Legal Status of Lease and License Agreements, Study notes of Property Law

Download Legal Status of Lease and License Agreements and more Study notes Property Law in PDF only on Docsity! D owns a house and has a 20 year license to use the warehouse. (a) D allowed R to use the warehouse. D gave R a written document that was headed ‘lease”; R could have sole occupation of the warehouse for three years in return for a payment of £150 per month. (b) Debbie agreed that her sister, Kate, could live in a flat for a monthly payment of £300. D agreed that Kate could live in a flat ‘until she was ready to emigrate to Australia’. (c) D allowed Adam (brother) along with his partner Ian to live in the rest of the house. D signed separate agreements with A and I, and Ian signed his agreement a few days later (lack of unity in time) than A. Terms a) The agreement allowed Debbie to move another person into one of the spare bedrooms in the house at any time. Debbie reassured Adam and Ian that she would only move somebody else in to live in the house if she was in dire financial need. b) Under the agreement Debbie kept a key to the house. It also provided for Debbie’s cleaner to come on the first Tuesday of every month to undertake a ‘deep clean’ of the house. Advise Debbie. In order to be able to advise Debbie (D) of her rights, we need to consider whether signing the agreement would create a lease or a license. This is important because a license is a mere personal right, binding only the parties that created it (LIyod v Dugdale). A lease, on the other hand, is a proprietary right and therefore could become binding to third parties. In Street v Mountford, Lord Templeman gave the essential characteristics of lease as an arrangement that gives the occupier exclusive possession for a term of years at rent. If these requirements are fulfilled the occupier would have a lease unless “there is something in the circumstances, such as a family arrangement, a friendship or generosity, so as to negate any intention to create a tenancy” (Lord Denning in Facchini v Bryson). The court will analyze these requirements holistically (Addiscombe Garden Estates) in the light of any Facchini categories. Russ D has taken a 20-year license from the council to use the warehouse. She has now “leased” the warehouse to Russ (R) The question is how could she let a lease when she herself possesses a license and not a lease. In Bruton v London and Quadrant Housing Trust, the HOL held that provided the criteria of lease setout in Street v Mountford is satisfied, it does not matter that the defendant only held a license and not an estate because it was the agreement between the parties that created ‘a lease’. The decision created a ‘non-proprietary lease’ or ‘contractual tenancy’ being a lease between the parties, but not a lease in a proprietary sense. Hence, D despite having a license can grant a lease to R however such a lease would be proprietary between the parties but would not bind any subsequent owner of the reversion. However further characteristics laid down in Street need to be proved. Rent The next issue to address is whether the “ fee of £4,200” payable on an annual can be considered rent. It is pertinent to mention that the existence of lease does not depend on rent (S. 205(1) (xxvii) LPA 1922) however a lack of consideration does enhance the claim for a license. Hence this element is satisfied by our facts. Certain term: An important requirement is that a lease must be certain. At the start of the lease it must be possible to determine precisely when it would end (Lace v Chantler). With an agreed term of three years to occupy the warehouse there is certainty of term. Exclusive Possession A lease will only exist when the occupier has been given exclusive possession of the premises. It indicates that the tenant has a right to exclude everyone, including the landlord from going inside the leasehold estate. It states that “Russ could have sole use of the empty warehouse” hence the requirement of exclusive possession is satisfied. Has the lease met the required formalities for creation? As per the facts, the lease is 3 years which means that no necessary formalities are required to be a legal lease (Re Knight). It will however need to meet the requirements of s54(2) LPA 1925. That is: reiterated here. Hence if the requirements of s.54(2) are met then this will amount to a legal lease. It is pertinent to mention that under para 1 of schedule 3 LRA 2002 such lease would be an overriding interest hence do no need to be registered. Under s. 28 and 29 LRA 2002 it will be binding on D and any transferee should the estate be sold. Adam and Ian In order to be able to advise D in relation to the legal status of the arrangement she has made with Adam (A) and Ian (I), we need to consider whether signing the agreement would create a lease or a license. The requirement of exclusive possession would exclusively be discussed (Street v Mountford) as this is the only controversial aspect in this scenario. In a scenario like the one given above where there is more than one occupier, there is often a license rather than a lease due to the fact that possession is shared rather than exclusive. However A,I can have exclusive possession of the leasehold estate if they satisfy the four unities requirement (time, possession, interest and title). However, D who is the landlord would argue that I signed his agreement a few days letter than A hence the requirement of unity of time is not satisfied hence they cannot hold the leasehold estate as joint tenant and would therefore have separate licenses. However in a similar case of Antoniades v Villers where a couple despite signing separate agreements were held to be joint tenants. Hence by analogy, the signing of documents at different times would not destroy joint tenancy. Like Antoniades, here also parties are in relationship and hence they would possess joint tenancy of the leasehold estate. A clause in the agreement provides that D reserves the right to move another person into one of the spare bedrooms in the house at any time however D would only move somebody if she was in dire financial need. Landlords have used such types of clauses to refuse the giving of exclusive possession which is an essential ingredient of a lease. Hence a license rather than a lease is created. Furthermore, under the agreement D has retained the keys of the house. In Aslan v Murphy, the court decided that the retaining of keys of itself would not automatically invalidate exclusive possession. The court should examine the reasons why R holds the key. It is more likely that a tenancy would be implied if it is kept for emergencies, meter reading and to conduct repairs on the leasehold property. A license would be more likely to be issued if the keys are kept for services such as daily bed making and cleaning. As D’s cleaner is allowed to clean the house only on specific time (i.e. “ first Tuesday of every month”) this would not negate the exclusive possession required for lease as R does not have unrestricted access to the home of TU. Additionally, if no such service is actually rendered in practice, this would be considered as a pretence and ignored by the court (Antoniades v Villers , Markou v Da Silvaesa).