Leases Notes

Leases Notes

A – the lessor

B – the lessee

X – a third party who is a stranger to the property to which the license relates

C – a third party who has acquired the relevant right from A (fee simple, lease etc.)

What is a lease?

A lease is a proprietary right which grants exclusive possession of land for a limited period of time.

A lease will affect different parties in the following ways:

1. The effect of a lease on A –

   1. A and B enter in to a landlord-tenant relationship

      1. The common law will impose certain duties on parties even if they didn’t intentionally undertake these in the contract

         1. s11 of the Landlord and Tenant Act 1985 imposes a duty on private landlords to keep in repair the structure and exterior of a dwelling house which B occupies

2. The effect of a lease on X –

   1. As a result of leases being proprietary rights, they are capable of binding third parties.

      1. If B has a legal lease, then third parties have a prima facie duty not to interfere with B’s use of A’s land

         1. In Hunter v Canary Wharf, it was held that to sue in nuisance a claimant must have a property right in the land and that property right must give the claimant exclusive possession of the land

            1. Lord Hoffmann said that “Exclusive possession is the bedrock of English land law”

            2. One might take issue with Lord Goff’s judgement where he states that a “licensee with exclusive possession” might be able to sue for nuisance, given that exclusive possession is a distinguishing feature of a lease. We can avoid this problem by distinguishing between two senses of exclusive possession:

               1. Legal exclusive possession or a legal right of exclusive possession

               2. A personal right of exclusive possession which arises, for instance, where a couple lives together, but one person moves out leaving the remaining partner as the sole factual possessor

3. The effect of a lease on C –

   1. Legal and equitable leases are property rights which are capable of binding third parties who later acquire a right from A

What are the requirements for a lease?

In Street v Mountford Lord Templeman established the two requirements of a lease.

• In this case S hired out two rooms to M. The contract said that the agreement was a license and not a lease. If this were true, M would not be protected by the Rent Act 1977.

  • Held: C had a lease

    • If the agreement satisfied the requirements of a tenancy, the agreement produces a tenancy and the parties cannot alter the effect of the agreement by insisting they only created a license

      • “The only intention relevant is the intention demonstrated to grant exclusive possession for a term at rent”

    • Lord Templeman set out the requirements of a lease:

      • Exclusive possession of land

      • For a fixed time

    • Three categories of tenancy might prevent the creation of a tenancy:

      • No intention to create legal relations

        • BUT: in Bruton v London & Quadrant Housing Lord Millet said that his is not an exception to the general rule:

          • The landlord-tenant relationship is legal – it cannot exist by an arrangement not intended to be a legal one

      • Some additional independent relationship giving rise to an alternate explanation

      • The absence of a power to create a tenancy

        • BUT: see Bruton which seems to suggest that this is no longer true

Per Lord Templeman we seek to interpret the original ‘lease’ agreement, with subsequent conduct only illuminating the original agreement.

1. Exclusive possession –

   1. It will generally be necessary for a landlord to intend to grant the tenant a right to exclusive possession; the fact that the person exclusively possesses the land does not mean that they hold the right to exclusive possession

      1. Lord Templeman said in Street v Mountford that a right to exclusive possession is synonymous with ownership for a limited period

      2. The lessor will retain a ‘reversionary interest’, meaning that the right to exclusive possession granted to the lessee will eventually revert back to the lessor.

      3. The distinction drawn above between legal exclusive possession and a personal right of exclusive occupation is important in this respect

   2. In Watts v Stewart, Sir Etherton MR referred to Denning LJ in Errington v Errington, where he said that:

      1. “Legal exclusive possession entitles the occupier to exclude all others, including the legal owner, from the property. Exclusive occupation may, or may not, amount to legal possession. If it does, the occupier is a tenant. If it does not, the occupier is not a tenant and occupies in some different capacity.”

      2. “if the circumstances and the conduct of the parties show that all was intended was that the occupier should be granted a personal privilege, with no interest in the land, he will be held to be a licensee only”

         1. The distinction drawn above between legal exclusive possession and a personal right of exclusive occupation is important in this respect

   3. In Westminster City Council v Clarke an agreement was made between C and Westminster CC for C to occupy a room at a hostel. It was clearly stated that he license was not and was not intend to give any of the rights of a tenant or give the right of exclusive occupation of any particular accommodation or room which was allotted to C. (The hostel operated as a halfway house for rehabilitation and treatment en-route to an independent home). Following complaints from other residents, the council sought to remove C from the hostel, but he refused under Part IV of the Housing Act 1985.

      1. Held: C did not have a lease – he had a license. Lord Templeman said that “the provisions of the license to occupy and the circumstances in which the license was granted (the purpose of a halfway house) continued to lead to the conclusion that Mr Clarke has never enjoyed that exclusive possession which he claims”

         1. The key to this outcome was the contextual factors which meant that the Council could not have granted a lease

            1. NOTE: it is possible that there was more judicial sympathy towards the objectives of the council than those of Mr...

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