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Land Law Leases Essay Definition

Scenario (1) raises the question of whether George can obtain vacant possession of the flats occupied by Bella, Charles, David, Eva and Fiona. There are two types of interest in Land which are Proprietary rights and Personal rights.

To ascertain whether or not each individual has an interest in the land that is binding on George we shall be looking at the principles and characteristics of a Lease and a Licence to determine what legal rights if any is given to those that posses one. S1 (1) of the Law of Property Act 1925 states that a lease confers a proprietary status in the land which is capable of binding third parties whereas ‘licence’ is personal right as it is plainly a permission to enter another’s property. In case we are able to prove a lease it will grant the occupants protection under Landlord and Tenant Act 1954. To aid us in determining what group the occupants fall under we shall be looking at the relevant law in this area which is the Land Registration Act 2002 alongside the Property Act 1925 and past case laws on the subject. Finally, we shall conclude with an advice for George on what his rights are and whether or not he can obtain vacant possession of the flats.

Bella signed a document titled ‘license’ in which she is paying £400 a month giving her the ‘right to occupy’ the flat for 2 years. A licence is defined as a ‘personal arrangement between two parties which constitutes permission to occupy land for some particular purpose’. In Thomas v sorrel it was stated that ‘a licence properly passeth no interest nor alters or transfers property in anything’. It does not give Bella any proprietary interest in the land but instead, it merely prevents her from what would otherwise been an unlawful trespass. There are different types of licence. Licences that are given without any consideration from the licensee are known as ‘Bare licences’ and these are usually for a short period of time and can be withdrawn at anytime. Another type of licence is that which is ‘coupled with a grant’; such a licence gives the licensee the right to take something from another person’s land . A ‘contractual licence’ is whereby someone who is by arrangement paying fixed sum of money for the right of occupation.
Bella has given consideration in form of money to Alf for the licence. Lord Justice Greene of the House of Lords stated in Winter Garden Theatre v Millennium Productions that ‘a licence created by a contract creates a contractual right to do certain things which otherwise would be trespass.’ In London Borough of Hounslow v Twickenham Garden Developments Ltd an analysis of the contractual licence identified four major principles; firstly, ‘a licence to enter land is a contractual licence if it is conferred by contract.’ Secondly, ‘a contractual licence is not an entity distinct from the contract which brings it into being but merely one of the provisions of that contract’ and thirdly ‘if a contractual licence is not specifically enforceable the court will not grant equitable remedies in order to procure or aid a breach of the licence.’ Most importantly Bella has established the contract by proving a valid offer and acceptance, intention to create legal relation and sufficient consideration it may be argued that she has all the elements of a contractual licence.
Charles too has signed a licence in which he paid £450 giving him the ‘right to occupy’ the flat with Bella for a length of time that is not known to us. From the information given we know that Charles has given consideration of monetary value for his licence. Therefore Charles has contractual licences just as Bella, which arise from permission to use or occupy land, derived from an express or implied contract.
There have been attempts by the court to make contractual licences binding on third parties in Binions v Evans it was suggested that a contractual licence is itself an equitable interest in land which it is capable of binding a purchaser. Howerever this notion was rejected by Lord Justice Fox in Ashburn Anstalt v Arnold.

David and Eva entered into two identical agreements with Alf to occupy the one bedroom attic flat as residents in which they gave Alf consideration of £500. Prima facie the agreement has all the characteristics of a contractual licence. However the fact that the agreement between them is described as a ‘licence’ does not necessarily rule out the chance of it being a lease. Even though Alf reserved the right to nominate another occupier or to occupy the flat, it could be argued that there is a possibility that there was an intention to create the relationship of landlord and tenant. David and Eva are to pay ??500 a month which could constitute as rent and the agreement is to be for a year which could amount to a fix term according to the principles laid down in street v Mountford. For the purpose of deciding whether David and Eva were given exclusive possession of the flat it could be argued on the basis of the decision in Antoniades v Villiers. In this case their Lordship held that the attempt to make the agreement look like two separated licence was in fact a joint tenancy. It could then be argued that David and Eva are in fact joint tenants as Alf’s expressed intention to create a licence may not be conclusive, especially if he wanted to avoid the Rents Acts by granting licenses instead of lease, it is not their apparent intentions but their real intentions, as shown by their conduct and the circumstances.

Nonetheless, Eva vacating the property renders her agreement with Alf void therefore she no longer holds any proprietary interest in the property.

Fiona is paying rent of £30 per week to Alf for an unspecified length of time for the unfinished basement flat. From the facts given Fiona has not signed an agreement titled ‘licence’ unlike the other occupants mentioned above. Fiona hence needs to prove she has a proprietary interest instead of a personal right. The leading authority for Lease is Street v Mountford, were the House of Lords held that whereby arrangement in question was intended to create legal relations and the occupier was granted a right to exclusive possession of the premises for a fixed or periodic term at a rent, then a lease or tenancy arises via the dictum of ‘he who asserts must prove’. The burden is on Fiona to prove that she satisfies all three requirements for a lease. Firstly she would need to prove she has exclusive possession of the flat and has the ability to exclude all others from the flat including Alf. Looking at it from face value it can be argued from the facts given that Alf by retaining a key and having entered into the flat a few times does not give Fiona exclusive possession. Howerever, the decision in Aslan v Murphy [1990] suggest otherwise, it was held that by the landlord keeping a key to the property that by itself did not prevent a lease. Fiona can argue that due to the flat being unfinished Alf did reserve the right to enter the premises during reasonable hours as his intention was to supervise the workmen to allow repairs. The second criterion that needs to be met is the length of term of the lease; it should be noted that, a lease will fail without certainty of term. Fiona must prove that her lease was for a fixed or periodic term? If her lease did not exceed three years then it would be legal without formalities provided that section 5(2) LPA 1925 is satisfied. Section 54(2) LPA states that the tenant must be given immediate right of possession, at the market rent with no fine. As we have not been given any indication as to how long she plans on staying at the flat, for this purpose we shall assume that there was an uncertainty in the term.

One would wisely take the view by invoking periodic tenancy when it appears uncertainty of term. As confirmed by Prudential Assurance v London Residuary Body it was stated that the beginning and the end of the term must be ascertainable at the outset. However by looking at the authority in Lace v.Chantler, the House of Lords decided that there was insufficient certainty about the date of the end of the lease and therefore it could not be a valid term of ‘year’s absolute’ but instead it was a lease ‘from year to year’. Meaning if a rent is paid weekly the court would imply it to have a weekly tenancy; the weekly payment of £30 could fall under what is classed as periodic intervals.

Fiona was given the consent to occupy the flat at the will of Alf who may have terminated it at any time. She was allowed possession and paid rent at regular intervals. Her payment of rent converts what could be classed as a ‘tenancy at will’ into a periodic tenancy which is likely to be overriding and under Section 1 (1) of the Law of Property Act 1925 is capable of binding third parties.

Advise George

In the light of the above I would advise George in regards to Bella, Charles and David, to rely on the rule as laid down in King v David Allen & Sons which states that a contractual licence does not give rise to bind a third party as it is merely a licence that is personal in nature; it has no security on tenure. Bella, Charles and David have only a mere permission and thus, George as the lawful owner of the land would have the right to revoke the licence at any time under common law. In Winter Gardens Theatre (London) Ltd Millennium Production Ltd suggests that a licence can be revoked on giving reasonable notice.

In regards to Fiona, George could challenge her tenancy based on the judgement in Heslop v Burns by claiming that Alf had no intention to create legal relation, as both Fiona and Alf were related. Either Alf or Fiona could have terminated it at any time for any reason, or for no reason at all. Alf having transferred his interest in the property to George the agreement is broken therefore George should be able to obtain vacant possession of the flats.

Scenario (2) raised the question on the enforceability of the parties to the covenant. A covenant is a promise contained in a deed as stated in section 52(1) of the Law of Property Act 1925 which is made by one party for the benefit of another. Covenants impose restrictions on how the land may be used or require a certain continuing action, which is referred to as “run with the land”. Any future covenantee of the land must therefore abide by the terms. In this scenario we shall focus on the law applicable to the enforcement of covenants on freehold land and covenants in leases. Leonard holds the freehold of ‘Lushland’ and the title is registered. Leonard sells 50 acres to Mary and 100 acres to Ned with a covenant. Ned then sells his land and Mary leases her land. For the purpose of this scenario we shall try to establish what sort of covenant is held by the parties and whether or not these are enforceable by Sarah who inherited ‘Lushland’ after Leonard’s death. For this purpose we shall look at the relevant case laws in this area alongside the Law of Property Act 1925, the Land Registration Act 2002 and the Landlord and Tenant (covenants) Act 1995. Having examined the positions held by each of them we shall conclude with an advice for Sarah as to the enforceability of the covenants.

Sarah and Ned

Ned is the original covenantor who has a ‘negative’ covenant with Leonard. The terms of the covenant are restrictive as it expressly prevents Ned from using the land for ‘commercial purposes’. Therefore the land owned by Ned is subject to the burdened of the covenant. However when Ned sells his plot to Philip the burden of the covenant is shifted to Philip under section 79(1) LPA 1925 which states that ‘a covenant relating to any land of the covenantor shall be deemed to be made ‘on behalf of himself and his successors in title.’ Ned can avoid liability by acquiring a guarantee from Philip that he will comply with the covenant. As there was no indication of such a guarantee between Ned and Philip it can be argued that the original covenantor (Ned) is liable for any breaches of his successors in title (Philip).
Sarah inherits ‘Lushland’ from Leonard and has therefore become the successor in title. Under common law rules section 79 (1) LPA 1925 provides that it is the intention of a covenant in common law that the benefit of a covenant is passed on to the successor of the land, so as to give them the right to enforce a promise by a promisor on that land. To enforce the benefit at common law Sarah will have to satisfy certain conditions to show that the benefit of the covenant has passed to her and she can sue Ned for breach of them. Firstly, the covenant must touch and concern the land according to the principle in Rogers v Hosegood . This means that the covenant must relate to the use or value of the land in the terms of a proprietary obligation. Secondly, the covenant must be restrictive or negative in nature which in this case it is. Thirdly, the successor in the title (Sarah) must have also acquired a legal estate in the land; which she has through inheritance. Fourthly, the covenant must have been imposed to benefit ‘Lushland’ by Leonard. The next requirement is that the burden of the restrictive covenant must be intended to run with the land. This obligation is fulfilled by evidence which establishes that the burden was meant to be proprietary instead of personal. As a result the burden is annexed to the land in order that the burden may run. As the title of the land is registered according to section 29 of the Land Registration Act 2002, the covenant amounts to a ‘minor interest’ against the burdened land which is therefore binding.

Sarah and Philip

Philip is not the original covenantor but instead a respective successor. Philip is running yoga and healing centre on the land which goes against the 1997 covenant between Leonard and Ned. To be able to ascertain whether the burden has passed to Philip, we shall rely on the rules of equity. First the covenant must be a negative one according to the principle laid down in Haywood v Brunswick Permanent Benefit Building society. Secondly, the covenant must touch and concern the land. This is also satisfied as the covenant is not personal but instead benefits the land.

Thirdly, it must be the common intention of the parties that the covenant shall run with the land. By virtue of s79 LPA 1925 covenants relating to the covenanter’s land which are made after 1925 are deemed to have been made by the covenantor on behalf of himself, his successors in title and the persons deriving title under him or unless a contrary intention appears. Here the covenant was entered into post 1925 and there is no contrary intention. Accordingly the third requirement is satisfied. Moreover, the title of the land was registered at the time the covenant was entered into therefore the restrictive covenant must have been entered as a minor interest. Accordingly, it seems that the burden of the covenant has passed to Philip.
It will be necessary for Sarah to show that the benefit of the title has passed to her. At common law the benefit of a covenant can run with freehold land if certain conditions are satisfied. However the burden of a covenant cannot run with freehold land directly at common law. Rather we would consider whether the benefit has passed to her in equity, For the benefit to pass Sarah the covenant must ‘touch and concern’ or ‘benefit’ the land of the covenantee. This condition is satisfied.
Sarah can rely on the doctrine of annexation. This is whereby the benefit of the covenant is attached to the land and whosoever acquires the title of the land benefited by the covenant will also acquire the benefit of the covenant. Sarah can argue her case on the basis of statutory annexation under section 78 (1), LPA 1925 ‘a covenant relating to the land of the covenantee shall be deemed to be made with the covenantee and his successors in title’, as applied in Federated homes v Mill Lodge Properties Ltd.

Sarah and Mary

Mary is the original covenantor whose interest in the land is proprietary, in the form of a covenant between Leonard the original covenantee. The covenant between them is negative as it restricts Mary from using the land other than for ‘environmental friendly purposes only.’ We have already established earlier that Sarah is the successor in title of the covenantee (Leonard) and the benefit of the covenant has passed to her in common law rules. Sarah can sue Mary for breach of covenant under section 79 (1) LPA 1925, which provides that the covenant can not only be binding on successors in title but that the original covenantor is liable for any breaches by successors in title. However when Mary assigns the reversion of her plot to Oliver the burden might be transferred over to him under the Landlord and Tenant (Covenants) Act 1995.
Due to the lease being granted to Oliver in 2000 section 1 (1) of the Act, provides that all leases granted on or after 1 January 1996 are referred as ‘new tenancies’. Accordingly, all obligations of landlord and tenant automatically pass when the lease is assigned (BHP Petroleum v Chesterfield Properties).

Sarah and Oliver

There is ‘privity of estate’ between Oliver and Mary. However there is no indication of whether Oliver had notice of the 1995 covenant between Leonard and Mary.

Sayles: Land Law Concentrate 4e

Chapter 7: Outline answers to essay questions

To what extent has the Landlord and Tenant (Covenants) Act 1995 eradicated the perceived problems that existed in relation to the enforcement of leasehold covenants prior to the Act coming into force?

A good starting point would be to consider how the law prior to the LT(C)A 1995 coming into force operated and what the perceived defects with its operation were. This discussion could be enhanced by looking at Law Commission Report (no 174) in which reasons for reforming the law, and thus identification of perceived defects of the existing law, were outlined.

This discussion may include:

  • identifying the perceived injustice of continuing liability of the original landlord (Stuart v Joy (1904)) and tenant (Thursby v Plant (1670)) long after they have disposed of the lease;
  • problems with the inconsistent interpretation of the concept of 'touch and concern' (Spencer's Case (1583)) and having 'reference to the subject matter of the lease (ss 141 and 142 LPA 1925);
  • the imbalance that exists between a tenant and landlord by virtue of the tenant retaining an ability to sue a landlord for breach of covenant committed whilst he (the tenant) was in possession even after the tenant has assigned the lease (City and Metropolitan Properties v Greycroft (1987) but with no similar right being afforded to the landlord after he assigns the reversion (Re King (1963));
  • identifying problems with enforcement of covenants in equitable leases under the rules in Spencer's Case (1583).

You should then discuss how the LT(C)A 1995 addressed the defects that you have raised. Remember to make the point that any solutions which the LT(C)A 1995 provides to correct the defects are limited in their application to post-1995 leases. Be critical in analysing whether the statute went far enough in correcting the faults.
For example:

  • is it right that the LT(C)A 1995 provides for automatic release from liability for a tenant upon assignment of his lease, but that release from liability must be applied for by a landlord upon assignment of his reversion?
  • is it right that a tenant can be requested to enter in to an authorized guarantee agreements, therefore limiting the effect of automatic release from liability?

Is the LT(C)A 1995 itself free from any defects?

Draw appropriate conclusions.

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