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Land law: Leases 2 and beginning of leasehold covenants - Coggle Diagram
Land law: Leases 2 and beginning of leasehold covenants
3 step structure for approaching Land Law problem questions:
"substance": what is the right? (eg a lease, an easement). What elements are needed for that right to exist?
"Formalities": What formalities are needed to create the right? Is it legal or equitable?
"Priority/Registration": Which priority rule applies? iS THE RIGHT ENFORCEABLE UNDER LRA 2002? (Consider whether protection on the register is needed or whether it is an unregistered interest that overrides)
Formalities
Legal leases - LPA 1925, s52
"All conveyances of land or of any interest therein are void for the purpose of creating a legal estate unless
made by deed
"
Requirement for a valid deed: s1 Law of Property (MP) Act 1989
document makes clear on its face intended to be a deed
it is signed by the persons to the agreement in the presence of a witness
the witness signs the deed him or herself (attests the signature)
it is delivered as a deed (will be immediate if document specifies it is 'signed and delivered' as a deed)
EXCEPTION to generally needing a deed to form a legal lease
"Short" leases - LPA 1925, s54(2)
This states that legal leases can be formed despite there being no use of a deed :!:
This applies in situations where the term/duration of the lease does not exceed three years :!:
This can even been orally created; no document needed, as long as it is less than 3 years
Additional criteria for short leases exception:
the lease must take effect in possession
; possession of the property must be granted from the date of the lease (ie. the lease needs to take effect when there is possession of the property - there cannot be a gap between possession and beginning of the lease)
the lease must be for the best rent that can be reasonably obtained
; the rent cannot be discounted
there must not be a fine
; lump sum taken at the beginning of paying the first rent
:!: NOTE: this exception can cover periodic tenancies
equitable leases
:red_flag: Walsh v Lonsdale (1882) - where you have an imperfect legal lease
no legal lease (the doc was not a deed, just a written agreement)
majority are for three years or less and usually qualify as legal under the short term exception above
However, equity stepped in to rescue the lease which fails as a legal lease and instead recognises it as a valid equitable lease (like a contract)
requirement of a contract - Law of Property (MP) Act 1989, s2:
in writing
contain all terms agreed by the parties
signed by both parties
An equitable lease cannot exist without these requirements :!:
Also, ideally it requires registration
Implied legal periodic tenancy
:star: if everything else fails (final option) if there is no lease (can't be a deed) or valid contract (can't be equitable either) so the correct formalities for a legal or equitable lease haven't been followed
Example:
5 years lease, but no deed or written doc. Rent paid monthly
Monthly periodic tenancy implied
Will be a legal lease - no written formalities needed as "monthly" tenancy is less than 3 years (s54(2))
however, can be terminated by one month's notice due to monthly payments
Priority/registration
LEGAL LEASES:
no need to register leases of 7 years or less (LRA 2002, sch 3 para 1 - unregistered interests which override)
legal leases for more than 7 years additionally require registration - LRA 2002, s27 (s)(b)
not legal if not registered
EQUITABLE LEASES:
protect by notice at land registry
"actual occupation" may also assist (LRA 2002, such 3 para 2)
APPLICATION TO ONLINE SCENARIO
Substance - what is the right?
lease or license? Street v Mountford (doesn't matter if it has been called something, there needs to be proof)
certain term/duration, but exclusive possession - questionable?
consider multiple occupation and consider their relationship
the fact that rent is payable may help to prove that a lease exists
formalities - what formalities are needed to create the right? Is it legal or equitable?
legal lease - s54(2) LPA 1925
priority/registration - which priority rule applies?
special priority rule - purchaser bound by everything on the register and overriding interests - s29 LRA 2002
is the right enforceable? Yes - legal leases of less than 7 years are unregistered interests which override (sch 3 para 1 LRA 2002)
leasehold covenants
at the heart of all of this is the understanding that a lease is
contract
- it represents an intersection between contract and land law
:star: meaning of a leasehold covenant = the contractual obligations arising from the lease
covenants by landlord and tenant
can be
express, implied and imposed by statute
:star:
the law steps in where there is an absence of express covenants because express covenants are usually hugely in favour of the landlord rather than the tenants
A)
obligations for landlord to repair
(in favour of the tenant):
may be dealt with expressly
if not expressly = implied terms: limited at common law
:red_flag: Smith v Marrable (1843)
only relates at common law to furnished properties
repair obligation only applies for day 1 of the lease
statutory obligations
(to balance out the limitations above):
landlord and tenant act 1985, s.11 -
imposes implied repairing obligations onto a landlord
this applies to lettings of homes for no more than 7 years
Quotes: "(a) structure and exterior", "(b)water, gas, electricity and sanitation", "(c)space heating and heating water"
Landlord and Tenant Act (1985), s11
Repairing obligations in short leases
"landlord must keep structure and exterior in repair"
"water, gas and electricity...sanitation"
"space, heating and heated water"
:red_flag: quick v Taff-ely BC (1986)
No breach of covenant, not in disrepair; the windows were just poor quality
showed that the statute doesn't cover everything you would expect - not a complete obligation!
if a tenant is able to show a breach of the repair covenant (express or implied), there is various compensation routes available:
damages
specific performance (court order)
self help (quickest and best)
B)
Landlord's covenant of quiet enjoyment:
:red_flag: Southwark LBC v Mills (2001)
"the covenant of quiet enjoyment is broken if the landlord...does anything that substantially interferes with the tenant's title to possession of the premises, or with his ordinary and lawful enjoyment [of it]"
covers a range of problems the tenant may experience, such as
breaches by actions of the landlord
:red_flag: Lavender v Betts (1942)
removal or doors and windows to get tenants to leave :check:
:red_flag: Kenny v Preen (1963)
shouted and threatened tenant, banging on door :check:
wider application than just harassing?
:red_flag: Timothy Taylor Ltd v Mayfair House Corp (2016)
scaffolding interfering with art gallery :check:
Actions of others
:red_flag: Sanderson v Berwick upon Tweed Corp (1884)
another tenant of the same landlord causing the problem :check:
Southwark v Mills (2001)
noise nuisance and same landlord, but :red_cross:
remedies for breach of quiet enjoyment
injuction
damages
if breach also involves harassment by the landlord
exemplary damages may be claimed in tort
:red_flag: Drane v Evangelou (1978)
statutory liability
:black_flag: Housing Act 1988, s27 shows possibility for there to be liability in tort (
applies where the landlord has unlawfully deprived the tenant of its occupation of the premises
)
criminal liability in the worst cases (unlawful eviction and harassment, covered in the :black_flag: Protection from Eviction Act 1977)
landlord's key remedy: forfeiture
this enables the landlord to terminate the lease early
there must be an express forfeiture clause (known as a right of re-entry)
must follow the correct procedure with evidence of this
the landlord must not have waived breach
:red_flag: Matthews v Smallwood (1910)
Waiving is where the landlord knows of the breach but does something which explicitly recognises the continuation of the lease anyway
:star: usually, this is done through the continuation of accepting/asking for rent. If a client (landlord) knows there has been a breach and wants to terminate the lease through forfeiture, they MUST NOT accept rent
key tenant breaches:
failure to pay rent (
known as in arrears of rent
)
disrepair
Landlod remedies for non-payment of rent
sue tenant for debt action (usually not worth it due to lack of money)
forfeiture (as above)
commercial rent arrears recovery procedure (CRAR) -
only applies to commercial property, but landlord can take goods and sell them off to pay rent that hasn't been paid
(usually for commercial property such as shops rather than offices)
insolvency proceedings (liquidation or bankruptcy of the tenant)
sue former tenant
landlord's remedies for disrepair
(
usually it is the tenant that repairs in commercial property leases
)
forfeiture (s.146 LPA 1925, however, says that the landlord must serve certain notices on the tenant first and allow them time to repair)
damages (s.18 LTA 1927 is a limitation to this: restricts damages claims by a landlord in disrepair cases, complex procedure)
specific performance: require T to repair
self help and add to rent
sue former tenant
leases for three years or less that give the tenant an immediate right to possession of the land without the payment of an initial capital sum at the best rent will be legal whether created orally, written in a contract or by deed
leases for more than three years and those which don't fall into the point 1 above, are required to be made by deed to have any prospect of taking effect as a legal estate (signed, sealed and delivered)
if the lease is granted by deed out of registered land (where the freehold or superior leasehold is a registered title) and it is for a term
over
seven years, it must also be registered as a title at HM land registry
if the lease is granted by deed out of unregistered land (where the freehold r superior leasehold is not a registered title) and it is for a term of
over
seven years, it must also be registered
if the lease is to take effect in land of unregistered title and the lease is outside the first registration trigger (when it is for seven years or less) the grant by deed is all that is needed to convey the legal leasehold estate to the tenant from the date specified in the deed
legal leases and third parties
legal leases that are substantively registered as titles in their own right under 2002 will bind a transferee of the reversion
legal leases granted out of unregistered land that do not trigger compulsory first registration of the lease (generally when seven years or less) the situation is governed by the long established rules of unregistered conveyancing; the lease is effective against any transferee of the reversion
however, it is possible for an equitable lease to be created out of the operation of the doctrine of proprietary estoppel; these will arise where a landlord has promised some right in over land to the tenant orally or by conduct, and this is relied on by the prospective tenant to his detriment
the court will satisfy the estoppel by giving the promisee a tenancy, albeit an equitable one that has arisen out of the informal dealings between the parties (RARE SITUATION)
equitable leases and third parties
in registered land
equitable leases are capable of being entered on the register of title of land over which they take effect through a notice; they are then protected by such registration and are effective against later transferees of the reversion
however, even if not registered in this way, most equitable leases will take effect as an interest which overrides a transferee and thus is binding on the new landlord (equitable tenant should be in actual occupation within the meaning of schedule 3 2002 act)
in unregistered land
equitable leases that arise from enforceable contracts are registrable as class C Land Charges (estate contracts) and must be registered against the appropriate name of the estate owner in order to bind a purchaser in the land (failure to do so will mean that the equitable lease is void against such purchaser)
however, even an unregistered equitable lease is binding against a non-purchaser (ie. adverse possessor) or against someone who purchases only an equitable interest (no protection for an equitable tenant in unregistered land merely because they occupy the land)
main express covenants that the landlord will include in the lease contract:
(always the landlord who creates the lease) -
a covenant to pay rent
a covenant to pay utility bills (i.e., gas and electricity)
covenants which regulate the tenant's behaviour (i.e., not to damage or cause nuisance, not to under/sub-let the property)
a covenant for tenants to remove their belongings at the end of a lease (students in particular)
(potentially) covenant for tenant to repair
but could also be implied