Land L12 Leases n exclsve pssn n rnt PDF

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Leases and exclusive possession and rent...

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Land L12: Leases: Exclusive possession and rent What is exclusive possession? The right to exclude others from the property, Form of ownership interest, even if temporally or contractually limited. ‘The tenant possessing exclusive possession is able to exercise the rights of an owner of land, which is in the real sense his land albeit temporarily and subject to certain restrictions. A tenant armed with exclusive possession can keep out strangers and keep out the landlord unless the landlord is exercising limited rights reserved to him by the tenancy agreement to enter and view and repair. A licensee lacking exclusive possession can in no sense call the land his own and cannot be said to own any estate in the land. The licence does not create an estate in the land to which it relates but only makes an act lawful which would otherwise be unlawful.” -Lord Templeman, Street v Mountford Why does/did determining if a party has exclusive possession matter? The Historical context Previously there was a big advantage to be under a lease as opposed to with just permission. You could apply under rents act and then a rent assessor would determine a fair market rate. So could have your rent lowered. Landlords used to trick around the law so it the agreement was categorised as a licence and not a lease eg by arguing that the tenant had no exclusive possession and it became merely a license. This was discussed below: The plaintiff in Street v Mountford was “a double rogue – a landlord and a lawyer”. In an article he summed up the reasons why landlords would want any arrangements characterised as a licence, rather than a tenancy: ‘The rent acts are grossly unfair to landlords. A stranger obtains a weekly tenancy of a house: half a century may pass before the owner can have his property again. In the meantime he can only charge a so-called ‘fair’ rent which in many cases does little more than cover the cost of keeping the property in repair. As a result of all this the capital value of the property drops to between one-third and one-half of its vacant possession value. Little wonder that over the years landlords and their legal advisers have sought various ways of avoiding the potentially horrendous consequences of being caught by the legislation’ Street R ‘Coach and Horses trip cancelled?: Rent act avoidance after Street v Mountfotd’ 1985 Mr S tried to convince it was a licence but not a lease. Firstly he got Mrs M to sign agreement for a licence fee, not a rent – of £37 weekly. Also he talks about it to be a personal license, not a property entitlement which could be transferred He also says the owner can always enter room and inspect, read and collect metre money, carry out maintenance, install or replace furniture, or any other purpose. Mr S: this is not a lease cause there is no exclusive possession. Lord Templeman: The law is about substance not the words we use. It’s a factual test. “An occupier of residential accommodation at a rent for a term is either a lodger or a tenant. The occupier is a lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises.…. If on the other hand residential accommodation is granted for a term at a rent with exclusive possession, the landlord providing neither attendance nor services, the grant is a tenancy” Lord Templeman applied a test ‘“If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting that they only created a licence. The manufacture of a five pronged implement for manual digging results in

a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade.” Court decided then that in substance it’s a lease, not a licence. Eg Lord Templeman thought these weren’t genuine terms Many cases followed from this to understand whether or not an agreement is exclusive possession and if its real terms or sham terms WCC v Carke: run a hostel for homeless men with 31 rooms each with bed and limited cooking facilities. Accommodation described ‘licence to occupy; and council could move residents between rooms, require them to share rooms, and council reps could enter at any time. Meant they could easily kick out homeless men. Was this exclusive possession and was it a lease? Law: “The conditions of occupancy support the view that Mr. Clarke was not in exclusive occupation of Room E. He was expressly limited in his enjoyment of any accommodation provided for him. He was forbidden to entertain visitors without the approval of the Council staff and was bound to comply with the Council's warden or other staff in charge of the hostel. These limitations confirmed thatthe Council retained possession of all the rooms of the hostel in order to supervise and control the activities of the occupiers, including Mr. Clarke. Although Mr. Clarke physically occupied Room E he did not enjoy possession exclusively of the Council.” How could you draft tenancy agreements so they didn’t constitute leases? It isn’t the wording, It’s the extent to which in reality they have exclusion, to what extent the land lord can enter the property. Lord Templeman: ‘the court should, in my opinon, be astute to detect and frustrate shame devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the Rent Acts’ Villiers case: agreement between landlord and a couple for a small attic flat with double bed, sitting room, kitchen, bathroom. Terms: 16. licensor shall be entitled at any time to use the rooms together with the licensee and permit other perons to use all of the rooms together with the licensee’ 23. The real intention of the parties in all surrounding circumstances is to create this licence which is not coming under the rents acts’ Did this agreement grant exclusive possession to the couple? Was this a lease or a license? Attempt to avoid granting exclusive possession but didn’t work. • LAW: The fact that clause 16 was a pretence appears from its terms and from the negotiations. … The flat, situated in an attic with a sloping roof, was too small for sharing between strangers. If clause 16 had been genuine there would have been some discussion between Mr. Antoniades, Mr. Villiers and Miss Bridger as to how clause 16 might be operated in practice and in whose favour it was likely to be operated. … Clause 16 was only designed to disguise the grant of a tenancy and to contract out of the Rent Acts. - Lord Templeman Crancour Ltd v Da Silvaesa Agreement ‘licensed occupiers ot use the furnished rooms “on each day between the hours of midnight and 10.30am and between noon and midnight but at no other times”. Other terms included: ‘licensor will retain keys and has an absolute right of entry at all times… licensor will provide attendance for housekeepers, rubbish collectors, laundering of bed linen’ etc. “In my judgment, the approach which the court should take is to construe the document as a whole in order to determine the nature and quality of the occupancy under the terms of the agreement reached between the parties. To this end the use of the words such as licence or lease in the agreement is not definitive, nor indeed is the de facto intention of either or both of the parties. Subject to the agreement on its face appearing to be a sham, the effect in law of the agreement must depend upon its construction in accordance with the normal rules in the context of its factual matrix and genesis.” -PURCHAS LJ

Compare the case to Huwlyer v Ruddy (1996) 28 HLR 550, where cleaning services and fresh linen were genuinely provided – giving rise to a mere licence, rather than a lease. AG Securities v Vaughan: four people moved into a house at different times and share flat, pay different sums and some can move in and out as others leave Need to think about certainty of term. Held that when 2+ occupiers seek to establish a joint lease, they must show they acquired the right to exclusive possession as JTs rather than as TICs. Must show: Unity of possession, unity of time, unity of title, unity of interest. This means if someone leaves you must cover their rent if you have a lease. If you just have a license then you aren’t having to cover for theirs as you aren’t on the same agreement. CASES • Street v Mountford [1985] AC 809 Westminster City Council v Clarke [1992] 2 AC 288 AG Securities Ltd v Vaughan and Antoniades v Villiers [1990] 1 AC 417 Crancour Ltd v Da Silvaesa [1986] 1 EGLR 80 Aslan v Murphy (Nos 1& 2) [1990] 1 WLR 766 Mikeover Ltd v Brady [1989] 3 All ER 618 Mehta v Royal Bank of Scotland [1999] 3 EGLR 153...