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Requirements of a lease

 
 
 
In Street v Mountford [1985] AC 809 (Case summary) Lord Templeman identified three essential criteria for a lease:
 
  1. the grant of exclusive possession
  2. for a period of time which is certain
  3. the payment of rent
 
1 Exclusive possession
 
Exclusive possession is the most contentious and complex requirement for a lease. Exclusive possession looks to legal entitlement rather than what is actually going on in practice. In this sense it needs to be distinguished from exclusive occupation which does relate to what is happening in practice. If a person has exclusive occupation this raises a presumption of exclusive possession. If a person does not have exclusive occupation then they do not have exclusive possession and therefore they do not have a lease. It is therefore necessary to establish exclusive occupation.

Exclusive occupation was present in:

Somma v Hazelhurst [1978] 1 WLR 1014  Case summary

Street v Mountford [1985] AC 809   Case summary
 
Exclusive occupation is also required in commercial agreements:

 
Shell-Mex and BP Ltd v Manchester Garages Ltd [1971] 1 All ER 841   Case summary


Terms requiring occupants to share the accommodation and not to allow visitors would be inconsistent with exclusive occupation:



Terms permitting the landlord to enter at a reasonable hour for the purpose of inspecting the state of repair and cleanliness was not inconsistent with exclusive possession:



 
Lodgers
 
 
A lodger is a licencee as oppose to a tenant as recognised in Street v Mountford. A lodger is one who shares occupation of the premises with the owner. A lodger does not have the right to exclude the owner from the premises. The owner may provide services to the lodger such as meals and cleaning services.

 
Provision of services
 
 
Provision of services is likely to be indicative of a lodger relationship and will generally prevent a finding of exclusive occupation:


Crancour v De Silvaesa (1986) 52 P & CR 204   Case summary
 
 
 
Marchant v Charters [1977] 1 WLR 1181  Case summary


Long term hotel residents are licensees due to the provision of services
 

Appah v Parncliffe Investments Ltd [1964] 1 WLR 1064    Case summary


The majority of residents in care homes are also mere licensees:


Abbeyfield (Harpenden) Society v Woods [1968] 1WLR 374   Case summary
 
Retention of keys


Where the owner retains the keys, this does not automatically prevent a finding of exclusive occupation. It depends on the reason the keys were retained:
 
 
Aslan v Murphy [1990] 1 WLR 767   Case summary


Shared occupancy


Where there is shared occupancy this could be classed as individual licenses or a joint tenancy. This will depend upon the facts of the case and decided on a case by case basis:


AG Securities v Vaughan [1990] 1 AC 417

Antoniades v Villiers [1990] 1 AC 417   Case summary

Mortgage Corporation v Ubah (1997) 73 P & CR 500


Service occupancy

Where the occupation arises through employment this is likely to create a licence as oppose to a tenancy.

To determine if an occupation is one of service, the test applied is whether the servant is required to occupy premises in order to better perform his duties as a servant:

Smith v Seghill Overseers (1875) LR 10 QB 422    Case summary

This covers occupation by those in the armed forces:


Fox v Dalby (1874) LR 10 CP 285    Case summary

A clergyman in a church:


Glasgow Corp v Johnstone [1965] AC 609   Case summary

If the terms of the employment do not require the servant to reside in the premises, a lease may be granted:


Murray Bull & Co Ltd v Murray [1953] 1 QB 211  Case summary

Facchini v Bryson [1952] 1 TLR 1386  Case summary


Norris v Checksfield [1991] 1 WLR 1241   Case summary

However, Lord Denning seemed to suggest otherwise in:


Crane v Morris [1965] 3 All ER 77

 
Social and domestic agreements


In social and domestic agreements between friends and family it is presumed that there is no intention to create legal relations and therefore a licence is created rather than a lease:


Jones v Padavatton [1969] 1 WLR 328  Case summary
 
Cobb v Lane [1952] 1 TLR 1037   Case summary

Booker v Palmer [1942] 2 All ER 674   Case summary

Heslop v Burns [1974] 3 All ER 406    Case summary


The presumption may be rebutted on the facts of the case:


Nunn v Dalrymple (1990) 59  P & CR 231   Case summary



2. Certain period of time


According to Street v Mountford [1985] AC 809 Case summary, to create a lease the grant must be for a certain period of time. This means there must be an identifiable start date and there must be certainty as to the duration of the lease.
 
Commencement date

 
Where no commencement date is specified in the agreement, it will not create a valid lease:
 
 
Harvey v Pratt [1965] 1 WLR 1025   Case summary
 
If, however, the commencement date is not certain but clearly defined this will create a valid lease:
 
 
Brilliant v Michaels [1945] 1 All ER   Case summary
 
Swift v Macbean [1942] I KB 375
 
 
Certainty as to the maximum duration

 
A lease is invalid unless it has a fixed maximum duration:

Say v Smith (1563)  Plowd 269




Hardy v Haselden [[2011] EWCA] Civ 1387



Difficulties arise when the duration of the tenancy is defined by the happening of an event:


Lace v Chantler [1944] KB 368  Case summary


Great Northern Railway v Arnold (1916) 33 TLR 114


Ashburn Anstalt v Arnold [1989] Ch 1  Case summary




A lease granted for life (or until marriage) would be saved by s.149 (6) of the Law of Property Act 1925 which provides that such leases are to take effect as a lease granted for 90 years determinable on death (or marriage) of that person.


3. Payment of rent

Whilst Street v Mountford [1985] AC 809 Case summary  refers to the requirement of rent to create a tenancy this is not always strictly enforced:


Ashburn Anstalt v Arnold [1989] Ch 1  Case summary

However, absence of rent may be indicative that no tenancy was intended:

Colchester Council v Smith [1991] Ch 448

Requirements of a lease