Summary of Lectures on Leases I

Terminology and related Aspects

There is a lot of terminology around and to make sense of the subject it may be as
well to look at the key terms used in this field. These are set out below for the sake
of convenience.

Landlord refers to the person who may well be the freeholder who grants a
lease of land, a house, a flat or other premises to a tenant.
The tenant (sometimes, especially with longer leases, called a lessee) is the
person (or for that matter company if capable of holding a lease) who has
exclusive possession of the premises for the duration of the lease. The
tenant normally pays rent but this is not an absolute rule (Ashburn Anstalt v
Arnold).
o Note that a lease grants the right to exclusive possession to the tenant
in fact a so-called lease that fails to do this cannot be a lease, and will
be taken to be a different animal such as a contractual licence to
occupy.
o The term premises is traditional but it covers any type of real
property that can be leased.
o Owing to the wide definition of land in LPA 1925 s 205(1)(ix) a
freeholder can grant a lease of an apartment unit in a building with
several different floors. Indeed to this day there are about 1 million
long leases of such apartments, although only for leases of between 99
and 125 years for the most part, which is niggardly when compared to
the lease lengths conceded in Ireland (normally 300 999 years).

Some Extra Points to Note

We noted that the landlord does not have to hold the freehold before s/he can
grant a valid lease. In fact as you would expect a person holding a lease can
sub-let the property concerned if they wish but only if the length of he sublease carved out of their own superior lease is less in duration than their own
lease.
o Unhappily in Milmo v Carreras the landlord fell foul of this rule. The
landlord held a lease for 12 months only and attempted to grant a
tenant of his own a tenancy for 13 months. The CA could have held
that the whole arrangement was void after all no-one can grant a
longer period of occupation to another than they hold. However the
court treated this so-called lease as an automatic transfer or assignment
of the whole of the 12 month tenancy to the tenant and the
landlord dropped out of the picture.
Sometimes make use of the expression assignment as when looking at
enforcement of lease obligations against the original tenant where they
transfer the lease to another person.
Assignments must be by deed to be valid at law (LPA 1925 s 52) and
amount to outright transfer of whole leasehold interest.
1

Nature of Leases
In its basic form, a lease is an agreement for the exclusive occupation by a tenant or
lessee of the land of a freeholder or a person with a leasehold reversion.
Without exclusive possession conferred on the tenant there can be no
lease note the significance of exclusive possession relating to the
landlord and also to third parties.
Leases ordinarily require the payment of rent to the landlord.
A lease is also an estate in land (LPA 1925 s 205(1)(xxvii)).
In other words a lease is a hybrid part property part contract. The
property element is the estate conferred by the deed granting the lease,
while the contract element is supplied by the list of obligations, mainly
imposed on the tenant, with regard to the leased property.
On expiry of the lease at the date fixed for termination the tenant at common law
becomes a trespasser unless a new lease or tenancy is agreed expressly or impliedly
(eg T holds over paying rent).
Leases as Property Interests
By law (LPA 1925 s 1 a lease is as much an estate in land as is a freehold interest.
The definition of term of years in LPA 1925 s 205(1)(xxvii) is wide it includes
fixed term leases and periodic tenancies (eg for one week, one month or one year).
Problems - 1) Note the views of Lord Hoffmann in Bruton v London Quadrant
Housing Trust which suggest that granting a lease does not ipso facto involve
conferring an estate on the tenant and the landlord need not necessarily hold any estate
either.
2) In Milmo v Carreras holds that without leasehold tenure there can be no
valid grant of a lease or sub-lease? However as leases were at one time personal
property only, although with a real action for recovery, leasehold tenure is not the same
thing as freehold tenure (as is shown by the fact that if a lease is disclaimed in
insolvency proceedings, the leasehold estate is destroyed).

Leases as Contracts
The contractualisation, as it is sometimes called , of leases has been gathering
pace thus rent is a contractual payment for use and occupation by the tenant of
the landlords land.
A person with no capacity to grant an estate in land binding on his own superior
freeholder can still grant a valid lease to a tenant (Bruton). At the same time in
most cases one would expect the landlord to hold a property interest out of which
the lease is carved. It may be that in Bruton the House of Lords wished to see to
it that the landlord (which only itself held under licence) was liable under statute
to repair and maintain the premises in which Mr Bruton was living, which was
only possible if Mr Bruton held a tenancy as against the landlords.

Repudiation applies to leases and can be invoked by the landlord and tenant alike.
This entails (Hussein v Mehlman) that the landlord for example has so persistently
disregarded his tenancy obligations (in that case with regard to repairs as imposed
by statute) that he offers to repudiate the lease, which offer the tenant can accept by
quitting, after which the tenant is not liable to pay rent and is freed from the lease.
A tenant can commit repudiatory breach as well as by persistently refusing with
no good reason to pay rent.
In the end leases appear to be contractual agreements with some property elements
thanks to the way the LPA 1925 and LRA 2002 approach leases ( eg one of two
legal estates is a term of years absolute; leases for any period of 7 years or more
require registration, etc). Note also that leases are subject to formal rules as
regards their creation as legal leases (LPA 1925 ss 52 and 54) which would make
little sense if they were, like licences to occupy, simple contracts.
Creation of Leases and Tenancies
Formalities
As to LEGAL leases the effect of LPA 1925 ss 52 and 54 read together needs to be
taken into account.
The basic effect is that a deed is required to create a legal lease unless the original term
agreed is for three years or more. The exception essentially relates to possession leases
which are at a market non capitalised rent which do not exceed three years
There are registration rules pertaining to most legal leases (LRA 2002 s 27(2) and Sched 1
para 1).
But any lease for up to seven years certain cannot be registered (LRA 2002 s 4). The aim
here is to rescue tenancies such as for one year or 18 months as are apparently often found
in the private residential sector from cluttering up the register, saving the parties
unnecessary trouble and expense as well.

Issues are the rules in need of revisiting? Why do the legislative rules require
the drawing up of a deed for a lease between 3 and 7 years certain that will
override if the tenant is in occupation of the land? What is the purpose of the
statutory exception relating to short leases? Perhaps any lease for over 3 years
ought to be registered?
Also, (1) why does any reversionary lease no matter how short require a deed (clue the lease
is suspended as far` as its possession date is concerned for some years)
(2) Is it fair to require as does Crago v Julian that an assignment of any legal lease must be by
deed no matter what its length may have been when granted? ( perhaps this is just an
anomaly of legislation in need of revision with its roots in the C19)

Note also the basic position with equitable or informal leases a void legal lease
is treated as if it were a valid legal lease based on the ability of the tenant or
landlord to seek specific performance (Walsh v Lonsdale).

From Berrisford v Mexfield Housing Co-Operative Ltd the courts now

seems to think that correct order in such a case would be to hold that the tenant can
remain in possession and t en the landlord an order for possession.
Note - We cannot say that an equitable lease is as good as a legal lease. It may be as
between landlord and tenant - but if the equitable tenant wishes to protect their occupation
under a void legal lease against third parties they must assuming the land is registered
land, resort to a notice procedure under LRA 2002 s 34(2) although if the tenant is in
actual occupation the lease will override and binds the purchaser for that reason (but these
are technical points and you need not worry unduly about them you deal later on in the
module with registration aspects).

Conferral of Exclusive Possession on the Tenant

Without exclusive possession conferred on the tenant there can be no lease. The
tenant must be able to exclude all third parties and the landlord from possession
and enjoyment of the premises note the effect of a clause entitling a landlord to
access to the premises for specific purposes such as to repair or inspect the
premises. Exclusive possession is the hallmark of a lease if it is in fact present
then this is a clear pointer to a lease not a contractual licence to occupy (Street v
Mountford).
Note also the use of contractual licences in the residential and business sector alike
to avoid creating a tenancy (one traditional but no much less significant incentive
being to avoid statutory security in the residential sector or renewal rights in the
business sector).
Basic Test for Lease/Licence a Key Case
The key case is Street v Mountford and from this we can see the following
emerging:

The courts have regard to the substance of the document before

them not its labelling or form. The stated intention of the parties in
the document is not decisive if the court concludes that the elements
of a lease are present.
A primary issue is the conferral or not of exclusive possession on
the occupier. If this is conferred, this points to a lease unless one of
a number of exceptional cases apply, as set out in Street v
Mountford.
The courts must ask if in doubt about the meaning and effect of a
document headed This Licence if there is rent as opposed to
some other form of payment and a term for the disputed occupation
agreement.
If the occupier is genuinely within one of a number of special
categories then the occupation is under licence such as a lodger.
Note the courts ability to go behind the form to the reality as in
Aslan v Murphy, where a term banning the occupier from the
premises for a given period of time each day was treated as a sham,

so affecting the view of the court of the genuineness of the

document as a whole.
Typical Licenses and Related Matters

A typical licensee in the eye of the law is a service occupier (who

is there in order to perform his duties better, as with a chauffeur or
school head teacher).
Ordinarily a person in occupation of an hotel room is a licensee
(why?) (see the Mehta case, where the notice period for this
licensee was held inconsiderate. Compare Uratemp Ventures v
Collins, where the fact that the tenant treated his hotel room as his
home for all purposes including eating simple meals made the
difference.
o Multiple occupation can cause genuine problems of
interpretation as to whether there is a genuine or sham
licence agreement (see AG Securities v Vaughan).
The House of Lords in Street v Mountford recognised that a person
can be in apparent exclusive occupation but still a licensee as
with someone occupying land pending completion of a contract for
sale of land.
o If the person concerned has no power to grant a tenancy
than there is a licence unless the agreement falls within the
Bruton decision.
o There is a licence where, as in Ward v Warnke, there is no
intention to create legal relations.

Is the Approach with regard to Occupation Agreement of Business Property

Different?

Note the less suspicious approach of the courts to documents which

appear to be genuine licences in relation to the occupation of
business premises. In Clear Channel v Manchester City Council for
example the Court of Appeal regarded the argument that there was a
tenancy as unedifying perhaps because in the business occupation
sector an agreement can be taken to mean what it says.
o The courts have adopted a liberal view of mobility clauses
thus in Dresden Estates Ltd v Collinson where the
occupier could be moved without notice hence they had no
possible exclusive possession (if the owner can move he
occupier around as they please without ending the
agreement that is the opposite of exclusive possession).
In the business sector the courts may ask if the licence agreement is
such as to retain control in the hands of the owner.
o Example - an agreement gave the owners servants and
officers unrestricted access to a garage forecourt which
was held a licence especially as the right would be in fact

made use of and was not just there on paper (Shell-Mex v

Manchester Garages).