M9357 – Leasehold estates in land – additional handout

Reading:
 Dixon, Modern Land Law, chapter 6.

There are only two legal estates in land. Fee simple absolute in possession, and a term of years
absolute, as in ‘freehold’ and ‘leasehold’. (LPA 1925 s.1(1)).
A lease will be between a landlord (lessor) and a tenant (lessee). The lease used to be a mere
contractual right – not part of land law at all – but, as in Scotland also, although perhaps a little
later, it came to be ‘real’. In the words of Lord Browne-Wilkinson in Hammersmith & Fulham
LBC v Monk [1992] 1 AC 478 (HL) at 491 “In certain cases a contract between two persons
can, by itself, give rise to a property interest in one of them. The contract between a landlord
and tenant is a classic example. The contract of tenancy confers on the tenant a legal estate in
land: such a legal estate gives rise to rights and duties incapable of being founded in contract
alone.”
Leases may be legal or equitable, and between the parties it is often considered that an equitable
lease is probably as good as a legal lease, but if the lessor denudes the protection of the lessee
will depend upon the doctrine of notice. Any meaningful attempt to bring about a legal lease
which fails may be sufficient to give rise to an equitable lease but some failed attempts at leases
might fall into the category of licence. The lease/licence distinction is discussed in a separate
handout.
A lease is a term of years absolute. ‘Years’ includes periods of a year or less – LPA 1925 at
s.205(1)(xxvii) extended to a lease of less than a year, or for a year or years, or of a fraction of
a year, or from year to year. ‘Absolute’ does not rule out as leases arrangements that can be
brought to an end prematurely or which can be continued without limit. In fact there is a degree
of elasticity to the English lease that can seem surprising to the Scots lawyer. ‘Rent’, for
example, is a common but not an essential element of an English lease, this notwithstanding
the doctrine of consideration in English contract law. In Scotland there is no doctrine of
consideration yet rent is an essential element in any lease and without it there can be no lease.
Similarly, English leases may be for what to Scots lawyers may seem implausibly long terms
– an English lease of 3,000 years might be perfectly valid, and 99-year leases may not be
unusual, but a purported lease “until England next win the FIFA football World Cup” (which
is more plausible than Scotland ever winning it) might prove problematic, at least until the case
of Berrisford v Mexfield Housing Co-operative [2011] UKSC 52 found that in the case of
natural persons, such a lease could be deemed to be a ‘tenancy for life’ determinable in the
event of England actually winning the World Cup, in consequence of which, by virtue of
s.149(6) LPA 1925, it had been converted into a 90-year lease determinable by determinable
upon the grounds listed in s.149(6), which include the service of one month’s notice by the
lessee or notice in terms of the agreement by the lessor. The same section covers leases for life
or until marriage.
A legal lease for >3yrs must be created by a deed. A lease of ≤3yrs with possession taken at
the best rent obtainable can be legal without any requirement of writing. A legal lease of >7yrs
must be land registered. Non-compliance with the formalities for the creation of a legal lease
may nevertheless give rise to an equitable lease.
A lease may not be in perpetuity. A perpetually-renewable lease may be converted by means
of the Law of Property Act 1922 – NOTE THE DATE, it is the LPA 1922 and not the LPA
1925 that contains the provision – at s.145, into a lease of two thousand years (!) The tenant
can terminate such a 2,000 year lease by giving 10 days’ notice timed to expire upon what
would have been the renewal date under the periodic tenancy. Only the tenant has this right to
terminate. This 2,000 year provision and the provision in re 90-year leases referred to above
is illustrative of a tendency in English lease law to replace uncertain terms by certain terms
fixed by statute. The incentive is for lessors to get it right at the outset.
An implied periodic tenancy is created where possession is taken at the best rent obtainable,
without requirement of writing, per s.54(2) LPA 1925.
Three peculiar cases
The standard cases are the Fixed Term Lease or Tenancy and the Periodic Tenancy. For a
periodic tenancy, there would be defined period for occupation that would roll into a renewal
at the end of that period automatically, subject to proper notice being given to terminate. Three
other leases might be considered though.
 Tenancy at Will is a form of tenancy, whether express or by implication, determinable
at the will of the landlord, generally at nil rent. Tenancy at will tends to be a transitional
thing, such as where an old tenancy has come to an end and a new one is being
negotiated on but is not yet agreed, or simply where the ‘tenant’ has been entered into
possession by the landlord without all of the particulars of the tenancy having been
settled. Tenancy at will cannot be assigned and terminates upon the death of either of
the parties.
 Tenancy at Sufferance describes a situation where a tenant has stayed on in possession
at the expiry of a lease without the consent or dissent of the landlord. There is no rent
due but the landlord can claim mense profits (which in Scotland might equate to violent
profits). In this form of tenancy the original occupation was lawful but had become
unlawful. The landlord may signal consent, thereby converting into a Tenancy at Will.
Should no such consent be signaled, no notice to terminate is needed.
 Tenancy by Estoppel – Estoppel is very similar though possibly not identical to the
Scots law principle of personal bar. It comes about where there has been a
representation upon which detrimental reliance has been taken. Such reliance must be
reasonable. “it is not the estoppel which created the tenancy, but the tenancy which
creates the estoppel” per Lord Hoffman in Bruton v London & Quadrant Housing Trust
[2000] 1 AC 406. Tenancies by estoppel only bind the particular parties and those who
derive title from them but are not binding upon a person with a better title than the
purported lessor under the estoppel. Where someone who lacks the legal title to create
a lease nevertheless gives rise to a tenancy by estoppel and thereafter acquits the
necessary legal title the estoppel is deemed to have been ‘fed’ and the result is a proper
legal lease.

A TOYA requires:
 That there must be a capable grantor and a capable grantee. Note that in England a
person under 18 may not hold a legal estate in land.
 A fixed beginning and an end date that is capable of being fixed. The beginning may
be up to 21 years in the future.
 Exclusive possession to be given to the tenant. Possession may be immediate or may
be at some future date. Exclusive possession is distinguished from exclusive
occupation. This is one of the boundaries in the ‘lease or licence’ quandary, per Street
v Mountford [1985] AC 809 HL. Ditto there must be certainty of premises.
  Rent is NOT a necessary element of a lease per LPA 1925 s.205(1)(xxvii).

Enforceability of Leases as estates in land

The question of whether a lease is enforceable as an estate in land requires some consideration
of whether the land is registered or unregistered land. This is not something you would be
expect to worry about in the M9357 course and this is included for completeness.

Unregistered land

 Legal Leases = automatically binding

 Equitable Leases = binding only if registered under Land Charges Act 1972 - Class C
(iv), not binding otherwise even if notice

Registered land

 Legal Leases
o 7+ Years = must be registered (see Part 1 above)
o <7 years = overriding interest (LRA – Schedule 3, para 1)
 Equitable Leases
o Notice on Freehold title – LRA s29
o Overriding interest – LRA - Schedule 3 paragraph 2
o Otherwise enforceable as contract rather than estate

How leases end:

 Expiry of term (but the tenant may have security of tenure)
 Notice to quit (in periodic leases)
 Merger
 Frustration (performance impossible)
 Surrender/disclaimer
 Forfeiture