Leases and Leasehold Covenants

Lease

Temporary residence of someone other than the owner for a fixed term, “term in years” in s1 of LPA 1925 refers to this

Tenancy

Land is let on a short term (weeks/months) basis

Lessor

Grantors of the lease, landlords also used for successors in title, also reversioner as they hold freehold interest/reversion on the land

Lessee

Grantees of the lease

Subletting

When the tenant lets the land out to someone else, can perpetuate further

Assignment

Transfer of interest of land to someone else

Street v Mountford (1985)

There should be exclusive possession for a term at a rent for a lease

s205(1)(xxvii) of LPA 1925

“term of years absolute” means a term of years certain or liable to be determined by notice, date of commencement must be clear to both parties

Lace v Chantler (1944)

Lease lasting the duration of the war was invalid due to uncertainty

Prudential Assurance Co v London Residuary Body (1972)

Ability of either party to end a periodic tenancy by notice was required for certainty

Berrisford v Mexfield Housing Co-operative (2011)

s144(6) of LPA 1925 means that a life tenancy was a 90 year lease

Exclusive possession

Tenant can exclude everyone from the land and it goes beyond exclusive occupation

Circumstances where there is no tenancy despite exclusive possession

• Parties did not intend to enter into legal relations

• Occupation is required as a term of the contract

• Occupancy takes place under a contract for the sale of the land

• Owner has no power to grant tenancy

AG Securities v Vaughan (1990)

If parties don’t enjoy exclusive possession together, it is not a lease, different terms

Antonaides v Villiers (1990)

All in one agreement with the same terms, is a lease

Ashburn Anstalt (1984)

Can have a tenancy without rent, but it is more uncertain

License

a granting of permission to enjoy land without giving an interest

Bare license

revoked on death or transfer

Contractual license

Valid until expiry of contractual period, but will not bind a successor

s6 of CLA 1977

Possession can not be taken through criminal means

Fixed term lease

Must be done expressly with a clear length of term to both parties

Automatic termination

Tenant cannot stay on the land after the end of the term, “effluxion of time”

Forfeiture

Landlord can end base prematurely if the tenant fails to meet their obligations

Surrender

Tenant gives up the lease and landlord accepts

Merger

Tenant acquires the landlord’s estate in land

Break clause

Either party can serve notice to end the lease prematurely

Periodic tenancies

• Basic duration agreed, renews every month until agreed end

• Can be either express or implied (Javad v Mohammed Aqil (1991))

Termination of periodic tenancies

• Ended with notice, length of notice depends on term of tenancy

• S5 of PEA 1977, residential lease notices must be served in writing at least 4 weeks prior

• S3 of PEA 1977, court order needed to recover premises

s1(1)(b) of LPA 1925

leasehold can be a legal estate

s52(1) of LPA 1925

deed is needed to create a legal estate in land

S1 of LP(MP)A 1989

deed must be clearly marked as one and must be signed, witnessed and delivered

s54(2) of LPA 1925

allows for parol lease exception

S27 of Land Registration Act 2002

leasehold over 7 years is a registrable disposition

Covenant

promises made by the parties to each other, can be positive (obligation) or negative (restriction)

Quiet enjoyment

Enjoyment of land will not be substantially interfered with by the landlord

Kenny v Preen (1963)

If the landlord threatens the tenant, this covenant could be breached

ss1(2) and (3) of PEA 1977

Landlord cannot unlawfully deprive tenant of occupation

Southwark LBC v Mills (2001)

Does not refer to absence of noise, but regular excessive noise can count

s11 of the Landlord and Tenant Act 1985

Tenants under 7 years cannot be made responsible for repairs

Warner v Keen (1954)

Tenants are responsible for routine fixes for matters of their own doing

Obligations under s11

Maintaining structure and exterior, water, gas, electricity, sanitation, and heating

Quick v Taff Ely Borough Council (1986)

No liability if there is no disrepair

Ravenseft Properties v Davstone (1980)

Landlord must rectify inherent defects as soon as they are made aware of it

Tenant’s express covenants

• Rent must be paid in the agreed arrears

• Covenants are usually placed on the way a tenant uses a property

• Landlord can impose alienation covenant on subletting, can be absolute or qualified

• ss1 and 19, landlord can allow for subletting if it is requested by tenant

Spencer’s Case (1583)

Obligations pass with the land, regardless of who the landlord is, applies if covenant “touch and concern” the land

S131 of LPA 1925

Entitlement to rent and covenants go to all subsequent owners

S172 of LPA 1925

Obligations under the lease are also transferred

Lord Oliver’s test in P & A Swift Investments v Combined English Stores Group (1989)

• Only benefits landlord

• Affects the nature, quality, mode of use or value of the land

• Not expressed to be personal

• Money is irrelevant if the first three requirements are satisfied

S17 of LT(C)A 1995

Relates to the recovery of a fixed charge from a former tenant, even if it is an old lease

Moule v Garrett (1872)

Where one person discharges the liability of another, that person may seek to recover the amount that was paid in order to do so

Avonridge Property Co v Mashru (2005)

Landlords can state in their lease that their liability ends once they have disposed of the reversion

S16 of LT(C)A 1995

Before consenting to assignment, landlord may insist on an authorised guarantee agreement

s19(1)(a) of LTA 1927

Landlord cannot unreasonably withhold consent to an assignment

Action for debt

• S19 of Limitation Act 1980, cannot be done over six years since due date

• If done under privity of contract or AGA, s17 default notice is needed (LT(C)A 1995))

Commercial rent arrears recovery

• Comes from Sch. 12 of the Tribunals, Courts and Enforcement Act 2007

• Recovers rent 7+ days, must be due and payable, and have one week notice of enforcement

 Forfeiture

• Landlord has a right to forfeit where there is a forfeiture clause or the lease is granted subject to a condition that the landlord may forfeit it on the happening of some event

• Landlord has choice to invoke forfeiture clause, this is legally binding

Non-payment of rent

• Duppa v Mayo (1669), landlord must show that they gave the tenant the opportunity to pay

• Can be waived in tenancy agreement

• Choice of peaceful re-entry or forfeiture proceedings, subject to s2 of PEA 1977

• Illegal to use violence for these means (s6 of CLA 1977)

Hadley v Baxendale (1854)

Damages are only awarded for natural and expected wrongs

S18 of LTA 1927

Disrepair damages can only reflect loss of value as a result

Lee-Parker v Izzet (1971)

Failure of landlord obligations alone is not enough to withhold rent

Taylor v Beal (1591)

Cost of repairs can be deducted from rent

s146 of LPA 1925

Notice must specify the breach, require it to be reasonably remedied and compensated if needed

s146(4) of LPA 1925

Sets out relief for ended subletting and mortgages