leases

• Lease


  A legal agreement that grants exclusive possession of a property for a certain period in exchange for rent
• Lease


  • Allows two or more people to enjoy the benefits of an estate in land at the same time
  • A proprietary right, whereas an estate is an ownership of one's own land
• Characteristics of a Lease (outlined in Street v Mountford)

  • Exclusive Possession - The tenant has control over who enters the property and can exclude even the landlord
  • Considerations - If the landlord retains the key, it may negate exclusive possession. However, if the key is retained for repairs or emergencies, it may not negate exclusive possession
  • Certainty of Term - A lease must have a definite duration, either for a fixed period or on a periodic basis
• Lace v Chantler [1944]

  • A tenant of a house sub-let the house to the defendant. The agreement stated the lease was to last for the duration of the war. The tenancy failed as there was no certainty as to the maximum duration
• Ashburn Ansalt v Arnold [1989]


  • D had a right to stay in a shop as a licensee without payment of rent for seven months, subject to a quarter's notice by C. The court ruled in favor of D, stating that it had a lease, which was an overriding interest, thus binding on C
• Prudential Assurance Co. Ltd v London Residuary Body [1992]


  • A strip of land was sold to the council, who leased it back to the seller until needed for road widening. The court ruled the original agreement was void, creating a legal periodic tenancy instead
• Berrisford v Mexfield (2011)


  • A month-to-month tenancy agreement had a clause regarding the landlord's right of reentry under certain conditions. The Supreme Court held the lease was not void. It created a life tenancy, which, under s149(6) LPA 1925, was equivalent to a 90-year lease
• Obligation to Pay Rent

  The tenant must pay rent to the landlord. This is considered a hallmark of a tenancy, but it doesn't always have to be monetary
• Dresden v Collinson [1988]


  • The court determined that an agreement granting a "licence" to occupy a workshop and store did not create a tenancy. The agreement allowed the licensor to require the licensees to transfer to other premises and increase the licence fee, indicating that no exclusive possession was surrendered to the tenant
• Lease


  Grants exclusive possession, has a certain term, involves consideration, and grants a proprietary estate
• License


  Grants exclusive occupation, is a permission, involves consideration, is a personal right, without transferring any ownership interest, and does not grant a proprietary estate
• Various statutory rights are available to the tenant but not to the licensee
• Appah v Parneliffe Investments Ltd [1964]


  • A woman occupied a room as a long term resident at 'Emperors Gate Hotel'. The hotel consisted of 17 rooms each resident had their own Yale lock key and were generally long term. The owner provided services of cleaning, bed making and provision of linen. She was a licensee. The provision of services necessitated entry by the owner which was inconsistent with exclusive occupation
• Intention/Existence of Lease


  • First View: Parties' intention construed through the words of the contract, irrespective of facts of the matter (Somma v Hazelhurst)
  • Second View: Terms are irrelevant, and facts of the matter are looked at (Street v Mountford). Street is upheld currently, preventing "sham contracts" (Bruton v London Quadrant Trust)
• Leases Recognized by LRA 2002

  • Registrable Leases: More than 7 years, must be registered even if freehold estate is not
  • Leases that Override: Less than 7 years, no legal effect; only effect in equity
• Formalities for Creation of Leases

  • Legally Competent: Must be 18 and above and of sound mind
  • Must be by Deed: S.52(1) LPA 1925 and signed and witnessed by a person capable of it (S.1 LP(MP)A 1989). Leases less than 3 years do not require writing
  • Equitable Remedies for Failure to Observe Formalities: Equity may assist by regarding the attempted grant as a contract to grant a lease and ordering specific performance of that contract
• Creation and Termination of Leases

  1. Leases for not more than 3 years: May be created orally or in writing - provided they satisfy the requirements of LPA 1925 s. 54(2), Taking effect in possession i.e start at date of grant, not at some time in the future, Are at best rent obtainable

  2. Leases for more than 3 but less than 7 years and short leases which do not fit requirements of s. 54(2): Must be made by deed - LPA 1925 s.52(1)

  3. Leases for more than 7 years: Must be made by deed (as above) and title to leasehold estate created must be registered

  4. Equitable Leases: Same as legal without proper formalities being present. Mostly based on the contract

  5. Termination of Leases: Forfeiture: Occurs when there is a breach of covenant by the tenant. Not available unless landlord provides notice (S.146 LPA 1925)
• Landlord's Covenants


  • Quiet possession
  • Repair/fitness for habitation
  • Non-derogation
• Tenant's Covenants


  • Pay rent
  • Allow re-entry for non-payment of rent
  • Not assign or sublet (optional based on contract)
• Covenants Running with the Land

  Effect: Third party may be liable on it and enforce it. If burden runs with land, the new owner can enforce it
• Enforceability of Covenants


  • Pre-01/01/1996: Both benefits and burdens would pass if covenants touch and concern land and privity of estate exists
  • Post-01/01/1996: Released from liability except where there is an authorized guarantee agreement. Covenants must affect the nature, quality, or value of the leased land to "touch and concern" it
• Licenses

  • Definition: Permission to enter and occupy land belonging to another without being a tenant
  • Types: Bare license (gratuitous), license coupled with interest, and contractual license (for value)
  • Revocability: Depends on the terms of the agreement and the loss incurred by the licensee
• Third Parties: Generally do not bind third parties but may under certain circumstances, especially if the licensee was in actual possession
• Street v Mountford [1985]

  • Street granted Mountford a license to occupy two rooms at a weekly rent, titled a 'licence agreement', and declaring it did not create a tenancy. The appeal was allowed. A lease must grant exclusive possession for a fixed term at a rent. Labels are irrelevant; what matters is the intention to confer exclusive possession
• Post Street v Mountford

  • It was thought that this case would provide an end to the matter. The courts, however, were often faced with difficult issues in respect of what amounted to "exclusive possession"
  • The first problem with S v M is that the judgment may be construed as referring only to residential situations
  • The second problem, it left open the question of what is meant by board and lodging
  • Thirdly, it left open the possibility of exceptional circumstances, where there is exclusive possession but no lease
• Criteria for Distinguishing Between Lease and License

  • Reasons for Uncertainty: A lease must be for a certain period and grant the tenant exclusive possession. If either requirement is not met, the arrangement cannot be considered a lease
  • Exclusive Possession: The key factor distinguishing a lease from a license is whether the occupier has exclusive possession. If the occupier has exclusive possession, they are a tenant; if not, they are not considered a tenant
  • Test of Exclusive Possession: Decisions where the occupier had exclusive possession but was held to be a licensee illustrate this difficulty. The approach summarized in Facchini v Bryson [1952] emphasizes that the substance of the agreement, rather than its label, determines whether it's a lease or a license
  • Street v Mountford [1985] Clarification: In Street v Mountford [1985], the House of Lords clarified the process of distinguishing between a lease and a license. Lord Templeman emphasized that parties cannot convert a lease into a license simply by labeling it as such
  • Developments After Street v Mountford: Lord Templeman highlighted that an occupier with exclusive possession of residential property is generally considered a tenant, except in exceptional circumstances. The contrast is a lodger who, provided with board and services, lac
• Lease


  A contractually binding agreement by which one person grants another the right to exclusive possession of land for a term, usually in return for a payment of money
• License


  A mere permission to occupy, where the occupier has no "stake in the land" and cannot exercise the rights of an owner consistent with the grant of a tenancy
• The distinction between lease and license is crucial due to the legal protections afforded to tenants, particularly under the Rent Act 1977 and the Housing Act 1988 (as amended by the Housing Act 1996)
• Test of Exclusive Possession

  • The substance of the agreement, rather than its label, determines whether it's a lease or a license
• In Street v Mountford [1985], the House of Lords clarified the process of distinguishing between a lease and a license
• Lord Templeman's exception in Street


  Regarding lack of capacity to grant a tenancy
• The House of Lords declined to extend Lord Templeman's exception in Street to cases where the grantor has no legal estate in the land
• This implies that a mere trespasser could grant a personal tenancy despite having no legal right to the land
• This contradicts the principle that a grantor of an equitable title can only create a term of years with equitable quality
• The reasoning also conflicts with the concept that a tenant granting a sublease for an equal or longer term is treated as having assigned their lease
• The key issue is that the grantor must have some legal interest in the land for the tenancy, ensuring something reverts to them at the end
• Tenancy


  Elevates a grant of exclusive possession (for a term) into an estate in land, where the tenant is characterised as having a proprietary interest in land capable of assignment and binding third parties
• License


  The grant of exclusive occupation confers on the occupier a mere permission to occupy, where the licensee has no "stake in the land" and cannot exercise the rights of an owner consistent with the grant of a tenancy
• Since Bruton, it is apparent that a tenancy need not have proprietary characteristics, and the tenancy may be purely contractual in nature, creating no estate in land