Legal Considerations and Contractual Issues

Rebecca’s claim

According to the Law of Property Act 1925, a leasehold is an estate in land for years absolute. A lease is granted by a landlord to a tenant who obtains exclusive possession of the property. In this scenario, Rebecca alleges that she was granted a lease by her cousin Jeremiah, a landlord at the time. The purported oral agreement for lease of house number 1 for two years at aren’t of 650. On the face of it, the circumstances portray a periodic tenancy. However, there are basic conditions that must be met for a lease to apply. Accordingly, Lord Templeman in Street v Mountford set the criteria for a lease to entail: the grant of exclusive possession, for a period of time which is certain, and the payment of rent. Notwithstanding the fact that the agreement was oral, it would still be valid as long as the lease in question is for a period not more than three years. If you need assistance with your law dissertation, then our team is here in place to provide expert law dissertation help.

It is important to address the contractual issues in this scenario. Generally, social and domestic agreements between family and friends is presumed not to create legal relations between the parties. Instead of a lease, a license is presumed to be created. In Heslop v Burns, a family who were allowed to move into the landlord’s cottage owing to their close relationship were found to be mere licensees and not tenants. They were licensees because the nature of their relationship implied that there was no intention to create legal relations. However, not all family and friendship connections negates the intention to create legal relations between the parties to a lease agreement. In Nunn v Dalrymple a family that moved into property owned by his wife’s parents after they renovated and paid rent were held to be tenants. The court was adamant that the family connection between the two parties did not preclude the existence of a tenancy.

Similarly, Rebecca has a family relationship with Jeremiah who allegedly granted her a lease over house number 1. Despite the family connection, she had exclusive occupation of the house which leads to a presumption of exclusive possession as was the case in Street. In consideration of the above, Rebecca can argue that she is a

beneficiary of a periodic tenancy given that she is to pay monthly rent at 650. Periodic tenancies can be renewed weekly, monthly, quarterly or yearly until there is notice to quit. A notice to quit can be issued by either party and in this case Abdul can use that element to issue a notice to quit to Rebecca then he can proceed to demolish the house. Essentially, a notice to quit terminates the periodic tenancy. Nonetheless, if Rebecca were a licensee, then her permission to occupy the premises would be extinguished by change of the freehold owner.

Bruno’s claim

Bruno claims to have a lease of 6 years over house number 2. He also claims to have a deed which was executed six months ago granting him the lease. It appears that there was an agreement between Bruno and Jeremiah to grant him a lease of the freehold property in respect of house number two for six years. Therefore, here is an agreement for a fixed period of time to grant freehold interest in the property. Law of Property Act 1925 provides that all dispositions involving land must be made in writing. In this case the deed in rightfully within the contemplation of section 52(1) of the Law of Property Act. Accordingly, the deed granting him a legal lease qualifies to be a fixed term lease. It is a fixed term lease because it grants Bruno exclusive occupation of the house for a specific period of time which in this case is six years.

A fixed term tenancy agreement was binding on Jeremiah and having sold the property to Abdul, it is now binding on him. The fact that Bruno has not moved into the house is irrelevant. In fact, a deed can confer a leasehold in a given property to be assumed in the future but at a specified date. In this scenario, Bruno’s interest in the property commenced the moment the deed was executed by the two parties and that was six months ago. Because the tenancy is for a fixed period of time, it cannot be ended by a notice to quit from Abdul. However, if an arrangement is made, Bruno can opt on his own volition to surrender the lease. Abdul cannot therefore demolish house number two since Bruno has a leasehold interest in that property for six years.

Filip’s claim

A right to pass over another’s property can be granted as a license or an easement. Filip claims that he paid 1000 to Jeremiah for a right to pass over his land to access the road. The question here is whether the payment granted Filip a license to pass over Jeremiah’s land or an easement giving him the right of way over the same land. While a license is personal and applies only to Jeremiah and is extinguished upon sale of the property an easement is an interest that runs with the land and binds the next buyer. There are condition that must be met for an alleged right to be considered as an easement. These were set by Danckwerts J in Re Ellenborough Park where the right to use a park was upheld as a valid easement.

First, there must be a dominant tenement and servient tenement. In this case the two pieces of land one now belonging to Abdul and the other to Filip are adjoining properties with different proprietors. Filip’s land can be termed as the dominate land to which benefit accrues and Abdul’s land is the servient tenement which is burdened by an easement. Second, the easement must accommodate the dominant tenement. This means that the easement in question must confer a benefit to the dominant tenement which is Filip’s land. Presently, the right of Filip to pass through Abdul’s land benefits the land by enabling the person in occupation to access the road. This signifies the need for two separate but adjoining lands otherwise it would not make sense to grant an easement to one person owning both pieces of land.

Third, the dominant and the servient tenement must be owned by two different people. This diversity of ownership is necessary because one person rights are granted to one person over another’s land. It would be utterly nonsensical to suggest that a person has an easement over their own land. However, a landlord and tenant will treating differently depending on the circumstances, because a tenant could have an easement over land which he has possession but belongs to the landlord. Fourth, the right should not go as far as depriving the servient owner of all beneficial proprietorship. Lastly, easements must be capable of forming the subject matter of a grant. In order to satisfy

this last condition: there must be a capable grantor and grantee, the right must be sufficiently definite, the right must be a nature normally granted by easements and, the right must not impose any positive burden on the servient tenement proprietor.

In light of the above, the right acquired by Filip over Abdul’s land is an interest in land referred as an easement. This right is entirely different from profits a prendre which entails the right to enter someone’s land to take something from the soil or the soil itself. Easements are conferred by a grant which should be executed by both parties. It can thus be presumed that the note given to Filip is an informal equivalent of a grant of lease. Since easements are interests in land that run with the land and not the person, the right will be binding on the next owner of the property. It follows that Abdul is bound by Filip’s right to pass over the property. The amount paid for the right will be taken as consideration for the grant of an easement.

Trudi’s claim

Trudi claims that she has a document that restricts the use of land by Abdul. Normally, a registered proprietor of land has a good title against the whole world and can use the land as he pleases. However, there are restrictions that can be placed upon someone’s land precluding them from doing specified things on that land. Restrictive covenant is a tool used to control the use of another’s property, usually a neighbouring property for the benefit of someone else. As early as 1848, the Court of Chancery had recognised the existence and enforceability of restrictive covenants in England and Wales. In this case, the court acknowledged that restrictive covenants runs with the land and not the person.

Subsequently, there are three conditions that must be met at common law for the benefit of a restrictive covenant to run with the land. First, the covenant must not be personal nature in that, it must not be for the benefit of an individual but the land itself. Second, the covenant in question must be in relation to the land and affect the value and how the land is used. Lastly, the land benefited by the covenant must be identifiable. While covenants can be positive by requiring the owner of land to do

something to that land for benefit of another, restrictive covenants are negative and usually requires one to refrain from doing certain things in his land. For instance in Tulk v Moxhay, a person who bought land subject to a restrictive covenant not to build over the Leicester square was effectively stopped through an injunction from going against the covenant by erecting buildings in the same place.

Restrictive covenants run with land and for that reason they should be in a deed form and the same should be entered into the register. At the Land Registry, any restrictions affecting property are entered in the Charges Register. Whereas Abdul will be bound the restrictive covenant not to build or open a hotel on his land, he can apply to the Registrar to have the covenant dissolved or modified. Under the Law of Property Act 1925, he can apply to the Lands Tribunal to have the restriction on his land cancelled or modified. This can be done if he believes that the restriction is obsolete or it no longer affects Trudi’s land in any way. Otherwise, he is bound by the restrictive covenant registered upon the land even though he did not sign the covenant himself. Having noted that, Abdul should be aware that a breach of a restrictive covenant could expose him for liability in form of compensatory damages and damages in lieu of an injunction.

Lucy’s claim

A person is said to have a legal title if his or her name appears in the register of titles and in documents. A legal title grants true ownership of property and the person whose names appears in the title enjoys the bundle of rights attendant to land ownership. Nonetheless, another person may have beneficial interest in the property that restricts the manner in which one uses and enjoys their property. Frequently, cohabitants and co-occupiers of property contribute money to buy property but the ownership is never formalised to show the extent of beneficial interest. In order to protect parties with beneficial interests, the law has developed two principles of trust, resulting and constructive trust. A resulting trust can be presumed where a party- like Lucy, contributes to the purchase of property but his or her name is not entered in the register.

Recently, in Haque v Raja the court held that a party claiming unregistered equitable interest in a property, there should be a notice of it on the legal title of the property. further, a party holding the legal title has the right to sell the property without consulting the beneficial owner; and when he or she sells that property to a third party, the beneficial owner cannot say that the buyer is holding his or her beneficial interest in the property. The only recourse that the beneficial owner has is to bring an action against the seller who held the legal title for a share of the proceeds of sale. Similarly, Abdul is not bound by Lucy’s beneficial interest in the property unless he had notice of the same or Lucy was staying in the property at the time he bought it.

Licenses and leases

The House of Lords in Street held that a lease arises when there is an intention to create legal relations , and the occupier is granted a right to exclusive possession of the property for a fixed of periodic term at a rent. Leases must be for a specified duration and any attempt to create a lease for an uncertain period like duration of war has been found by the courts to be invalid. Further, there must be an exclusive possession by the tenant or lessee to the exclusion of others including the landlord himself. In Appah v Parncliffe Investments Ltd, it was held that where a land lord reserves the right to enter premises a he pleases then the arrangement will be no more than a license.

Whereas Lord Templeman in Street v Mountford implies that rent is a necessary precondition for a lease, the Court of Appeal in Ashburn Anstalt v Arnold held that the right to receive rent is not an essential element of a lease or a tenancy. These two cases appear to give conflicting stance on rent as a feature of a lease, however, the position in Ashburn was subsequently applied in National Car Packs case suggesting that it is the new position.

On authority of Street, a lease will be created when all the requirements are met. The only exception is where there was no intention to create legal relation or a party physically occupying the property and having exclusive control is not a tenant. The above position was clear on what constitutes a lease and also instances when a license will arise. Nonetheless, decisions in subsequent cases appear to have blurred the line between leases and licenses. In the controversial case of Bruton v London & Quadrant Housing Trust, the House of Lords held that Mr Bruton was tenant despite the fact that he had been granted a license by a Housing Trust which was equally occupying the land on a license from the local authority. This decision defied the principle of nemo dat quod non habet since the Housing Trust was not a lessee and could not purport to grant a lease to Mr Burton. In fact, the best they could have offered him was a license to occupy the premises.

The Bruton decision makes it difficult to distinguish between contractual licenses and leases. On one hand licenses do not grant exclusive possession to the licensee while on anther a grantor who has no power to exclude the proprietor from possession has power to grant a tenancy. In National Provincial Bank Ltd v Ainsworth, Lord Wilberforce reinforced the principle of proprietary interest in property stating that it has degree of permanence and is always identifiable third parties. In light of the Bruton decision, it appears that the notion that leases create proprietary interest is being challenged. It would thus seem that the decision is pushing the agenda that licenses, in a similar fashion as leases, could be regarded as proprietary. Notwithstanding, the Burton decision, the courts have previously insisted that a license does not come into existence merely because the parties term it so, but will be construed to constitute a lease to defeat a sham agreement.

In 2000, the Court of Appeal in Dutton v Manchester Airport Plc was faced with the same dilemma as Bruton. Manchester Airport, a mere licensee sought possession order to eject protestors from National Trust’s land. Essentially, the court granted a remedy,

ejectment that was only available to parties with estate in land and not licensees. In Westminster City Council v Clarke, a license agreement allowing the council to change the accommodation without notice was upheld thus indicating the clear line between leases and licences as intended in Street v Mountford.

The upshot of the foregoing is that exclusive possession is no longer the trademark of a lease. As a consequence, the courts have been more than willing to hold that occupiers in exclusive possession are tenants if it is the intention of a party to merely escape the statutory duties of the Rents Act. In the same vein, Colbey R argued that the decision in Street gave a leeway for landlord to avoid legislation. It follows that the courts will look at the intention of the parties decide whether there is a licenses or a lease. However, despite the fact that the Dutton and Bruton decisions implied tenancies, it appears that the proprietary interests do not accrue to the beneficiaries of those pronouncements. In the end, the distinction between a lease and a license remains unclear and the courts will look at the circumstances of each case to make its decision with Street v Mount taking being applied inconsistently.

Continue your exploration of Legal And Beneficial Interests In Joint Tenancy with our related content.

Cases

Appah v Parncliffe Investments Ltd [1964] 1WLR 1064

Ashburn Anstalt v Arnold [1988] EWCA Civ 14

Bruton v London & Quadrant Housing Trust [1998] QB 834

Dutton v Manchester Airport Plc [2000] QB 133

Haque v Raja [2016] EWHC 1950 (Ch)

Heslop v Burns [1974] 1 WLR 1241

Lace v Chantler [1944] KB 368

Miller v Jackson [1977] QB 966, CA

Moncrieff v Jamieson [2007] UKHL 42

National Car Parks Ltd v Trinity Development Co (Banbury) Ltd [2001] EWCA

Nunn v Dalrymple (1989) 21 HLR 569

Re Ellenborough Park [1955] EWCA Civ 4

Street v Mountford [1985] AC 809

Thomas v Sorrell [1673] EWHC (KB) J85

Tulk v Moxhay [1848] EWHC Ch J34

Westminster City Council v Clarke [1990] 1 AC 417

Table of Statutes

Land Registration Act 2002/

Law of Property Act 1925

Rents Act

Books

McFarlane B, Hopkins N, & Nield S, Land law: text, cases, and materials. (Oxford University Press 2015)

McMorland H, and Sim PBA, Land Law. (1978)