Overview
Understanding the key aspects of leases and how they differ from licences is vital for landlord and tenant law, a major focus of the SQE1 FLK2 exam. This article delves into these topics, examining their legal roots, practical effects, and significance in modern property law. Proficiency in these areas is necessary for handling complex legal issues and achieving success in exams and future practice.
The Nature and Creation of Leases
Defining Features of a Lease
A lease provides a tenant with rights to land, including exclusive possession for a set term in return for payment. Key elements include:
- Exclusive Possession: The tenant's right to prevent others, including the landlord, from entering.
- Determinate Term: A specific duration.
- Consideration: Usually rent, though not mandatory under the Law of Property Act 1925.
- Parties: A capable grantor and grantee.
- Demised Premises: A clearly defined property or section.
Legal vs. Equitable Leases
Knowing the difference between legal and equitable leases is important:
- Legal Leases: Established by deed or, for terms of 3 years or less, by simple contract per Section 54(2) of the Law of Property Act 1925.
- Equitable Leases: Result from lease contracts, informal agreements, or estoppel.
Case Study: Creation of an Equitable Lease
Alice agrees in writing to lease her shop to Bob for five years without a deed. Bob takes possession and pays rent, creating an equitable lease under the principle of Walsh v Lonsdale (1882), acknowledging Bob's interest through occupation and rent.
Leases in Land Registration
Leases are handled differently in registered and unregistered land:
Registered Land
- Leases over seven years require registration.
- Shorter leases often qualify as overriding interests under the Land Registration Act 2002.
- Equitable leases may be protected by Notice registration or as overriding interests if in actual occupation.
Unregistered Land
- Legal leases bind later purchasers automatically.
- Equitable leases from written agreements must register as Class C(iv) Land Charges.
- Estoppel-based equitable leases can bind via the doctrine of notice.
Licences: Nature and Differentiation from Leases
A licence is a personal allowance to use land for a specific purpose, fundamentally different from a lease:
- No Exclusive Possession: The key difference from leases.
- Personal Right: Non-transferable and typically revocable.
- No Proprietary Interest: Doesn't create an estate in land.
Comparative Analysis: Lease vs. Licence
| Feature | Lease | Licence |
|---|---|---|
| Exclusive Possession | Yes | No |
| Proprietary Interest | Creates estate in land | Personal right only |
| Assignability | Generally assignable | Non-assignable |
| Security of Tenure | Possible statutory protection | Limited protection |
| Registration | May require registration | Not registrable |
Landmark Case Law
- Street v Mountford [1985]: Established exclusive possession as crucial in distinguishing leases from licences.
- Antoniades v Villiers [1990]: Showed courts examine actual occupancy over formal documents.
Practical Application
Consider Charlie's agreement to live in Diana's house for six months. Despite being termed a "licence," if Charlie effectively has exclusive possession, it could be a lease. Courts would look at the real situation to decide.
Leasehold Covenants and Their Effects
Covenant obligations are key in leasehold relationships:
Pre-1996 Leases
- Original parties are liable for the lease term (privity of contract).
- Assignees are bound by relevant covenants (privity of estate).
- Sections 141-142 of the Law of Property Act 1925 control benefit and burden transfer to reversion assignees.
Post-1996 Leases
The Landlord and Tenant (Covenants) Act 1995 brought changes:
- Original tenants are usually released upon assignment.
- All covenants generally pass to assignees.
- The "touching and concerning" concept is not relevant for covenant transfer.
Example: Covenant Enforcement
Frank leases a property to Grace for 10 years in 1990, with a retail-only covenant. Grace assigns it to Harry in 1995, who breaks this covenant. Frank can enforce it against both Grace (privity of contract) and Harry (covenant relevance). Under a post-1996 lease, only Harry would be liable.
Conclusion
Knowing the distinctions between leases and licences, along with lease creation, registration, and covenant effects, is essential for SQE1 FLK2 exam success. These concepts shape landlord and tenant law, influencing property rights and disputes. Key takeaways include:
- Exclusive possession defines a lease, setting it apart from a licence.
- Lease creation and enforcement differ in registered vs. unregistered land.
- Case law, like Street v Mountford and Antoniades v Villiers, plays a crucial role in identifying occupancy nature.
- The Landlord and Tenant (Covenants) Act 1995 altered leasehold covenant operations post-1996.
- Equitable leases can arise under various conditions, offering different protections.
Candidates should be ready to apply these principles to complex scenarios, understanding the different types of occupancy arrangements and their legal outcomes. The nuanced interaction among statutes, case law, and equitable principles requires detailed analysis in property law practice.