Leases 1 Essential Characteristics Notes

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).

  • 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

  • [[This is not covered on GDL]]

• (for purposes of GDL) Importance of distinguish lease v licence is

  • 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.

  • Lease can be transferred (assigned); and, as a proprietary interest, can bind new owners of the freehold.

  • 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).

  • (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.

  • (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.

  • Only a tenant, not a licensee, can sue a 3^rd party for nuisance or trespass.

• Types of Licence:

  • (1) Licence coupled with an interest

  • when a licence is granted in connection with an interest, eg a profit a prendre (outside syllabus).

  • 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.

  • The licence exists to facilitate the enjoyment of the interest.

  • The licence cannot be revoked before the interest concerned has ended.

  • 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 3^rd parties.

  • (2) Licence by estoppel

  • 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.

  • In such a case, although the estoppel might bind 3^rd parties, any subsequent licence awarded by the court will be personal.

  • (3) Bare Licence

  • 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.

  • 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.

  • 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).

  • (4) Contractual Licence

  • A licence granted in exchange for consideration. Hence general principles of contract law are relevant to their creation.

  • 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.

  • 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.

  • 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.

  • 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:

  • A property owner had purported to grant a young couple two separate residential ‘licences’ for the use of a double bed-sitting 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 co-licencees.

  • 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’.

  • 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...

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