Leasehold - GDL Land Law

• One person with an estate in land (Landlord) grants the temporary right to another person (Tenant), giving him exclusive use of his land for a period of time

• Must be for a lesser term than the Landlord has the land

• Grants right to exclude all other people from the land (incl. Landlord)

• Different from licence (personal right of occupation – no legal estate in the land)

Terminology

• The Term of Years Absolute

• Sweet & Maxwell – ‘the grant of a right to the exclusive possession of land for a determinate term less than that which the grantor has himself in the land’

• Landlord grants lease (his estate is the freehold reversion)

• Lease is granted to the tenant: who can create a ‘sub-lease’

Essential Characteristics of a lease

2 basic requirements:

1. Certainty of term

2. Exclusive possession

Certainty of term

1. Fixed Term

   • Maximum duration of the arrangement known from the outset – neither party can unilaterally bring the lease to an end unless there is a break in the clause

   • A lease “for the duration of the war” cannot create a legal estate (Lace v Chantler)

   • Prudential Assurance Co. Ltd v LRR: overruled decision in Ashburn v Arnold that the ability of either side to bring arrangement to an end meant that the terms were not uncertain

2. Periodic Term

   • Where the length of the term is not fixed in advance – can still be a “certain term”

   • Arrangement runs from period to period – automatically renewed unless and until either party serves notice upon the other that the arrangement is coming to an end – ‘notice to quit’

May be created:

1. Expressly – written agreement

2. Impliedly – not In writing but arises simply by payment and acceptance of rent on a periodic basis – Prudential Assurance

• The ‘term’ depends upon the period by reference to which the rent is calculated – not the intervals at which it is payable – Ladies’ Hosiery and Underwear Ltd v Parker

• Rent commonly paid on the ‘usual quarter days’ – 25 March, 24 June, 29 Sept and 25 Dec

Problems with Certainty of Term

Tenancy at Will: Tenant occupied land with Landlord’s consent on understanding that either party may terminate tenancy at any time: no estate

• Although, if the tenant starts to pay rent by reference to a period, a common law periodic tenancy is created

Tenancy at Sufferance: Arises where a tenant holds over – remains in possession without the consent of the landlord after tenancy comes to an end: no trespass as original entry was lawful

Tenancy for life: Automatically converted into a tenancy for a fixed term of 90 years

• Berrisford v Mexfield Housing Cooperative: SC criticised current law on certainty of term – requirement of certainty of term for the creation of a valid lease outdated – but they didn’t remove requirement

Exclusive Possession

• Right to exclude all others from the property, including landlord

Formalities to create a Legal lease

• Depends on the length of the term of the lease

Lease created for a period exceeding seven years

• must be by deed (s52 LPA 1925)

• requirements for a valid deed (s1 LP (MP) A 1989)

• s. 1 Law of Property (Miscellaneous Provisions) Act 1989 – formal requirements for a valid deed:

  • makes it clear on the fact that it is intended to be a deed

  • validly executed as a deed (signed, attested, delivered)

• Registered land: Must be substantively registered (s27 (2)(b)(i) LRA 2002): so there will be (1) a register of the title to the freehold estate and (2) a register of the title to the leasehold estate

• Unregistered: will also require substantive registration to make it legal (s4(1)(c) LRA 2002) – but this will not trigger need to register the freehold estate as well – registered lease can exist over unregistered freehold estate

Leases exceeding three, but not exceeding seven years

• Must be created by deed to be legal

• But they do not need to be substantively registered

• so lease for less than 7 years not mentioned on the register – example of ‘unregistered interest which override registered dispositions’ – so would bind a new estate owner

Short leases – i.e. a term not exceeding three years

• some have no formal requirements – but still exist as legal leases

  • need not be in writing – s54(2) LPA 1925

1. Short fixed term leases (with max term of 3 years or less)

2. Express periodic tenancies (where there is a tenancy agreement)

3. Implied periodic tenancies

   • NB – periodic tenancies only fall under this if each individual period of the tenancy is for 3 years or less

• Example of a short lease which didn’t comply with requirements of s54(2)LPA 1925 = Fitzkriston LLP v Panayi

• Don’t need to be registered to exist as legal leases – so do not have their own registered leasehold title – will only be registered in respect of the freehold estate – lease won’t appear anywhere on the freehold register

• They will take effect as overriding interests on any 1^st registration/registered disposition of the property

Non-compliance with Formalities

Two possible outcomes:

1. Possible Periodic Tenancy

   • Prudential Assurance v London Residuary: common law recognised periodic tenancy

   • Javad v Aqil: Nicholas LJ declined to recognise a tenancy as there was no intention to create...