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 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 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 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) 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. Leasehold Termination There are three main ways in which a lease may be determined: 1. By Expiry 2. By Notice 3. By Forfeiture 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 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. 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 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. 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 Leasehold 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) 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) 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) 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) 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 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 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. 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. 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 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  2 WLR 15 HL – require compensation if required. 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 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 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 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.