a contract)
2. Some diversity of occupation (unless easement of light or the rights are continuous and apparent)
3. A privilege exists at the date of conveyance that is capable of being an easement or profit.

Question 14

Easement: Prescription

Prescription applies only to ____ owners against ____ owners.

Answer 14

Freehold.

Question 15

Easements: Prescription

For prescription to occur, the right must be exercised:

Three conditions

Answer 15

(a) Continuously
(b) As of right.
(c) for 20 years or more

Continuously - Use can be by a number of freehold owners in succession and can be intermittent.

As of right -Not without force, secrecy or permission.

Question 16

A man only used an easement for six to ten occasions over a 35-year period. There were some years in which he did not use the easement. Could this qualify as continuous use?

Answer 16

Yes.

It might fail against the Prescription Act 1832, but it would be saved either at common law or by the doctrine of Lost Modern Grant.

Question 17

Easement: Prescription

Prescription may arise by virtue of:

3 types

Answer 17

1. Common law
2. Doctrine of Lost Modern Grant
3. Prescription Act 1832.

Question 18

Easement: Prescription

At common law, the dominant land owner is entitled to the presumption where he used the easement for 20 years or more. However, the servient land owner can rebut that presumption by:

Answer 18

Showing that at some time since 1189:
- The right wasn’t exercised
- The right could not have been exercised.
- The dominant and servient tenement were vested in the same owner.

Question 19

Easement: Prescription

When is the doctrine of Lost Modern Grant applied? What is it?

Answer 19

When both common law prescription and the Prescription Act have been rebutted.

A last resort presumption granting the easement where the dominant owner has fulfilled all three conditions of prescription (continuous use, as of right, for 20 years or more)

Question 20

Easements: Prescription

The Prescription Act applies as a default provided that the claimant can prove uninterrupted enjoyment for 20 years or more. What interruptions are permitted under this type of prescription?

Prescription Act 1832

Answer 20

Interruptions in use lasting a year or more.

If there is an interruption for more than one year, the doctrine of lost modern grant may assist instead.

Question 21

Freehold Covenants

Is a covenant capable of being legal?
What are the relevant formalities for covenants to be effective?

Answer 21

No.
Formalities: In writing and signed.

Question 22

Freehold Covenants

When can the burden of a covenant pass to a successor at common law?

Answer 22

Never.

Question 23

Restrictive Covenants: Tulk v Moxhay and the burden in equity

The burden of a covenant can pass to a successor in equity when the covenant:

5 conditions

IMPORTANT

Answer 23

(a) is restrictive
(b) benefitted the dominant land retained by the covenantee at the time of creation.
(c) touches and concerns the dominant land.
(d) was intended to burden the servient land.
(e) Owner of servient land has notice of the covenant for it to bind them.

Whether notice is given depends upon whether it is registered or unregistered land.

Question 24

Restrictive Covenants: Tulk v Moxhay and the burden in equity

A sells his land subject to a covenant not to build on it. The original covenantor sells the land to B, who starts to build on the land.

Can A prevent B from building on the land?

Answer 24

No. He did not retain any of the dominant land.

Question 25

Restrictive Covenants: Tulk v Moxhay and the burden in equity

In determining whether the covenant touches and concerns the land, what three conditions must the covenant satisfy?

Answer 25

1. It benefits any dominant owner, but ceases to benefit him when he is separated from the land.
2. It affects the nature, quality, mode of user or value of the dominant land.
3. It is not expressed to be personal.

Question 26

Restrictive Covenants: Tulk v Moxhay and the burden in equity

Intention to burden the servient land can be either…

Answer 26

express or implied.

Question 27

Restrictive Covenants: Tulk v Moxhay and the burden in equity

Mark owns 6 and 8 Tennison Avenue. He sells 8 Tennison Avenue to Stella, but retains 6. The transfer on sale contained the following:

“The Buyer and her successors in title covenants with the Seller to:
(a) Paint the exterior of the Property every five years;
(b) Not use the Property for any purpose other than a private dwelling house.

Stella sold the Property to Emma. Is Emma bound by the covenants?

Answer 27

Neither burden runs in common law.
(a) cannot run in equity either, as it is a positive covenant.
(b) runs in equity because:

• Mark retains ownership of the benefitted land.
• The covenant benefits any owner of the dominant land and enhances the mode of user and value.
• There is an express intention for the burden to run.
• Provided Emma has been given notice, she will be bound.

Question 28

Positive Covenants: Alternative Methods for enforcement

The three ways that positive covenants may be enforced against a successor of the covenantor is if:

Answer 28

(1) The landowner creates a lease instead of selling it.
(2) Indemnity Covenant
(3) Doctrine of mutual benefit and burden arises.

Question 29

Positive Covenants: Doctrine of mutual benefit and burden

This doctrine dictates that:
There are two conditions for this doctrine to arise:

Answer 29

A person wishing to benefit from the other land must also comply with any corresponding burdens.

(1) The burden is relevant to the exercise of the rights enabling the benefit to be obtained.
(2) The covenantor’s successors in title must have the opportunity to elect whether to take the benefit and accept the burden or to renounce it.

Question 30

Marjorie owns a house with extensive grounds. In 2010, she sold most of the garden to David. Access to the garden is over a track crossing the Manor House. The transfer to David contained the following:

“The Seller grants to the Buyer a right of way over the track, subject to the buyer paying a contribution toward its maintenance”

David sells the garden to Eleanour. Can Marjorie enforce the positive covenant?

Answer 30

Yes. Closely linked benefit. If Eleanour elects to take the benefit of the easement, she will have to accept the related burden.

Question 31

Covenants: Running of the benefit at common law

Whether positive or restrictive covenant, there are two ways in which an original covenantee can pass the benefit of the covenant onto a successor at common law:

This would allow the successor covenantee to pursue the original covenantor for any breach of covenant.

Note: it would never be relevant to successor covenantors, as the burden cannot run in common law.

Answer 31

1. By Annexation
2. By Assignment

Question 32

Covenants: Running of the benefit at common law

Annexation occurs if the following four conditions are met:

Answer 32

1. The covenant touches and concerns the land.
2. The benefit was intended to run with land.
3. The original covenantee held a legal estate (not equitable interest) in the benefited land.
4. The successor covenantee obtained legal title to the benefited land from the original covenantee.

Question 33

Covenants: Running of the benefit at common law

In annexation, how can the benefit be intended to run with the land?

2 ways

Answer 33

1. Express words
2. Implied by s.78 LPA 1925.

See later

Question 34

Covenants: Running of the benefit at common law

What are the requirements for the benefit of a covenant to pass to a successor covenantee by assignment?

Answer 34

• Assignment takes place at the time of transfer of land.
• In writing.
• Signed by assignor.
• Written notice of the assignment given to the original covenantor.

Question 35

Covenants: Running of the benefit in equity

In what three ways can the benefit of a covenant pass to the successor covenantee in equity?

This is mostly relevant to restrictive covenants, as it allows the successor covenantee to pursue the successor covenantor for a breach of restrictive covenants. The same cannot be said for positive covenants.

Answer 35

1. Annexation
2. Assignment
3. Building schemes.

Question 36

Covenants: Annexation in detail

What are the three methods of annexation?

Answer 36

• Express annexation
• Implied annexation
• Statutory annexation

Question 37

Covenants: Annexation in detail

Express annexation: it is crucial to clearly…

Express Annexation

Answer 37

…identify the land intended to benefit.

It should refer to the whole of the dominant land.

Question 38

Covenants: Annexation in detail

Statutory annexation (s.78 LPA 1925) occurs where:

MOST LIKELY to occur in a problem question.

Implied annexation is hardly relevant. Courts may imply annexation where it was obviously intended and it would be unust to ignore that intention.

Answer 38

• The covenant was created after 1925;
• The covenant touches and concerns the land.
• The benefited land must be identified in the transfer.

Question 39

Covenants: Annexation in detail

Joeeta is the freehold owner of 6 and 8 Woodbury Road. She lives in number 6 and sold number 8 to Cameron. The transfer contains the following:

“For the benefit and protection of the Seller, the Buyer and his successors in title covenants with the Seller and her successors in title not to keep any animals on the Property”.

Cameron sells number 8 to Eloise. Joeeta has sold number 6 to Matthew. Does Matthew have the benefit in equity?

Answer 39

• Restrictive covenant = both burden and benefit can pass in equity.
• Benefit:
  => No assignment.
  => No express annexation (as it is expressed toward Joeeta and not Number 6.)
  => Statutory annexation likely to apply: Post-1925, touches and concerns the land.

Question 40

Apart from annexation and assignment, building schemes may impose positive covenants upon buyers of different plots. The two main prerequisites to establish whether a building scheme exists are:

Answer 40

• Evidence of a common intention between all purchases that the area of land is to be sold in plots
• Clear intention that all purchases of individual plots are subject to mutual and recipricol covenants.

Question 41

Covenants: Matching benefit and burden

The benefit and burden need to match where…

Answer 41

….both the dominant and servient land has changed ownership and the dominant land owner wants to take action.

Question 42

Covenants: Matching benefit and burden

Maurice is the freehold owner of 14 and 16 Barnet Crescent. He lives at number 14. Ten years ago, he sold number 16 to Louise. The transfer contained the following:

“For the benefit and protection of 14 Barnet Crescent the Buyer and her successors in title covenant with the Seller and his successors in title to use the Property only as a private dwelling house.

Eight years ago, Louise sold 16 Barnet Crescent to Desmond and Maurice sold 14 Barnet Crescent to Amanda. Last year, Desmond sold the property to Ola. Ola is running her business from the property.

Can Amanda take action in respect of the breach?

Restrictive Covenant

Answer 42

*Has the burden passed? *

Restrictive covenant, therefore burden can only pass in equity if criteria in Tulk v Moxhay is met:

(a) Restrictive covenant
(b) Maurice retained ownership of the benefited land when creating the covenant.
(c) Benefits any owner, arguably enhances mode of user and value of dominant land;
(d) Express intention for the burden to run with the land;
(e) Provided Ola has notice of the restrictive covenant, she is bound.

Has the benefit passed

As it is a restrictive covenant, Amanda must demonstrate that she has the benefit in equity.

No assignment present.
No express annexation.
Statutory Annexation exists: there are words of annexation which clearly identify the benefited land. Therefore she has the benefit and can pursue Ola for breach of covenant.

Question 43

Covenants: Matching benefit and burden

Tom is freehold owner of 22 and 24 May Road. He sells number 24 to Caitlin. The transfer contains the following:

“The Buyer and her successors in title covenant with the Seller and his successors in title not to allow the Property to fall into disrepair”

Caitlin sells number 24 to Siobhan. Tom sells number 22 to Archie. Siobhan has allowed number 24 to fall into disrepair.

Who can Archie sue for the breach?

Answer 43

Caitlin.

The burden of a positive covenant cannot pass to a successor in title in common law nor in equity.

HOWEVER, Caitlin remains bound as the original covenantor due to privity of contract.

Archie can pursue Caitlin provided that he can show that the benefit of the covenant passed at common law.

Question 44

Covenants: Remedies for breach

What are the two remedies against breaches of positive covenants?

Positive covenants

Answer 44

1. Damages.
2. Specific performance.

Question 45

Covenants: Remedies for breach

The original covenantee disposes of his land, and transfers to the successor, who has the benefit of the covenant. The original covenantor breaches a positive covenant. Who can sue the covenantor for damages?

Positive Covenant

Answer 45

The successor covenantee. The original covenantee would not be able to demonstrate that they suffered loss.

Question 46

Covenants: Remedies for breach

Suppose there is a positive covenant against the original covenantor to maintain the fence. If the covenantor sells the property to a successor in title, who then fails to maintain the fence, who can be sued with specific performance as the remedy?

Positive Covenant

Answer 46

Not the successor covenantor: the burden of a positive covenant cannot pass in common law nor equity.

The original covenantor can be, although they will only be able to pay - they will probably not be able to perform as they have no control over the property.

Question 47

Covenants: Remedies for breach

As restrictive covenants only run in equity, the principal remedy is:

Restrictive Covenants

Answer 47

Injunction

Question 48

Covenants: Remedies

A court will award damages instead of injunction where four conditions are met:

Restrictive Covenant

Answer 48

• injury to claimant is small;
• capable of being estimated in money;
• adequately compensated by money
• an injunction would be oppressive to the respondent.

Question 49

Covenants: modification and discharge

The 4 methods of removing or limiting the effects of a freehold covenant are:

Answer 49

1. Express release
2. Common ownership
3. s.84 LPA 1925.
4. Insurance.

Question 50

Covenants: modification and discharge

What is required for express release of a covenant (whether restrictive or positive)?

Express release

Answer 50

A deed.

Question 51

Covenants: modification and discharge

When would an s.84 LPA application to the Lands Chamber be successful?

Relates only to restrictive covenants

Answer 51

a. Covenant is obsolete;
b. Covenant impedes some reasonable use of the land and either

i. does not secure any practical benefit to the persons it should benefit; or
ii. contrary to public interest

And in either case, money is adequate consideration.

c. Those entitled to the benefit have expressly or impliedly agreed to discharge;
d. The discharge will not injure the persons entitled to benefit.

Question 52

Mortgages

What are the lender’s five remedies in relation to a legal mortgage?

Answer 52

1. possession
2. power of sale
3. debt action
4. appointing a receiver
5. foreclosure

Question 53

Mortgages

Out of the lender’s powers, which ones bring the mortgage to an end?

Answer 53

• Power of sale
• Foreclosure

Question 54

Mortgages: Possession

(1) What is the meaning of possession?
(2) What are the two ways in which possession can be lawfully obtained?

Answer 54

(1) Meaning of possession
- Taking physical possession; or
- Where the property is let, directing that tenants pay their rent to the lender (rather than the borrower)

(2) How to lawfully obtain possession:
- Without court order, if peaceable entry is possible.
- With court order

Rarely used in isolation. Usually as a pre-cursor to other rights.
Peaceable entry only possible if property is empty or when the property is let and lender directs tenants to pay rent to lender)

Question 55

Mortgages: Possession

Section 36 of the Administration of Justice Act 1970 allows the borrower to ask the court to exercise its discretion to: (2 requests)

This section applies where the following three circumstances are met:

A “reasonable period” is defined to include:

Answer 55

(1) The two requests of the borrower:

• Adjourn proceedings; or
• On making an order, suspend execution or postpone date of possession.

(2) Three circumstances allowing such requests:
(a) Lender started proceedings
(b) Property includes a dwelling-house; and
(c) Borrower is likely to pay arrears within a reasonable period.

The full remaining period of the mortgage.

Question 56

Mortgages: Possession

Where the property is producing income, the lender can use the income to pay the debt owed. However, this is subject to the strict duty to account. To that end, the lender is required to do two things:

Strict Duty to Account

Answer 56

a. Account to borrower for any sum beyond that which is due; and
b. manage property with due diligence.

This is why, in relation to income-producing property, the lender would typically prefer to appoint a receiver, which does not have the strict duty to account.

Question 57

Mortgages: Power of sale

Before exercising this power, the lender may need to obtain possession. The three conditoins for power of sale to be exercised are that it must:

Answer 57

1. Exist.
2. Have arisen.
3. Become exercisable.

Question 58

Mortgages: Power of sale

Power of sale exists means that it is either…

Power of sale has arisen means:

More specifically, the power of sale arises where the legal date for… has passed, or any…

Answer 58

…expressly stated within mortgage deed or if it is a legal mortgage, it is automatically implied.

…the mortgage money is due.

The redemption date; instalment has become due.

Question 59

Mortgages: Power of sale

The power is exercisable if it is expressly set out in the mortgage deed or one of the three conditions under s.103 LPA 1925 are met:

Power sale must be exercisable.

Answer 59

a. Lender has given the borrower notice to repay a debt in full and borrower hasn’t paid it for three months after such notice;

b. Inerest is in arrears for two months after becoming due;

c. Borrower has breached a term of the mortgage other than payment of mortgage money.

Question 60

Mortgages: Power of sale

(1) Before exercising the power of sale, the lender must ensure all three conditions: the power of sale exists, has arisen and is exercisable. What does a propsective buyer need to check after the lender has exercised this power?

(2) In exercising the power, the lender has two duties toward the borrower:

(3) Is the lender under an obligation to delay sale in order to maximise price?

(4) The two effects of the sale upon the buyer are that they take the whole estate:

Answer 60

(1) Only that the power exists and has arisen.

(2) Duties toward borrower:
(a) Act in good faith;
(b) Take reasonable care to obtain true market value.

(3) No.

(4) Effect of sale on buyer:
- free of any estates or interests which the lender took priority over; but
- Subject to estates and interests that took priority over the selling lender.

Question 61

Mortgages: Power of Sale

The lender is the trustee of the proceeds of sale and must distribute in accordance with s.105 LPA 1925 to pay:

What is the equity of redemption?

Proceeds of Sale

Answer 61

a. Cost of redeeming any prior mortgages;
b. lender’s expenses of sale;
c. lender’s own mortgage;
d. balance to any person entitled to the equity of redemption (i.e. a subsequent lender or borrower).

Equity of redemption: The right in equity for the borrower to recover the balance after the sale.

Question 62

Mortgages: Debt Action

The debt can be recovered by an action for repayment. For this to occur the legal date for…

The Limitation Act 1980 limits the ldender’ ability to recover the debt to: (two considerations)

Answer 62

…redemption must have passed;
- six years for recovery of interest;
- twelve years for recovery of capital.

Question 63

Mortgages: Appointment of receiver

(1) A lender will only appoint a receiver where the property is…

(2) The power arises in the same way as the power of sale. It must:

A further condition is that the receiver is:

(3) The receiver has the power to demand and receive income from the property. The income must be applied to pay: (6 things)

(4) Can the receiver sell the property?

Answer 63

(1) …producing income.
(2) Power must:
- exist, have arisen, be exercisable.
- …appointed in writing.

(3) s.109(8)

• Outgoings on the property;
• Interest on prior mortgages;
• Insurance premiums, repair costs and their own costs;
• Interest on current mortgage;
• Capital on current mortgage;
• Balance to borrower (equity of redemption)

Question 64

Mortgage: Appointing Receiver

Can the receiver sell the property?

Is the receiver agent for lender or borrower? What is the practical effects of this?

Answer 64

No, unless expressly given in the terms of the mortgage.

Borrower. Practical effects: borrower has no recourse to lender for acts/omissions of receiver.

Question 65

Mortgages: Appointing a receiver

What are the four duties of the receiver to both lender and borrower?

These duties extend to…

Where there is conflict between interests of lender and borrower, the receiver is permitted to…

Answer 65

(a) Ensure personal interests do not conflict.
(b) Act in good faith.
(c) Act with reasonable competence;
(d) Take reasonable care to obtain true market value;

Anyone with an interest in the equity of redemption.
Put lender’s interests first.

Additionally, may take steps to increase value of the property.

Question 66

Mortgages: Foreclosure

This is available upon…
The process is in two stages:
The effect of foreclosure is to extinguish…

Answer 66

…an application to the High Court once the legal date of redemption has passed.
i. Foreclosure Nisi
ii. Foreclosure Absolute

…the equity of redemption to the borrower.

But equally, if the sale proceeds is less than the sum owed, the borrower is released from liability. Hence, the lender would only use this if there is positive equity.

Question 67

Mortgages: Foreclosure

Foreclosure Nisi is the court order to…
Foreclosure absolute is the court order which…

Answer 67

…pay within a period of six months (usually)
…offiically vests title to the lender, extinguishing the equity of redemption.

Question 68

Mortgages: Foreclosure

The borrower is protected from the draconian effect of foreclosure in three independent ways:

Answer 68

a. Discretion of court to re-open foreclosure proceedings.
b. Application for adjournment of foreclosure where the property is a dwelling house.
c. Application for judicial sale, preserving the equity of redemption for the borrower.

On a. it can even be re-opened after foreclosure absolute, in exceptional circumstances.
On c. This can be made by any person with an interest in the equity of redemption.

Question 69

Leases: Formalities for legal lease

What is required for leases for more than three years?

What are the 4 requirements for a short-term lease of three years or less?

Answer 69

(1) A deed.

(2) Parol lease:
- Three years or less.
- Must give tenant immediate right to possess and enjoy the land;
- Must be at market rent;
- Must not include a charge or premium.

Question 70

Leases: Equitable lease

An equitable lease is created where (2 situations):

In both cases, what are the three requirements?

Answer 70

a. There is a contract to create or transfer a legal estate.
b. There is an attempt to use a deed but the deed is not valid.

Three requirements for equity to intervene:
- A contract
- Complying with s.2 LPMPA.
- Clean Hands (capable of specific performance)

Question 71

Leases: Essential Characteristics

The three essential requirements are:

If one or more of these are absent, what has been created?

Answer 71

1. Estate is for a duration permitted for a leasehold estate.
2. Exclusive possession.
3. Correct Formalities.

A license.

Question 72

Leases: Essential Characteristics

Permitted Duration: Are leases for life valid?

Exclusive Possession is the ability for the tenant to exercise control over land. The tenant may exclude…

Does exclusive possession extend beyond exclusive occupation?

Answer 72

Yes - they are converted to a term of 90 years ending on death of the tenant.
…all, including the landlord, from the land.

Yes. The tenant doesn’t need to be in occupation to enjoy exclusive possession.

Question 73

Lease vs License

(1) If the landowner retains a key, can there exclusive possession?

(2)If the occupier lacks general control, can there be exclusive possession?

(3) If an employer allows an employee to live in the employer’s accommodation for the performance of their duties, is this a licence or lease?

(4) If there is a flat sharing agreement, in which all occupiers have signed a single agreement described as a licence, is this a licence or lease?

(5) Is there any significance to rent being paid?

Answer 73

(1) Yes.
(2) No.
(3) Licence.
(4) Depends on the context and the intention as to exclusive possession.

(5) Yes. While it is not an essential characteristic, it supports the view that there is a lease.

Question 74

Leases: Relatinship between landlord and tenant

In the absence of an express obligation, certain covenants are implied. What are the two implied covenants promised by the landlord?

Answer 74

1. Quiet enjoyment.
2. Obligations in respect of fitness of the property.

Question 75

Leases: Relationship between landlord and tenant

s.11 Landlord and Tenants Act 1985 obliges the landlord to: (3 conditions)

Landlord covenant to respect fitness of property

Answer 75

(a) Keep in repair the structure and exterior of the dwelling.
(b) Keep in repair and proper working order the installations for heating and water heating.
(c) Keep in repair and proper working order supply of water, gas, electricity, sanitation.

Only liable where disrepair has been notified.

Question 76

Leases: Tenant’s Alienation Covenant

1. Assignment occurs where:
   Is a new lease created?
2. Sublease occurs where:
   Is a new lease created?

Assignment

Answer 76

1. The tenant passes all of their interest under the lease to a new tenant and steps out of the picture. No new lease created.
2. A lesser estate is carved out of the superior estate. A new lease is created.

In a sublease, the subtenant pays rent to the tenant, and the tenant has a dual capacity as tenant of headlease and landlord of sublease. Three legal estates exist concurrently.

Question 77

Leases: Tenant’s Alienation Covenants

1. Other than subleases and assignments, what are the two other methods of alienation?
2. Explain the following four terms that affect the interpretation of lease provisions:

(a) Open contract position
(b) Absolute prohibition
(c) Qualified covenant
(d) Fully qualified covenant

Answer 77

1. Other methods of alienation:
   - Mortgage/charge;
   - Parting with possession/occupation
2. Four terms determining nature of covenant:

(a) Open contract position = no covenant against alienation.
(b) Absolute prohibition = Covenant not to deal with lease
(c) Qualified covenant = covenant not to alienate without the landlord’s consent.
(d) Fully Qualified covenant = covenant not to alienate without the landlord’s reasonable consent.

Question 78

Leases: Tenant’s Alienation Covenants

What is the effect of s.19 of the Landlord and Tenant Act 1927?

Thus, where the landlord has received a written application in relation to a qualified covenant against alienation (of any kind), the landlord must do three things:

Answer 78

It translates any qualified covenant into a fully qualified covenant.

• give consent, unless unreasonable to do so;
• give written notice of their decision, including any conditions;
• where consent is withheld, give written reasons for refusal.

• Cannot unreasonably delay giving consent;
• Applies to both old and new leases.

Question 79

Leases: Tenant’s Alienation Covenants

(1) Section 19(1A) of the LTA 1927 enables the original landlord and original tenant of a ……. to agree in advance of drafting the lease upon:

(2) What is a new lease?

(3) Are either the circumstances or conditions subject to the reasonableness test (s.19 LTA 1988)?

(4) What is the most popular condition used by landlords, and what is its effect?

Answer 79

(1) Non-residential, new lease.
a. Circumstances in which landlord may withhold consent to an assignment;
b. Conditions to which consent to assign will be subject.

(2) A lease granted after 1 January 1996.

(3) No.

(4) An Authorised Guarantee Agreement (AGA). Its effect is to make the outgoing tenant the guarantor for the assignee for payment of rent and tenant covenants.

Question 80

Leases: Enforcing Covenants

There are two sets of rules governing the enforcement of covenants, based upon whether they are created:

Answer 80

• Before 1 January 1996 (Old lease)
• After 1 January 1996 (New lease)

Question 81

Leases: Enforcing Covenants

In an old lease:

1. What is the liability of the original tenant (T1) where they have assigned a new tenant (T2)?

This is a relationship of “privity of…”

2. What is the liability of T2?

This is a relationship of “privity of…”

As such, if T2 defaults, who can the landlord pursue?

Old Leases

Answer 81

1. Liability of original tenant
   - Remains subject to the burden of covenants for the duration of the lease.
   - Ceases to be entitled to the benefit of covenants.

Privity of contract.

2. Liability of assignee
   - Liable to the burden of covenants that “touch and concern” the land for the duration that the lease is vested in them.
   - Not liable for personal covenants.
3. T1 via privity of contract of T2 via privity of estate, or both.

Note: Most landlords will insist that each assignee covenants directly with them to observe and perform the covenants in the lease, thus creating privity of contract, but this situation is not the one tested on, as it is clearly unproblematic.

Question 82

Refresher: “Touches and Concerns the Land”

What does “touches and concerns” the land mean, according to P&A Swift Investments? (3 conditions)

Answer 82

• Benefits only the dominant owner for the time being, so that if separated form the land it ceases to be advantageous to them;
• Affects the nature, quality, mode or value of the dominant land.
• Not expressed to be personal.

Question 83

Leases: Enforcing Covenants

In 1994, Loretta, the freehold owner granted a 50-year lease to Toby (by deed). In 1997, Toby assigned to Alison (by deed and with Loretta’s consent. Last year, Alison assigned to Gwen (by deed and with Loretta’s consent). Gwen has failed to comply with the covenants of the lease.

Who is liable?

Old Leases

Answer 83

Loretta can take action against Toby under privity of contract, or Gwen under privity of estate, or both of them.

Question 84

Leases: Enforcing Covenants

If the landlord sues T1 for a breach of T2’s, what three courses of action can T1 take?

Old Leases

Answer 84

1. Common law action against breaching tenant.
2. Express indemnity covenant against the person to whom they assigned the lease.
3. Implied indemnity covenant, automatically contained in any assignment.

Question 85

Leases: Enforcing Covenants

On a sale of the reversion, what are transmitted to the new landlord?

If T2 breaches a covenant, who can the new landlord pursue?

Old Leases

Answer 85

The benefits and burdens of the landlord’s covenant’s that touch and concern the land.

Either T1, T2 or both.

Question 86

Leases: Enforcing Covenants

In a new lease:

1. What is the liability of the original tenant (T1) where they have assigned a new tenant (T2)?
2. What is the liability of T2?
3. As such, if T2 defaults, who can the landlord pursue?

New Leases

Answer 86

1. T1 is bound only while the lease is vested in them.
2. T2 is bound to all covenants unless expressed to be personal.
3. Only T2.

Notice T2 is bound to all covenants other than those expressed to be personal. C.f. being bound to those which touch and concern the land. Thus, in an old lease, if the covenant does not affect the nature of the land then T2 does not need to observe it. In contrast, if it were a new lease, T2 would still be required to observe it, provided it is not expressed to be personal.

Question 87

Leases: Enforcing Covenants

On a sale of the reversion, what are transmitted to the new landlord?

If T2 breaches a covenant, who can the new landlord pursue?

Is the outgoing landlord automatically released from the landlord covenants?

New Lease

Answer 87

Burdens and benefits of his successor, provided they were not expressed to be personal.

No. He has to obtain a release. If not obtained, the tenant will have a choice of pursuing either landlord, or both.

Question 88

Leases: AGAs

(1) An AGA only requires the former tenant to guarantee…

(2) The landlord can, however, require the former tenant to enter a new lease in the event that the assignee is…

(3) A landlord can only seek an AGA where the lease contains…

(4) Does the landlord’s request for an AGA need to be reasonable?

Answer 88

(1) …their immediate assignee.
(2) …declared bankrupt and the lease is thereby disclaimed.
(3) …a qualified covenant against alienation.
(4) If it is a residential lease, yes. If it is a condition of a commercial lease, no.

Question 89

Leases: AGAs

In 2010, Lucy, the freehold owner, granted a lease to Tanveer for a term of 20 years. In 2015, Tanveer assigned the lease to Ashleigh. In 2016, Lucy assigned the freehold reversion to Freddie. In 2020, Ashleigh assigned the lease to Gabriel, and provided an AGA to Freddie. Gabriel hasn’t paid the rent since the date of assignment to him.

Who can Freddie recover from?

Answer 89

The current tenant Gabriel, or the former tenant Ashleigh or both.

Question 90

Leases: Enforcing Covenants

If the landlord sues T1 for a breach of T2’s, what courses of action can T1 take?

New Leases

Answer 90

1. Common law action against breaching tenant.
2. Express indemnity covenant against the person to whom they assigned the lease.
   But there is no implied indemnity covenant.

Question 91

Leases: Retrospective provisions s.17, 18 and 19.