Requirements of a lease
per Street v Mountford:
1. exclusive possessoin
2. for a term
3. at a rent [not required per s.205(1)(xxvii) LPA 1925: ‘whether or not at a rent’ – confirmed in Ashburn Anstalt v Arnold] - rent relevant fro lease over 3 years [s.54(2) LPA - best rent]
+ they can be different types: long, short, periodic
+ Law of Property Act 1925, s.205(1)(xxvii) = statutory definiton
Statutory avoidance
- there are many statutess that protect leases, such as the Rent Act 1977, so landlords attempt to label agreements licences
- Somma v Hazelhurst = licence accepted by the court, so long as both parties intend it to be a licence
- Street v Mountford = despite the tenant signing the agreement labelled as a licence, the HoL found it to be a lease as it satisfied all 3 requirements
Sham or pretence
Antoniades v Villiers
- licensor permitted to use rooms
- never exercised so a pretence
- couple claimed a joint lease
- the court held that it was a lease
- so, the court looks beyond the agreement and takes into account the context
Aslan v Murphy
- term prevents exclusive possession
- never enforced, so clearly a pretence
- the court found it to be a lease
Not a sham or pretence
Camelot Guardian v Khoon
- not all licences are a sham
- control retained as no exclusive posession
- so not a lease
Justifying sham/pretence decisions
- one issue is that on what basis can the term be disregarded
- shams are not binding if the term does not create a legal obligation
- Brides argues that the concept of a sham in Snook is too narrow = Snook: common intention that term does not create legal rights/obligations
- leases are preferable as tenants enjoy more rights under the Rent Act 1977
Criticisms of the sham principle
- bright’s arguments = ‘the need for a common intention and for a whole transaction to be a sham limits the usefulness of the doctrine’
- it is too high a threshold for there to be no intention to enforce the sham as the landlord technically intends the clause to be binding, just not to enforce it
- the two versions of the pretence test may be better =
1. only incuded to deny exclusive posession
2. no genuine intention to implement agreement
certainty of term rule
- for certainty there must be certainty of commencement + maximum duration
- maximum duration = Say v Smith and affirmed in Lace v Chantler, which held that ‘until the end of the war’
- this was not certain so invalid
- vs. Parliament passed the Validation of Wartime Leases Act 1944
- leases during the war were given the same effect as if they were granted for a term of 10 years, so they were valid
certainty of term rule in statute
- s.205(1) LPA 1925 = a term must be certain
- s.149 (6) LPA 1925 = a lease for life equals 90 years
- s.145 sch 15 LPA 1925 = no perpetual leases, although they can be very long
– although, periodic tenancies renew automatically and can be implied, so are almost perpetual
exceptions to the certainty of term rule
- periodic tenancies renew automicatically
- periodic tenancies can be implied
- determinable long leases = a conveyancing method to bypass the rule by saying a lease for 100 years is detrminable upon an event, but it is valid as it is under the pretence of a determinable term
- the solution by the SC in Mexfield v Berrisford
Mexfield v Berrisford
- B remained in occupation but fell behind on rent
- Mserved her with a 1 month’s notice to quit without relying on clause 5 or 6, which allowed them to terminate and if rent was overdue by 21 days
- the question was concerning whetehr this was certainas B may never go into arrears
- agreement was void due to the uncertainty of term
- however, it was held that neither party served notice to quit so B could retain tenancy and M was not entitled to regain posession
- the reason for this was that
1. prior to 1926, it would have taken effect as a lease for life
2. after 1925, per s.149(6) LPA 1925, a lease for life would automatically convert into a 90-year lease determinable by death - this menat that despite the agreement being void, it was saved
Promblems with Mexfield
- limited scope of ‘tenancy for life’ as what if the party is a company so doesn’t die
- it is inapplicable in cases where there is no rent or it is not at market value
- it may go against the parties’intentions
- incorrect aoplication of pre-1926 rule as it did not create leases for life
- issues with formailites = there are no formalities required for monthly periodic leases, but there are for 90-year leases (leases under 3 years do not need a deed [s.54 LPA] but over 7 they do [s.27 LPA])
Parties’ intention
One issue with Mexfield is that it may go agaisnt the parties’ inentions to find a lease for life equal to a 90 year lease
This was raised in Southward HOusing Co-opertaive ltd v Walker
Arguments for the certainty of term rule
- consistent with nemo dat = you cannot give what you do nothave the right to give
- uncertainty reduces the land’s value, so the rule prevents this
- common law generally dislikes uncertainty
Arguments agaisnt the certainty of term rule
- it is artificial as it can be easily bypassed in relation to implied periodic leases
- it undermines the freedom of contract
- Mexfield has many issues
- courts appear to mold the law to for justice in specific cases, such as Mexfield they didn’t want to kick out Mrs B and the same reasoning in Bruton
Bruton leases
Bruton v Quadrant Housing
- council granted housing trust [HT] a licence
- the council had no legal powers to grant a licence
- Bruton claimed it was a lease
- Judgement = it was a lease
- the HoL said the key was the true intention’s of the parties
- the most problematic issue in this case is the HT’s lack of a title
- Dixon = due to nemo dat, the trust cannot give a property right, a lease, so it is a personal right, which is a licence
- Bright = Bruton contradicts nemo dat and this questions its affect on thid parties
- Roberts justifies the decision
Termination of leases
Passage of time
- fixed term = ends after passage of a stated time
- periodic leases = automatically renews unless notice is given
Parties terminate earleir
- break clauses and termination is a result
- landlord or tenant breaches the leases
- change of circumstance
Leases included into a different legal estate
- surrender = agreed surrending of tenant’s lease
- merger = fee simple and leasehold acquired by the same person
