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leases I - Coggle Diagram
leases I
formalities
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lease over seven years: Must be registered S27(2)(b)(i) LRA 2002- compulsory requirement and if not done, no legal leasehold estate is created per S27(1) LRA 2002
leases seven years or less: Lease does not need to be registered and take effect as legal leases binding on a freehold estate owner as an overriding interest Schedule 3 Para 1 LRA 2002
S54(2) lpa 1925 states a lease of 3 years or less need not be created by deed provided the following three conditions are all met:
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(c) lease not subject to a fine or premium (no upfront payment for the grant of the lease, which is common in long leases)
These are known as parol leases and do not need to be registered to exist as they are under 7 years- it will be binding as an overriding interest
Types: short term fixed lease (max 3 years), express periodic tenancies), implied periodic tenancies
Periodic tenancies will only fall within parol lease if each individual period is for three years or less
equitable leases
May be deliberate by entering contract for a lease or by accident where they try to create legal lease and fail (non valid deed or no registration when required)
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Walsh v Lonsdale- where there is conflict between common law and equity, equity will prevail. Where there could be an implied annual periodic tenancy or an equitable seven year lease on the facts- it was held there was a seven year equitable lease
certainty of term
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Once a fixed term is created, neither party can unilaterally end the lease earlier unless there is a break clause present which enables them to do so
Break clause: a right for either party to end the lease early. May be conditional and often requires notice to be served on the other party
periodic term
A lease for a period (weekly, monthly, yearly) which extends automatically until either landlord or tenant give notice to terminate ‘notice to quit’
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Implied is where there is nothing set out in writing but the certain term arises by looking objectively at all relevant circumstances including payement and acceptance of rent on a periodic basis
Term of periodic tenancy depends on period by reference to which the rent is calculated, not periods the rent is actually collected/payable
Prudential Assurance Co Ltd v London Residuary- there was no lease due to uncertain period (leased until land required back by council for road widening purposes) but the land was under a yearly periodic tenancy that had arisen by virtue of the tenant’s possession and payment of rent by reference to a year
exclusive possession
This is the right to exclude all others from the property, including the landlord
Landlords are keen to avoid granting leases as it affords tenants with more protection. Since Assured shorthold tenancies, the distinction is less important, particularly for residential purposes
Exclusive possession is a question of fact- they will look at reality of the situation and if a clause appears to defeat exclusive possession in what otherwise would appear to be a lease in substance, it will be thrown out as a sham
Defeats exclusive possession: landlord retains a key and has right of access, landlord provides services, sharing clause, landlord retains right to relocate the tenant
Aslan v Murphy- retention of a key will not change the nature of an arrangement. The purpose the key is retained for matters. Is right of access by the landlord restricted or unrestricted
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Marchant v Charters- if landlord provides attendance or services (changing bedding, cleaning), there is a license
sharing clause: Landlord reserves the right to share the property or right to introduce others to share, means no exclusive possession by the occupier
Antoniades v Villiers- must look at all circumstances to see whether clause is genuine or a sham to defeat exclusive possession. Added in a double bed for a couple but put clauses reserving right to share/add other occupants, stating no exclusibe possession. Not realistic to accommodate a couple then reserve these rights- they wouldn’t actually be used. Factors to consider on if sharing clause is a sham: size and nature of accommodation (is it large enough to share), relationship of occupiers (is it appropriate to add anyone else), wording of the clause (wider it is drafted, more likely a sham), whether clause has ever been exercised
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If the landlord has a right to relocate and move the tenant to alternative premises, it will not be a lease- Estates v Collinson (court will still always look at substance and identify if a sham clause)
Street v Mountford equally applies to non-residential tenancies (Must show certain term and exclusive possession)
Result affects security of tenure as certain business tenants are protected by Landlord and Tenant Act 1954 which may entitle them to remain in premises at the end of a lease term and request a new lease
In business context, it is more about if the landlord retains control over the property. Courts are more prepared to accept label of license as there is more equality of bargaining power and legal representation
Esso Petroleum Co ltd v Fumegrange Ltd and Others- degree of control of landlord- could make alterations on premises, install a car wash, and change shop layout. Degree of physical control and conduct of business is significant
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