Legal Analysis of Residency Agreements and Leases, Study notes of Property Law

Download Legal Analysis of Residency Agreements and Leases and more Study notes Property Law in PDF only on Docsity! Pauline-2021- Block B Pauline is the registered proprietor: a two-bedroomed house; a launderette; and a public house. T and U visit the house and sign separate “residency agreements” with P to occupy the house for three years. Terms a) Jointly pay an annual residency fee of £4,200”; b) Pauline reserved the right to require the residents to swap bedrooms during the three years; (she would not rely on this clause) c) Pauline’s cleaner would have a key to allow him to clean the house once every week. Would also email them before coming to clean. U replied they would prefer to do the cleaning themselves. Pauline agreed in writing with Dot to lease the launderette for “three years or until such time as Dot gives notice that she wants to retire”. Dot moved immediately and started paying rent in monthly installments. Pauline agreed that her stepson, Reggie, could live in the flat, rent free, for two years. Pauline insisted on putting the agreement onto a deed. Reggie never got around to putting the agreement into a deed. Tim and Una In order to be able to advise Tim (T) and Una (U) of their rights, we need to consider whether signing the agreement would create a lease or a license. This is important to determine because a license is merely a personal right binding only the parties that created it (LIyod v Dugdale). A lease, on the other hand, is a proprietary right which is attached to the estate and therefore capable of binding third pirates. Furthermore, leases have statutory protection in the form of Rent Act 1977 and Housing Act 1998 which protect the tenant from unconscionable terms of the landlord. Landlords in order to avoid this statutory protection draft the agreement in such a way that only a license is given to the occupier. This is primarily done by denying the occupier exclusive possession (an integral requirement of lease) or through the use of sham devices. More than one occupant: 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 T,U can have exclusive possession of the leasehold estate if they satisfy the four unities requirement (time, possession, interest and title). On our facts, TU signed separate but identical agreements hence this would imply that there is no unity of title (due to signing of different documents) hence they cannot be considered joint tenants hence would merely 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. On analogy to Antonaidaes , TU who are also a couple would hence be considered joint tenants despite signing separate documents for the entire premises. The idea of joint tenancy is further supported and strengthened by the fact that they needed to pay collectively as opposed to individually (Mikeover v Brady) Can the agreement amount to a lease? 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. The use of wording such as ‘residency agreements’ and ‘residency fee” The first problem to address is that the agreement plainly specifies that it is a “residency agreement”. In Somma v Hazelhurst, the court allowed the parties to specify the agreements legal character but this overruled in Street v mountford where it was held that the court will look at the substance rather than the form hence the parties declared intention are not necessarily determinative. As seen in Street and confirmed in Antoniades v Villiers, where the agreement stated that it was a license, it was considered to be a sham device used by the landlord and was ignored by the courts. These sham clauses are found through examination of the facts and circumstances and parties actual practice (Antoniades v Villiers). Therefore, if the real conditions analyzed below do not resemble those of lease, the court has the discretion to overlook the words of “residency agreement” or ``residency fee”. Rent: The next issue to address is whether the “ residency 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 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) but there is ambiguity about the maximum duration in the agreement’s wording. Is it a periodic tenancy/lease? We do know that D pays £6,000 per annum rent on a monthly basis and therefore this could amount to a monthly periodic tenancy. D would be advised that he would have a monthly periodic tenancy and with the payment of the next month installment begins a new lease for the next month. Thus until one of the pirates gives written notice of termination, the agreement could potentially go on forever (Frank Webb). On the facts, even though the duration of lease cannot be determined at the outset (Russell LJ in Re Midland Railway) if Prudential Assurance is followed then a monthly lease is a certain term and therefore satisfies the Street requirement of certainty. It is pertinent to mention that the view given in Mexfield Housing Co-operative Ltd v Berrisford that an uncertain term in a lease agreement could be treated as lease for life (s.149(6) 1925) was restricted in Southwark Housing Co-Operative v Walker, where it was held that the ratio of Mexfield only applies where the parties originally intended a lease for life and not simply where uncertain term had been for the occupier. On facts, such an intention is not present, hence the uncertain terms cannot constitute a lease for life. Other requirements of rent and exclusive possession? The requirements of rent and exclusive possession are easily met based on the facts given. Has the lease met the required formalities for creation? Due to the fact that it is a monthly periodic tenancy, it comes within the category of leases for 3 years or less even if it in actuality extends for a total occupancy term of more than 3 years (Re Knight). This means that no formalities are required in order to be legal lease (Re Knight). It will however need to meet the requirements of s54(2) LPA 1925 which are mentioned above and reiterated here. If the requirements s.54(2) are met then this will amount to a legal lease. Substantive Registration? It is pertinent to mention that such kinds of leases are not required to be registered as they would an overriding interest with paragraph 1 of 3 LRA 2002. Under s. 28 and 29 LRA 2002 it will be binding on P and any transferee should the estate be sold. Reggie In order to be able to advise Reggie (R) of his rights, we need to consider whether signing the agreement would create a lease or a license. The requirements laid down by Lord Templeman in Street v Mountford need to be met. There is certainty of duration. Lord Templeman in Street v Mountford included rent as part of the definition of a tenancy. However, the existence of a lease does not depend on a provision for the payment for rent (section 205(1) (xxvii) LPA 1922). Hence, R could still have a lease despite not giving rent to P. Exclusive possession There are situations where although the occupier has exclusive possession of the estate but for special reasons, no lease would exist. These exceptions were listed in Facchini v Bryson and includes agreements where there is no intention to create legal relations ( Booker v Palmer ): It could be argued that there was no intention to create legal relations because the agreement related to family( R being the stepson of P (David v Lewisham). Therefore, R occupation would be a way of license not a lease. Does R have a lease? Although R has satisfied the certainty of term requirement and rent but has failed to satisfy the exclusive possession which is a vital ingredient in a lease. Hence she would be a mere license and not a leaseholder Since the agreement was not put in a deed, there would be a written contract between R and P hence would be recognised in equity (Walsh) provided that the requirement of S. 2 LPA (Misc. provisions) Act, 1989 are met. Due to the fact that the duration of the lease is 2 years means that no formalities are required in order to be legal lease (Re Knight). It will however need to meet the requirements of s54(2) LPA 1925 which is reiterated. It can take effect as an overriding interest under paragraph 1 of Schedule 3 to the Land Registration Act 2002 as a fixed term lease created under section 54(2) of the Law of Property Act 1925 or alternately it can protected under schedule 3 of the LRA 2002 where interest of a person in actual occupation (here R) in actual occupation will override (take priority over) a registered disposition (sale). It is pertinent to mention that in case of any conflict between law and equity, equity will prevail (Walsh v Lonsdale).