Leasehold Land - Leasehold

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Leasehold Land - Leasehold Powered By Docstoc
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
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
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
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)
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.
   There are three main ways in which a lease may
   be determined:
1. By Expiry
2. By Notice
3. By Forfeiture
  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
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.
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
  Landlord and Tenant (Covenants) Act 1995
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.
  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
    Enforcement of Covenants after the
    Landlord and Tenant (Covenants) Act 1995
•   1st January 1996 (s1)
•   Landlord’s and Tenant’s 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)
• 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)
• 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)
• 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)
Remedies for Breach of Covenants
• Same rules apply to leases as apply to other forms
  of contract.
• If the Tenant is in breach the landlord may end the
  lease and take possession
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
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
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.
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
Forfeiture for breach other than non-payment of rent
S.146 Notice:
   – 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.
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
• If the tenant does not remedy then the landlord can
  seek possession by court order or peaceable re
• Depends on damage to the landlord’s interests,
  Expert Clothing Service v Hillgate House. If the
  landlord’s 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
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
• 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.

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