Leasehold

1
Leasehold

• Title
• A lease is a term of years absolute
• Creates an interest in land
• All land has freehold title and some land has
  leasehold title
• Periodic Tenancy
• Fixed Term Lease

2
Leasehold

• The Relationship
• Landlord and Tenant - contract
• Time - beginning and an end
• At the end of the lease the property reverts back
  to the landlord (Reversionary interest)
• Landlord can sell the reversion without
  disturbing the lease
• Tenant can assign leasehold interest to another
  for the unexpired term of the lease
• Tenant can sub-let leasehold interest, if lease
  allows, for the unexpired term less 1 day

3
Leasehold

• Legal Leases
• A lease exceeding three years must be by deed
  (s52(1) LPA 1925).
• A lease may be oral, written or by deed if it
• takes effect in possession
• is for a term not exceeding three years
• at the best rent reasonably available without
  taking a fine (premium)
• Legal Assignments
• By deed

4
Leasehold

• Equitable Leases
• Leases that do not comply with the formalities
  are only contracts for leases Walsh v Lonsdale
  (1882) 21 Ch D Either party may require a legal
  lease to be executed.
• Equitable Assignments
• Must comply with Law of Property (Miscellaneous
  Provision) Act 1989 s 2 (I.e. in writing,
  contains all the terms and signed by both he
  parties)

5
Leasehold

• The Essentials of Lease
• 1. The tenant must have a right to the exclusive
  possession of certain land
• 2. The lease must be for a period that is
  definite Lace v Chantler (1944)
• 3. The period must be less that of the
  grantor/landlord.

6
Leasehold

• Termination
• There are three main ways in which a lease may
  be determined
• 1. By Expiry
• 2. By Notice
• 3. By Forfeiture

7
Leasehold

• Registration
• The leasehold title for a term of more than 7
  years that is a legal estate must be registered
  under its own title number at HM Land Registry
  under the Land Registration Act 2002

8
Leasehold

• Assignment of Leases
• Tenant passes leasehold interest to another for
  the unexpired term of the lease
• A landlord may expressly prohibit assignment in
  the lease.

9
Leasehold

• Assignment of Leases
• If a landlord allows assignment with consent then
  such consent must not be unreasonably withheld
• s19 Landlord and Tenant Act 1927
• A landlord can specify circumstances in a lease
  as to when consent may be withheld -must not be
  subjective
• Landlord and Tenant (Covenants) Act 1995

10
Leasehold

• Assignment of Leases
• Where a request for consent to assign is made in
  writing the landlord is under a duty to (Landlord
  and Tenant Act 1988)
• Reply within a reasonable time
• Give consent except when reasonable not to do so
• Reply in writing specifying any conditions of the
  consent or reasons for refusal.

11
Leasehold

• Enforcement of Covenants before the Landlord and
  Tenant (Covenants) Act 1995
• Enforcement Doctrines - Privity of Contract
• Enforcement Doctrines - Privity of Estate
• Tenant liable for the whole term even if he or
  she assigned - considered unfair therefore
  Landlord and Tenant (Covenants) Act 1995 passed

12
Leasehold

• Enforcement of Covenants after the Landlord and
  Tenant (Covenants) Act 1995
• 1st January 1996 (s1)
• Landlords and Tenants covenants (s2)
• Annexed tot he land (s 3)
• The tenant only liable while he or she holds the
  lease and will not be liable after assignment (s5)

13
Leasehold

• Where an assignment is conditional on the
  landlord's consent the landlord may require a
  tenant to enter an authorised guarantee agreement
  (the tenant guarantees the performance of the
  "tenant's covenants" in the lease by the tenant's
  assignee) (s16)

14
Leasehold

• If the tenant assigns without the landlord's
  consent contrary to the lease he or she will not
  be released from liability until obtains consent
  for assignment in accordance with the lease (s11)

15
Leasehold

• Former tenants not liable for increase in rent
  due to variations of Assignees (s 18 )
• If an assignee is in breach a former tenant who
  has entered and AGA may claim an overriding lease
  (ss19 20)
• A landlord must in form a tenant who has entered
  and AGA that the assignee is in breach within 6
  months of the breach (s17)

16
Leasehold

• Remedies for Breach of Covenants
• Damages
• Same rules apply to leases as apply to other
  forms of contract.
• Forfeiture
• If the Tenant is in breach the landlord may end
  the lease and take possession

17
Leasehold

• Forfeiture (Continued)
• The lease must contain a right of re-entry if the
  tenant is in breach otherwise damages only
• Forfeiture of residential lease can only be
  obtained by court order - Protection From
  Eviction Act 1977
• Forfeiture of non-residential leases may be by
  court order or peaceable re-entry

18
Leasehold

• Forfeiture for non payment of rent
• Formal demand
• Exact amount of rent
• Between sunrise and sunset
• Unless 6 month's rent outstanding and distress
  not available S.210 Common Law Procedure Act
  1852.

19
Leasehold

• Tenant's right to relief against forfeiture for
  non-payment of rent
• High Court
• Stay of action if less than 6 months rent in
  arrears and rent and costs paid
• Discretionary power to grant relief- s210 Common
  Law Procedure Act 1852.

20
Leasehold

• Tenant's right to relief against forfeiture for
  non-payment of rent
• County Court
• Stay of action if payment made 5 days before the
  trial date, s.138 County Courts Act 1984.
• Suspend proceedings for a minimum of 4 weeks if
  arrears paid - court may extend this time -
  although after suspension enforcement order will
  be granted and landlord may obtain possession.
  The tenant then has 6months apply for relief-
  Administration of Justice Act 1985

21
Leasehold

• Forfeiture for breach other than non-payment of
  rent
• S.146 Notice
• Must
• specify the breach
• require remedy if can be remedied - reasonable
  time must be given Billson v Residential
  Apartments Billson v Residential Apartments Ltd
  1992 2 WLR 15 HL
• require compensation if required.

22
Leasehold

• S 146 Notice for repairing
• If a lease is for more than 7 years with more
  than 3 to run on a breach of a repairing
  covenant
• The notice must make reference to the right to
  serve a counter notice within 28 days
• The landlord must obtain leave to serve the
  notice if for one of 5 grounds e.g. serious
  breach of covenant which requires immediate
  remedy Leasehold Property (Repairs) Act 1938

23
Leasehold

• If the tenant does not remedy then the landlord
  can seek possession by court order or peaceable
  re entry.
• Depends on damage to the landlords interests,
  Expert Clothing Service v Hillgate House. If the
  landlords position can be restored within a
  reasonable time then the breach is capable of
  remedy, if not then the breach is irremediable.
• Positive Covenants generally remediable
• Negative Covenants generally not remediable

24
Leasehold

• Tenant's right to relief against forfeiture for
  breach other than non-payment of rent
• The tenant can apply to the court for relief
• When S.146 served
• Even if landlord obtains a possession order if
  not executed
• If possession obtained after court order the
  right of forfeiture is lost
• Unless by peaceable re-entry because S.146(2)
  gives a right to relief until there is a court
  order.