Property Law

Leasehold | Land Law – SQE1 & SQE2 Exam

Loader Loading...
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab

 

Leasehold
Term of Years Absolute
• Any length of time, as long as for a lesser term than the landlord has in the
land
• Person with estate in land = Landlord
• Grants temporary right to another person to use and enjoy land
exclusively = Tenant
• Lease allows tenant to exclude all other people, inc. landlord
• Lease ≠ licence ~ personal right of occupation, not legal estate
• Lease = a type of contract
• Lease generally confers on tenant an estate capable of binding third
parties
Required contract terms
General terms required for agreement and creation of lease (sufficiently clear
and certain + ITBB):
• Parties
• Premises
• Rent
• Duration of the lease
• Date of commencement or event on which lease to commence
• Other material terms
© Liam Porritt 2020 2
Essential Characteristics of a lease
Note that these two characteristics are not the sole characteristics. It is possible
for these to be in place and there not to be a lease (e.g. where no ICLR).
• Certainty of term
o Fixed Term
§ Cannot be ended unilaterally (unless break clause)
§ Max duration known from outset (Lace v Chantler)– applies
to corporate bodies and gratuitous tenancies (i.e no rent
paid) (Prudential Assurance Co Ltd v London Residuary
Body)
• Here, PA sells to London Council
• London Council leases back to PA ‘until road built’
• LC abolished and reversion to LRB
• LRB does not build roads but brings lease to end
• HELD: no lease at outset (i.e. max duration must be
known) + yearly lease arising by tenant’s
possession and rent and LPA 1925 s 54(2) =
periodic tenancy
§ Berrisford v Mexfield Housing Co-operative – Leases of
uncertain duration where tenant is human personality =
leases for life determinable on the uncertain event arising =
(under LPA s 149(6)) lease of 90 years determinable on
either the uncertain event or death occurring
o Periodic Term
§ Period automatically renewed until either party serves
notice to quit
§ Created:
• Expressly – written agreement
• Impliedly – payment of rent + possession
o Note: Javad v Aqil – payment of rent does not
necessarily lead to implied PT ~ intention to
create temporary occupation during
negotiation for formal lease, therefore no
implied periodic tenancy
§ Term = period by reference to which the rent is calculated,
not intervals at which it is payable (e.g. £10,000 a year by
four quarterly payments = annual period) (Hosiery and
Underwear Ltd v Parker)
© Liam Porritt 2020 3
o Tenancy at will – tenant occupies land with landlord’s consent –
either party may terminate at any time
§ Party has exclusive possession in absence of term certain
and does not pay rent
§ Tenure between landlord and tenant, ending on death or
assignment
§ No estate
o Tenancy at sufferance
§ Tenant remains in possession without consent of landlord
after end of lease – not trespass, as original entry lawful
o Tenancy for Life – converted to tenancy for 90 years (LPA 1925, s
149(6)) determinable on the death of the grantee
• Exclusive possession – does tenant have right to exclude all others from
the property, including landlord?
© Liam Porritt 2020 4
Formalities to create a legal lease
1. (Contract s2 LP(MP)A 1989)
2. Deed s52 LPA 1925 + s1 LP(MP)A ~ more than 3 years needs deed
3. Registration ~ more than 7 years needs registration
Ø S 27(2)(b)(i) LRA 2002 when created out of registered freehold
estate – otherwise exist in equity
Ø S 4(1)(c) LRA 2002 when created out of unregistered freehold
estate – however, no need to register freehold (i.e. can have
registered lease over unregistered freehold)
Ø If not substantively registered:
o Still takes effect in equity
o Can be protected by means of notice on the charges
register (for lease of more than 3 years)
• Legal lease of 7 years or less = ‘unregistered interest which overrides
registered dispositions’, or just ‘overriding interests’ ~ these bind new
freehold estate owners even though they do not appear on the registers of
title.
• Legal lease of more than 7 years = must be registered by registrar on
charges register to protect them = s 38 LRA 2002.
Lease of 3 years or less (inc. express + implied periodic tenancies)
• S 54(2) LPA 1925: if…
o Not more than 3 years
o Effect in possession
o Best rent (= market rent, not significantly less or more)
o Without fine (= without fee at start)
= No need for deed or writing
© Liam Porritt 2020 5
Formalities to transfer a legal lease
1. (Contract – s 2 LP(MP)A 1989)
2. Assignment completed by deed, regardless of duration of lease, s 52 LPA
1925, Crago v Julian; Deed compliant with s 1 LP(MP)A 1989
3. Registered:
a. s 27(2)(a) LRA 2002 if lease already registered
b. s 4(1)(a) + s 4(2)(b) LRA 2002 if lease not registered with more
than seven years to run at date of assignment (if lease created
before LRA 2002).
Non-compliance with formalities
Periodic tenancy is possible
• In possession
• Rent paid
• In accordance with s 54(2) LPA 1925
• Intention to create lease (as opposed to Javad v Aqil)
• = legal periodic tenancy
Equitable Lease is possible too!
If:
• Parties try but fail to create/transfer legal lease – ‘equity looks on that as
done which ought to be done’
• Agreement to grant lease in the future
• Agreement to transfer legal lease in the future
And:
• Valid contract s2 LP(MP)A 1989 compliant
• Specific performance available
o i.e. not “unclean hands” – i.e. not ‘gross and willful’ breach of terms
of agreement (Parker v Taswell)
o ‘willful’ = intentional, e.g. not paying rent as required by contract
(Coatsworth v Johnson).
Then:
• Walsh v Londsale – equitable tenure lease
Note 1: Lessor holds equitable estate in land, they can only grant equitable lease
– LPA 1925 s 53(1)(a).
Note 2: Assignment of an equitable lease = LPA 1925 s 53(1)(c)
© Liam Porritt 2020 6
Equitable Leases
Protection against new landlord
• Not automatically binding on new freehold owner
• Equitable tenant should protect interest by entering a notice on the
charges register of the freehold title – s 32 LRA 2002
• OR, for unregistered freehold, by registering a C(iv) land charge at the
Land Charges Registry (Land Charges Act 1972, s2(4)(iv))
However…
• LRA 2002, Sch 1 para 2 (for first registration of unregistered land) + Sch 3
para 2 (for land where superior title is already registered):
o Any equitable lease +
o Discoverable occupation
o = overriding interest, binding new owner
Legal or Equitable Lease?
• Where both legal periodic tenancy + equitable lease
• Walsh v Lonsdale – equitable lease prevails
Disadvantages of Equitable Lease
• Specific performance must be available for there to be an equitable lease
(i.e. clean hands needed)
• May not be enforceable against a third party (i.e. if not occupation or
notice/charge)
• Not a ‘conveyance’ – i.e. LPA 1925, s 62 = certain easements deemed to
pass to buyer on ‘conveyance’; LL = conveyance; EL = not conveyance
• Enforceability of leasehold covenants
o Covenants in legal lease binding on new landlord or tenant
(‘privity of estate’)
o Covenants in equitable lease before 1996 do not pass on to a
successor in title
o BUT covenants in EL from 1996 onwards do (Landlord and Tenant
(Covenants) Act 1995)
© Liam Porritt 2020 7
Commonhold
• Created by Commonhold and Leasehold Reform Act 2002
• Between freehold and leasehold – for ownership and management of
blocks of flats and other multiple interdependent properties
• Flat owner = until-holder ~ freehold of unit (cannot let out for more than
7 years) + member of commonhold association (private company)
owning and managing common parts and facilities
• Technically = freehold estate in commonhold land registered at Land
Registry

Share:

Leave a Reply

%d bloggers like this: