Leases Flashcards
(30 cards)
What type of lease will trigger first registration at HMLR?
A lease for 7 years +
What are the formalities for the creation of a lease?
A lease must be created by deed and registered with HMLR:
It is a legal short lease for three years or less (can be created orally or in writing) and the tenant takes possession of the property at the best rent which can be reasonably obtained
If the lease is not created by deed but is created by signed writing, it can take effect as an equitable mortgage
Where do leases appear on the register?
Registered land: As a notice on the charges register
Unregistered land: As a C(iv) land charge (estate contract)
If not protected in this way, a purchaser of the freehold will not be bound by the equitable tenancy, unless they are a person in actual occupation (in which case this will be an overriding interest)
When will an equitable lease come into being?
When it is in signed writing but has not been created by deed (subject to the short three year lease rules)
What are the formalities for an assignment?
An assignment can only be effected by deed
What are the different types of lease?
- Fixed term tenancies: a lease for a fixed period of years
- Reversionary lease: a lease providing that the tenant will take possession at some date in the future (unless the period before possession exceeds 21 years)
- Periodic lease: defined by a period of time such as ‘yearly’ or ‘year to year’/ ‘month to month’
What is an implied periodic tenancy?
Where the parties have not entered into a written agreement but the tenant has gone into possession and started to pay rent. The period will be implied based on how often the rent is paid
= pays rent every 2 months - will be an implied periodic lease
In a long-term lease, may rent be increased by the landlord?
No, not unless a rent review clause has been included
What is a tenancy at will?
When the landowner allows a buyer to take possession of the land before entering into any written agreement to sell. This is a personal agreement.
When will a lease be void for uncertainty?
Where termination of the lease depends on external circumstances over which the parties have no control
e.g. a lease for the life of a particular tenant
What are the three key characteristics of a lease?
Exclusive possession, for a term, at a rent
What are the main convenants contained in a lease?
- A term
- The payment of rent
- Quiet enjoyment (the landlord must not interfere physically or in any other way with the tenant’s enjoyment of the property)
- Repair (may either be for the tenant or the landlord to.repair - more likely to be the tenant if it is a commercial lease)
- What the premises can be used for
- Alteration of the premises (landord’s consent = qualified alterations covenant, prohibition = absolute bar to alteration)
- Insurance (if lease is for the whole building then it will normally fall on the tenant to insure it)
- Service charge (if there are shared services in the building then the landlord or management company will normally covenant to provide the services and the tenant will pay the cost of these by paying a service charge)
- Forfeiture clause (must be included to be effective)
Landlord remedies:
What is Commercial Rent Arrears Recovery and when does it apply from?
A statutory procedure that allows landlords of COMMERCIAL premises to recover rent arrears by taking control of the tenant’s goods and selling them.
It automatically applies to all commercial leases from 6 April 2014, it DOES NOT have to be referred to in the lease
Tenant must be given 7 days notice of the seizure
Landlord remedies:
What is forfeiture?
The right of the landlord to re-enter the premises and bring the lease to an end due to rent arrears by the tenant or failure to comply with repairing covenant
The lease must contain express provision for this, it cannot be implied.
A landlord may waive their right to forfeit e,g. if they accept the breach or demand payment
The landlord must serve a notice on the tenant which specifies the breach, requires the breach to be remedied within a reasonable time, and requires the tenant to pay compensation for the breach
If it is a residential property, a prior court order will be required before forfeiture can be exercised
What are the landlord remedies for breach of a repairing covenant?
- Damages
- Specific Performance
- Self-help (or Jervis v Harris clause) (i.e. carrying out the repairs themselves and then claiming the cost from the defaulting party)
- Forfeiture
What other remedies may a landlord have against a tenant in default?
- A simple debt action
- Retention of rent deposit
- Pursue the tenant’s guarantor
What are the rules regarding leases before 1 January 1996?
The landlord may still sue the original tenant even once the lease has been assigned
What are the rules regarding leases dated after 1 January 1996?
The landlord may only pursue the current tenant for rent arrears, not the original one (it is the date of the grant of the lease, not the assignment, which determines this)
What is an authorised guarantee agreement?
For new leases, as a condition of assignment, a landlord can require the outgoing tenant to sign an AGA which means they will act as a guarantor to their immediate successor in title (and would therefore have to pay in the event of rent arrears)
If there has been three assignments, and the AGA is only between the 2nd and third tenant, then the first tenant can no loner be sued
May a landlord include a requirement that the tenant signs an Authorised Guarantee Agreement in a residential lease?
No, but this may be included in a commercial lease
Is there privity of estate or privity of contract between the landlord and a subtenant
No - there is no privity of estate or privity of contract between the landlord and subtenant
Are the covenants in the head-lease enforceable against the subtenant?
No (unless a restrictive covenant in equity), but the original tenant will still be liable for the covenants, so they will seek to include the same covenants in their contract with the subtenant.
What is the difference between subletting and assigning in terms of the liabilities of the tenants?
Assignment - new tenant takes on the responsibility for the covenants in the lease because there is privity of estate between the landlord and the new tenant
Subletting - original tenant (not subtenant) remains responsible for performing the covenants in the lease. This is because there is no privity of estate or contract between the landlord and the subtenant.
What is an absolute covenant against assignment?
An absolute bar to assignment.
Any waiver of this bar would have to be formalised in a deed of variation.
