W3 Leasehold Flashcards
What are the advantages of a leasehold over a licence?
Leasehold is a proprietary right
Leasehold will normally bind a new purchaser of land
Leaseholds have a greater degree of security of tenure
Leases require due process to terminate
What is a proprietary right?
A right related to the property itself, rather than a right related to a relationship or contract (i.e. a personal right).
What is security of tenure?
Term used to describe the statutory protections afforded to tenants when a lease ends allowing them to remain in possession until removed by court order
What is a lease (two levels of operation)?
A proprietary right/estate in land - s1.1.b LPA 1925
A contractual relationship between landlord and tenant
Is a licence a proprietary right?
Not usually.
In some cases a licence holder has been given the right to evict or a right to challenge termination
Bruton v London and Quadrant 1999
Facts: Local authority granted a housing trust a licence to use council property as short term accommodation for homeless people, on the condition that the council could have access at specific times for development work. Tenant (who was granted a licence by the housing trust) did not vacate as requested, an action was brought, and question was raised whether it was a lease or a licence. Court determined that the intention of the agreement of both parties was to grant exclusive possession to the tenant, which is essential to a lease under Street v Mountford, so was a lease. The clause requiring the tenant to vacate upon notice were unenforceable, as you can’t contract out of the statutory implied covenants of the LTA 1985. However, the judgment confirmed that while it was a lease/tenancy, it did not necessarily grant proprietary rights.
Significance: HoL accepts the existence of a non-proprietary lease. Example of a technically ultra vires lease. Example of a licence found to actually have been a lease.
Manchester Airport Plc v Dutton 2000
Facts: National Trust owned land near the site for the airport’s second runway and granted a licence for the airport staff to undertake the work. Environmental protestors entered to try and prevent the work. Question was whether a licensee no in de facto occupation or possession was able to rely on a court order for possession. Historically, ejectment could only be performed by someone with a proprietary estate in land. Court held that they could grant a licensee relief which would protect their legal rights in the licence.
Significance: Licence holder given same rights to evict as leaseholder
Manchester Ship Canal Comp v Vauxhall Ltd 2019
Facts: D had a long licence to use drainage pipes and maintain them in the ship canal. Didn’t pay a licence fee, so C tried to terminate. Court granted D right to relief from forfeiture, even though it was a licence. Said the licence granted possessory, if not proprietary, rights, so relief from forfeiture could be granted.
Significance: Licence holder entitled to apply leasehold rules to challenge termination. Example of court taking a pragmatic approach to commercial situations.
What is a service occupancy?
When an employee is required to live in a premises for their job.
Is a service occupancy a lease or a licence?
Has the features of a lease but is not proprietary
Norris v Checksfield 1991
Facts: Employee lives in property to better perform their duties, so if employment terminated, occupancy can be terminated as well. Man given occupancy of a bungalow near a garage to be on call, lost driver’s licence, lost job and occupancy terminated. Tried to argue he still had a lease of bungalow, but court deemed it a licence (contract clearly tied the occupancy to the employment, and rent was deducted from wages), so no protections against eviction applied in this circumstance.
Significance: Example of a service occupancy invalidating the proprietary nature of a lease
What is the statutory definition of a lease?
Term of years absolute
Auth: s1(1)(b) LPA 1925
What is the statutory definition of a “term of years absolute”?
A term of years (including one year or a fraction of a year)
Either in possession or in reversion
Whether or not at rent
Subject or not to another legal estate
Auth: s205(1)(xxvii) LPA 1925
s205(1)(xxvii) LPA 1925
Defines a term of years absolute
What does “in possession” mean?
Tenant physically possesses land
What does “in reversion” mean?
Land is occupied by another, e.g. subtenant
What is the common law definition of a lease?
1) Exclusive possession
2) Certainty of term
3) Rent
Auth: Street v Mountford
Street v Mountford
Facts: Claimant granted defendant the right to occupy two rooms, subject to rent, with 14 days termination notice under an agreement titled “licence”. Agreement included a clause saying that no tenancy was created. Court held that despite the name of the document, it was a tenancy/lease since it granted exclusive possession for a clear term (no attendance or services).
Significance: Provides common law definition for lease: exclusive possession, certainty of term, rent.
What is exclusive possession?
The tenant has the right to exclude others from the property, including the landlord (generally)
What is certainty of term?
The length of the lease must be determinable from the outset
Is rent essential for an agreement to be a lease?
No.
Auth: Ashburn Anstalt v Arnold
Ashburn Anstalt v Arnold 1989
Facts: A man leased a shop premises and subleased it to a business on a long lease (50+ years). He sold both the headlease and sublease on, including provisions that he could remain at the property as a licensee for a period of time without paying rent, and that if the new owner redeveloped the land, he be offered shop premises at a discounted rent. Court held that it constituted a tenancy/lease, even though no rent was required.
Significance: Can still be a lease without a rent.
Does a landlord entering a property/having a key for emergencies violate exclusive possession?
No, landlord entering for reasonable purposes does not disprove exclusive possession
Does a landlord providing services undermine exclusive possession?
Yes, if it’s regular cleaning or similar, can point to more lodger-like arrangements
True or false: if a lease includes a provision for the landlord to provide regular cleaning services, exclusive possession is automatically undermined.
False. It could be a sham clause. It matters if the services are actually being provided in fact.
Aslan v Murphy 1989
Facts: Three separate appeals decided in the same judgment, all concerning whether contracts for occupation were leases or licenses. One required the tenant to vacate from 10:30-12 every day, one had been granted a full possession by the court, and one had a clause saying the owner may take possession at any time at short notice. The clauses in the first and third case were not enforced/intended to be enforced, so were leases.
Significance: Lease vs licence determination is based on the operation of the agreement in fact regardless of what’s in the contract/how it is labelled. An occupier agreeing to a document with a sham clause does not lose their statutory protections.
Antoniades v Villiers 1990
Facts: 1 bedroom flat let to a couple. Included a provision stating the landlord and unspecified other people could share the flat with the tenants. Deemed a sham clause. Although the couple signed separate documents, they had unity of title since the documents were interdependent and identical. Unity of interest was present in that, while the rent was split, they were jointly and severally liable for the full rent. Additionally, landlord had asked if they wanted single or double beds, and they had asked for a double bed - clearly intending to share the flat as a couple.
Significance: Sham clause example. Cohabiting couple had joint tenancy.
Can two separate leases cover the same space?
No - neither could claim exclusive possession
How do joint tenants demonstrate a single, joint lease?
By proving the 4 unities
What are the 4 unities?
PITT:
Possession (equal right to possess the property)
Interest (same nature, extent and duration of interest)
Title (interest derives from same or interdependent documents)
Time (lease vests at the same time)
Can a transient group of people have a joint tenancy?
No
AG Securities v Vaughan 1990
Facts 4 rooms in a shared flat. Each person had an individual arrangement with owner, started occupations at different times and all paid different rents. If somebody left, landlord could introduce somebody else. Court held that there was no joint tenancy – interests started at different times, separate documents, and all of them had different obligations to pay different amounts of rent.
Significance: No joint tenancy in a transient group
Mikeover v Brady 1989
Facts: Couple who moved in at same time then separated. Court held that they were severally liable for their own rent, so no unity of interest. When one left, remaining one offered to pay the full rent and the landlord refused. Since there was no unity of possession, and D could not prove sham clauses, was deemed a licence.
Significance: Couple who had separated did not have joint tenancy on the facts
Lace v Chantler 1944
Facts: Tried to grant lease for the duration of WWII. Uncertain term.
Significance: Certainty of term - term can’t be based on an uncertain end point
Does auto-renewal violate certainty of term?
No. Each renewal is a term, determinable from the outset
Does a break clause violate certainty of term?
No
What are the exceptions to certainty of term?
Court may imply lease length, such as a periodic lease equivalent to the rent payment terms, or a 90-year lease implied into a lease for life
Prudential v London Residuary Body 1992
Facts: Lease for land next to a highway, with a duration “until required to widen the road”. Land was sold to another, who tried to terminate the lease. Leaseholder said could only be terminated for road-building. Court held that the uncertain term voided the lease, but since the rent was paid yearly, the lease would be a yearly lease, and new owner could terminate on that schedule.
Significance: A certain term can be implied through the rent calculation period
Ladies Hosiery v Parker 1930
Facts: Land behind four houses with a shed on it had been leased to a business, with weekly rent. The lease was assigned and freehold bought several times, leading to confusion about the dates. Found to be a weekly tenancy.
Significance: Authority for calculation
Javad v Aqil 1991
Facts: Occupation was granted while the terms of the lease were still being negotiated. Rent was being paid quarterly during this time. Negotiations broke down, tried to claim tenancy protections. Court ruled it was a tenancy at will, not a quarterly tenancy.
Significance: Payment of periodic rent only creates the presumption of a periodic tenancy. It can be rebutted on the facts.
Berrisford v Mexfield 2011
Facts: Sold house to raise money to housing cooperative who rented it back to her. Limited power for landlord to terminate as long as tenant paying rent. Landlord tried to terminate claiming a monthly periodic tenancy. Court created a tenancy for life under s149(6) which is converted to a lease of 90 years.
Significance: Example of certainty of term not being strictly required, but is a controversial decision.
Southward Housing Cooperative v Walker 2015
Facts: Lease with uncertain term. Tenants tried to argue Mexfield, saying that it created a 90-year tenancy. However, the intentions of the parties had not been to grant a lease for life (unlike Mexfield). Agreement was re-classified as a periodic licence.
Significance: Limits Berrisford v Mexfield by saying the intention to create a lease for life must be present for Mexfield to apply.
What are the formality requirements for a lease of 3 years or less?
No written requirement
Immediate possession
At best rent
No premium
Auth: s54(2) LPA 1925
If the above three requirements are not met, then a Deed is required
s54(2) LPA 1925
Leases of three years or less can be created through oral agreements
What is a premium?
An up-front capital payment for a lease that isn’t a deposit
Does a lease of exactly three years require a written agreement?
No
What are the formality requirements for a lease over 3 years but not more than 7 years?
A Deed is required
What are the formality requirements for a lease over 7 years?
Deed (s52 LPA 1925)
Substantive registration (s27(1) LRA 2002)
s27(1) LRA 2002
Disposition of a registered estate or registered charge does not operate at law until any applicable registration requirements are met.
