leases

lease

landowner permits another person to use their land for certain period of time, usually in return for rent payment

linden gardens trust v lenesta sludge disposals

lord browne-wilkinson - ‘a lease is a hybrid, part contract, part property’

leasehold covenant

promise contained within lease (terms of the contract), such as paying rent

lpa 1925, s205(1)(xxvii)

‘’term of years absolute’ means a term of years (taking effect either in possession or in reversion whether or not at a rent)… either certain or liable to determination’

street v mountford

‘a tenancy is a term of years absolute. this expression by s205 of the lpa 1925, reproducing the common law, includes a term from week to week in possession at a rent…’

requirement for lease

• exclusive possession

• terms

• rent

street v mountford exclusive possession

‘the tenant possessing exclusive possession is able to exercise the rights of an owner of land, which is in the real sense his land albeit temporarily and subject to certain restrictions’

exclusive possession vs exclusive occupation

exclusive possession concerns legal right that tenant has, including right to enforce duty on 3rd parties. more than just physical occupancy. exclusive occupation is factual control over the land (just physical occupation). having exclusive occupation does not mean that you have exclusive possession as well.

exclusive occupation is one of the factors that can help determine is exclusive possession has been granted.

exclusive possession - entitlement to treat property the way an owner treats it

term

must be certain or liable to determination

helps determine lease from a fee simple (which is potentially perpetual, while leases have a fixed period of time)

lpa 1925 s149(6)

‘any lease… for life or lives for any terms of years determinable with life or lives… shall take effect as a lease, for a term of 90 years determinable after the death (of the lessee)… by at least one months’ notice in writing

lpa 1922 s145 sch15

no perpetual leases (although they may be very long, eg 999 years) and perpetually renewable leases converted into 2000 year terms

fixed term

a set period of time (more than 21 years is considered a long lease)

periodic term

typically weekly, monthly, annual, with automatic renewal at the end of term unless one of the parties chooses not to (by giving notice to quit). (usually used more for short leases) - could see this as an uncertain term due to automatic renewal (especially as parties don’t have to do anything to renew)

s205(1)(xxvii) lpa 1925

no rent requirement - term of years estate exists ‘whether or not at a rent’

ashburn anstalt v arnold

fox lj - ‘we treat the case as one where no rent was payable. did that prevent the provisions of clause 5 from creating a tenancy? we do not think so. we are unable to read lord templeman’s speech in street v mountford as laying down a principle of ‘no rent, no lease.’

s54(2)lpa

rent is relevant for the creation of leases 3< years

creation requirement for 7+ years

deed + registration (strongest requirements)

enforceability - s29 lra (owners powers)

creation requirements for leases between 3-7 years

don’t need registration, but do need deed

enforceability - notice s32 lra 2002, and overriding interest sch3 para1

creation requirements for leases under 3 years (and implied periodic tenancies)

can be created orally/informally

enforceability - no notice (s33 lra 2002), but do have overriding interest sch3p1

s54(2) - makes a short lease legally enforceable automatically, so equity does not arise, but must pay rent for it to be valid.

equitable leases

arise from lack of formalities

for an equitable lease to arise, we need doctrine of anticipation (walsh v lonsdale), which looks at what should’ve been done

equity intervention not automatic, activated upon requirements (eg cases where there is a specifically enforceable contract under lpmpa, remedied by specific performance. no damages because no unconscionable contract, therefore an equitable lease granted)

for equitable leases should apply sched3p2, which is protected by actual occupation

termination of leases

• passage of time

• the parties exercise power to terminate lease earlier (eg break clause)

• lease subsumed into a different legal estate

statutory avoidance

attempts by landlords to structure agreements in a way that avoids statutory protections that apply to tenants by granting ‘licences’ rather than ‘leases’

somma v hazelhurst

often accepted by courts previously - ‘we can see no reason why an ordinary landlord… should not be able to grant a licence to occupy an ordinary house’ if that is what both parties want

street v mountford

shift in attitudes - lord templeman - ‘if the agreement satisfied all requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting they only created a licence.’

bruton v london &quadrant housing trust

protection from legislation available only if lease (not licence) was granted to him

despite use of label ‘licence’, hl held occupier was granted lease, same as street v mountford

sham or pretence

letting agreements contractually structured to circumvent statutory control (landlords including terms in the contract which deny ‘tenants’ exclusive possession)

antoniades v villiers

clause not a genuine part of the agreement between parties, but ‘only designed to disguise the grant of a tenancy and to contract out of the rent acts’

must look behind words of bargain to find real intention of parties

aslan v murphy

another example as in antoniades v villiers

agreement labelled as licence but included terms designed to prevent grant of exclusive possession but terms never actually enforced by landlord.

hl held that the terms of the agreement were ‘wholly unrealistic and were clearly pretences’

camelto guardian v khoo

clauses included agreement to not grant exclusive right to possession, and giving permission to share occupation of living space with any other people.

purposes of identifying sham devices or pretence, courts can consider matters predating conclusion of agreement but also to how arrangements were operated in practice. justification that conduct may indicate that parties never intended that obligations from terms should be honoured.

on the facts, no exclusive possession and no sham/pretence

snook v london and west riding investments ltd

definition of sham - not binding if common intention that term does not create legal rights/obligation

critique of definition under snook

too high standard as landlord intends clause to be binding but no intention to enforce it

potential pretence test

2 possible versions:
1. terms included only for purpose of denying occupier exclusive possession (adopted in antoniades, but criticised by mcfarlane)

2. no genuine intention to implement the agreement as it stands (case of bright)