Leasehold Estates (Chapter 5) - Land Law

FLK 2

How can a lease be created?

What are the two types of lease?

1. Fixed term lease

2. Periodic tenancy (lease may last indefinitely)

   1. could run from week to week or month to month.

   2. ended by giving notice.

How must a legal valid lease be created?

• created by deed and registered depends on the length of lease.

• only leases of seven or more years need to be registered.

• only leases of three or more years need a valid deed.

What types of interest will a lease of 0-6 years be?

Overriding

If a 7+ year lease is not registered what will happen?

It would create an equitable lease and not a legal lease.

What are the three characteristics of a lease?

• exclusive possession

• a fixed duration

• (at a rent)

• the lease must have the correct formalities to be a valid legal lease, such as being made by deed and signed.

  • if not, it will be an equitable lease.

What is exclusive possession for a lease?

Tenant has the right to control the use of the property.

They can decide who goes into the property and they can exclude anyone from the property, including the landlord.

Must be exclusive

Must be able to exclude the landlords

Dependent on the substance of the agreement and not the name of it

Lodgers cannot be tenants

What is the difference between a license and a lease?

An occupier with a license can only stay in the property, and does not grant them proprietary or legal interest in the land.

A license may be permitted exclusive occupation of the property, but unless they have exclusive possession they will not hold a lease.

Licensees also don’t have any statutory protection to fair rent.

What is a fixed duration for a lease?

Fixed for a maximum duration.

Must not exceed duration of the landlord’s own title

Maximum term myst be confirmed at the start of the agreement

What is an express covenant?

Covenants written into the lease and will be determined by what the landlord feels appropriate

These include covenants preventing animals being kept in the property or covenants preventing any alterations to the property without the landlord’s prior consent.

What is an implied covenant?

Covenants deemed to be included into every lease unless there is a specific clause stating that it will not apply.

Examples of landlord implied covenants

1. Quiet enjoyment

   1. landlord should let tenant enjoy property without interference

2. Non-derogation from grant

   1. landlord cannot undermine term of lease

3. Repair

Examples of tenant implied covenants

1. Paying rent and taxes

2. Repairing

   1. keep property in good repair and condition

3. Not committing waste

   1. tenant cannot do anything on the end which would permanently change the landlord’s land.

Rules for leases where the land is in the ownership of the original landlord or tenant (privity of contract)

• covenants in a lease have privity of contract which means that only the parties subject to the contract can sue or be sued following any breach of the clauses in that contract.

Rules for leases where the land has been sold or transferred to a third party as a successor in title (for leases granted pre-1996)

• Privity of estate applies where the rights and duties that apply between the current owners of the different legal estates in the same piece of land.

• The successors in title would not be bound by every covenant in the original contract (lease).

• Only those covenants which ‘touch and concern’ the land will be enforceable between them.

Privity of estate and contract example

If a successor with privity of estate breaches a covenant, can the original landlord be sued?

Yes. They still have a privity of contract with the tenant. The OG landlord would have to obtain an indemnity from the successor to cover the the costs.

Main differences between privity of estate pre-1996 and post-1996?

The Post-1996 legislation removes the ongoing liability from the original landlord, providing that they write to the tenant to be released from the liability.

If the tenant agrees, or does not reply within four weeks, the landlord will be released from the privity of contract.

Enforceability of covenants

What an alienation covenant?

A clause in a lease preventing the assignment or sublet of a property.

Why have an alienation covenant?

• prevents the tenant from assigning, subletting or parting with possession of the property.

• common to have a further condition stating that permission to assign, sublet or part with possession of the property should not be unreasonably withheld.

• if a tenant does asking or sublet the landlord can seek a remedy to rectify the breach.

What are the remedies available to the landlord for the breach of a leasehold covenant?

1. Action for debt/damages

   1. application to small claims court

2. An injunction

   1. the court ordering a stopping of the tenant continuing the breach

3. Specific performance

   1. requires the tenant to specifically carry out something which they have not done, like repairing something they haven't.

   2. courts are reluctant to use it

4. Forfeiture

   1. drastic remedy which allows the landlord to terminate the lease.

What is involved in forfeiture for non-payment of rent?

To use this remedy the landlord must:

• make a formal demand for the outstanding rent, unless there is an express exemption of this in the leaser the rent is in arrears by six months or more.

• ensure there is a forfeiture clause in the lease.

If these terms are satisfied the landlord can then either re-enter the property forcefully or apply to the county court for possession proceedings.

Can a tenant be given relief from forfeiture clauses upon non-payment of rent?

Yes, if they pay the outstanding rent within five days of the hearing.

Court also has power to stop the proceedings for four or more weeks. If the tenant pays the arrear in full they will be granted automatic relief from forfeiture.

What is involved in forfeiture for a breach of covenant?

To use this remedy there must be:

• there must be a forfeiture clause in the lease

• the landlord must consider whether the breach is remediable

If the breach is remediable then the landlord must serve a notice specifying the time limit to remedy the breach. If the breach is remedies the forfeiture is lost. If it isn’t a court proceeding can be taken out.

If the breach isn’t remediable then the landlord must still serve a notice specifying for this. Must wait the wait 14 days before making an application to the court for forfeiture.

Can a tenant be given relief from forfeiture clauses upon breach of contract?

• they can show the court that they have remedied the breach

• they can persuade the court that the lease should continue even if there has been a breach. this is subjective.

What are the remedies available to a tenant for breach of covenant in lease?

1. damages

2. injunction

3. specific performance

4. recoup the costs of repair from future rent

Remedies for breach of covenant

What are the four ways to end a lease?

1. Expiration

2. Forfeiture

3. Surrender

   1. leaseholder gives back to freeholder

4. Merger

   1. the leaseholder could apply to purchase the freehold reversion. If that happens they can apply to merge the freehold and leasehold legal titles.