This is an extract of our Leases 1 Essential Characteristics document, which we sell as part of our GDL Land Law Notes collection written by the top tier of Cambridge/Bpp/College Of Law students.
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Land Law: Leases 1, Essential Characteristics Intro---importance of distinction between a lease and a licence
?????We've seen the formalities for legal and equitable leases
?????Leases v licences: need to show the definitional requirements of a lease to distinguish it from a licence.
?????'Security of tenure' = the right of occupants of residential or business accommodation to occupy the premises for the term of their arrangement---only available to a tenant, not a licensee. Historically, this encouraged landlords to attempt, wherever possible, to create a licence rather than a tenancy, to defeat the tenure provisions of the Rent Acts 1977 (for residential tenancies) and the Landlord & Tenant Act 1954 (re business tenancies). o The importance of distinguishing between lease and licence has diminished since Housing Act 1988, which created assured shorthold tenancies, which reduced tenants' security of tenure o [[This is not covered on GDL]]
?????(for purposes of GDL) Importance of distinguish lease v licence is o Lease = an estate in land, involves the tenant have right of exclusive possession enforceable against all others, including the landlord. Confers control over the property. o Lease can be transferred (assigned); and, as a proprietary interest, can bind new owners of the freehold. o CF licence, not an estate in estate, only personal permission to be on the land. It justifies what would otherwise be a trespass; not a proprietary interest. Doesn't bind a new owner of the freehold (subject to the possibility of estoppel, or a constructive trust). o (1) whether it can be terminated:
? eg if you have a 5 year lease, the lease can only be terminated only by a break clause or forfeiture;
? whereas a licence can be terminated any time, and only remedy is damages. o (2) issue of repair
? Where you have short residential leases, the Landlord &
Tenant Act 1985 gives the land responsibility to repair the structure, exterior and certain elements of the interior.
? This doesn't apply to licences. o Only a tenant, not a licensee, can sue a 3rd party for nuisance or trespass.
?????Types of Licence: o (1) Licence coupled with an interest
1 o when a licence is granted in connection with an interest, eg a profit a prendre (outside syllabus). o Eg when a person is given a right to shoot animals on land, they may be granted a licence to enter the land in order to remove the dead animals. o The licence exists to facilitate the enjoyment of the interest. o The licence cannot be revoked before the interest concerned has ended. o If the interest in land is binding on successors in title, the licence attached to it is also binding and may be validly assigned to 3rd parties. o (2) Licence by estoppel o LIcence arises by way of proprietary estoppel (ch 7); if estoppel is proved, then one of the remedies open to the court is a licence. o In such a case, although the estoppel might bind 3rd parties, any subsequent licence awarded by the court will be personal. o (3) Bare Licence o Simply a permission to enter or use land where consideration has not been given in return. The licence prevents a claim of trespass being brought against the licensee unless they exceed its bounds. o May be created expressly or impliedly---eg, there is an implied licence for all persons who believe they have legitimate business to walk up the path to someone else's house and knock on the door/deliver a letter. o Bare licence may be revoked without notice at any time; and is automatically revoked by the death of the licensor or by disposition of the land in question, except where a licence is granted expressly by, and/or implied to, a class of people (eg the postman will not have to ask each new owner for permission before walking up the path; and a new postman will be covered by the licence given to his predecessor). o (4) Contractual Licence o A licence granted in exchange for consideration. Hence general principles of contract law are relevant to their creation. o Contractual licences were often used in an attempt by landowners to evade the statutory protection afforded to leaseholders, but the courts are suspicious of such stratagems. o A landowner is free to grant a contractual licence; but is not permitted to grant a lease and prevent it is a licence, simply to avoid statutory provisions. o This does not undermine freedom of contract---the owner of land is free to do what he wants; but is not free to decide the legal significance of what he has done.
2 o Other egs of contractual licences: staying in a hotel room; paying to use a commercial car park; buying a ticket to attend a play. Is the interest a lease?
?????Initially, Somma v Hazelhurst (1978): the courts began by looking at the stated intention of the arrangement and gave weight to the label, rather than the underlying substance: o A property owner had purported to grant a young couple two separate residential 'licences' for the use of a double bedsitting room. They were both in identical form, commenced at same time, and could be terminated at same time. Each agreement said the licensor was not prepared to grant exclusive possession and reserved the right either to occupy himself (with the couple); or to allow others to occupy as colicencees. o CA HELD: no reason why an ordinary landlord should not be able to grant a licence to occupy an ordinary house; and if both parties intended to create a licence, they could 'frame any written agreement in such a way as to demonstrate that it is not really an agreement for a lease masquerading as a licence'. o i.e. -if the parties on the face of it declared an intention to create a licence, it was a licence. Definitional requirements of a lease-change in Street v Mountford, look to the substance, not the label
?????Street v Mountford (1985), Lord Templeman: 'the parties cannot turn a tenancy into a licence merely by calling it one': substance not form.
?????Miss Mountford paid what was called a 'licence fee' under the agreement, for her premises; CA HELD: applying Summer v Hazelhurst: that the document stated the intention of the parties ?
it was called a licence, so it was a licence.
?????HL: overturned CA. Said the licence was a sham; the only object of using language of a 'licence' was to disguise the fact that Street had granted a tenancy.
?????So whether lease or licence doesn't depend on what it is called by the parties---it's about the substance, the label used by the parties is not conclusive.
?????The essential characteristics of a lease: o (1) CERTAIN DURATION + (2) EXCLUSIVE POSSESSION =
LEASE o Templemen added: (3) you need RENT.
?????However, Templeman was wrong about the requirement for rent: o Rent is not a necessary definitional requirement for a lease:
3 o S205(1)(xxvii) LPA 1925 o Ashburn Astalt v Arnold (1989).
?????So essential requirements are (1) CERTAIN DURATION + (2) EXCLUSIVE POSSESSION = LEASE (1) CERTAIN DURATION/CERATINTY OF TERM
? ?? ? Two says to satisfy this:
? ?? ? (1) Fixed Term: o Maximum duration known at outset: o The start and finish is set out in advance o A lease for 6 months is just as much a lease as one for 999 years. o Lace v Chantler (1944). Lease for the 'period of the war' failed as a fixed term, because the parties didn't know how long the war would last. o Prudential Insurance v London Residuary Body (1992). Arrangement to let land 'until it was required for road widening'. HELD: the exact end date needn't be known; only the maximum duration needs to be known; but in this case even that failed. o Break clauses: clauses which enable one party or the other to bring the lease to an end earlier. These don't offend the rule that the term must be certain, because the parties still know the maximum term at the outset. o Same with forfeiture clauses, which allow landlord to end the lease early if the tenant breaches a covenant. Again, doesn't offend 'certain term', but maximum term is known at outset. o Leases for life ? are converted into a fixed term of 90 years by s149(6) LPA 1925
? ?? ? (2) Periodic Term: o Hammond v Farrow (1904): 'short terms presumed not to be for more than 3 years'. o In practice, they tend to be weekly, monthly, quarterly, annual. o They can satisfy certain of term even though at start you don't know how long the arrangement will last. o Agreed mode of payment (the period by which rent is calculated) = the period term: if you pay weekly, then it's a weekly lease. o The lease renews with each payment: the certainty requirement is satisfied if agreed period of payment. o Can be created (1) EXPRESSLY: agree to a lease at 'PS250 per month' = express periodic monthly lease. o OR (2) IMPLIED
? Person goes into occupation, and rent is paid and accepted ? implied periodic term
4 Prudential v London Residuary Body : lease until 'property needed for road-widening'---failed fixed term lease test; but held that there was an implied yearly periodic term, because was in occupation and yearly rent was paid and accepted. (2) EXCLUSIVE POSSESSION
??? ?This is the crucial distinction between lease and licence. Lease is a proprietary right.
? ?? ? Must be able to exclude all other from the property, including the landlord
??? ?Remember it's about substance, not form/labeling.
? ?? ? Bruton v London & Quadrant Housing Trust (2000)---underlines crucial importance of exclusive possession in deciding whether lease exists: o Lambeth Council owned a block of flats; granted a licence of the block to London & Quadrant Housing Trust (a charity providing short-term accommodation for the homeless and others in need). o The Trust then entered an agreement with Mr Bruton allowing him to occupy one of the flats---the agreement called it a 'temporary licence', and that the Trust had a right to enter the flat. o Bruton claimed for breach of repairing obligations under Landlord & Tenant Act 1985, s11, which applied only to leases. o The Trust itself only had a licence, only a personal a right in relation to the land. o HELD: Mr Bruton had a lease, on basis that it 'plainly gave Mr Bruton a right to exclusive possession. There is nothing to suggest that he was to share possession with the trust, the council or anyone else. o [[this was a radical decision: it ignores the crucial prerequisite for granting a lease, that the landlord must have an estate in land]].
? ?? ? Westminster CC v Clarke (1992): o Westminster CC owned houses used by the council as a hostel for homeless, single men. Was intended to be a temporary home for rehabilitation for those with alcoholism/drug addiction. o Clarke had signed an agreement called a 'licence to occupy'---
in which he acknowledged he had no exclusive possession. o HELD: no lease, genuinely a licence. Due to the object the council---the provision of accommodation for vulnerable homeless persons; the necessity for the council to retain possession of very room; by the terms of the licence, Clarke was not entitled to any particular room, could be required to share with any other person, and the council's representative could enter at any time.5
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