Leases
Randy has two empty cottages on his Blueacre estate which was registered land. When he
heard that his old college friend, Barry was out of work and looking for somewhere to live, he
wrote to him offering him one of the cottages, Cozy Cottage, saying, “I have no use for the
cottage at present. You can stay there for as long as you need it. I would charge you a nominal
weekly rent but I would expect you to keep the cottage and the garden in good condition.”
Oliver, another friend of Randley asked him if he could rent the second cottage, Neat Cottage
for 10 years. The agreement for a ten year lease was drawn up in a deed and it was titled
“Licence Agreement”. The terms of the agreement stated that Randy will keep a set of keys to
the cottage and that every week there would be a cleaning crew coming in to tidy the place
up.
Recently Randy sold Bluearce (including the two cottages) to Penny. The sale was expressly
subject to Barry’s right. Advise Barry and Oliver of their proprietary rights over the cottages.
In advising Barry and Oliver of their proprietary rights over the cottages, this paper will consider
whether the agreement they signed would be a lease or a licence. This is very important as a
licence is not protected under any statutes and could be revoked at any time without prior
notice. As per Vaughn CJ in Thomas v Sorrell, a licence passes no interest in the land. It merely
makes an unlawful act (trespass) lawful. A licence is a personal right incapable of binding a third
party whilst a lease constitutes a proprietary right which could be binding upon a third party.
As stated by Lord Templeman in Street v Mountford, the elements of certainty of duration,
exclusive possession, and rent payment must be satisfied in order to establish an agreement as
a lease. Though rent payment is now seen to be unnecessary to establish a lease as per s.
205(1)(xxvii) of the Law of Property Act 1925 (LPA 1925) and Ashburn Anstalt v Arnold.
i) Barry
The element rent payment could be satisfied based on the facts. The issue to consider here is
the certainty of duration. The general rule was laid down in Lace v Chantler [1944] where the
maximum duration of the lease must be ascertained at the beginning of the lease. In that case,
it was held that the term ‘for the duration of the war’ amounted to an indeterminate duration
and hence could not constitute a lease. On the facts, Randy told Barry that he could stay there
‘for as long as he likes’ which seems to indicate that there is no fixed period of time.
However, it can be seen in Hammersmith LBC v Monk that a periodic tenancy can be created if
the rent was paid on a periodic basis, and that the agreement can continue indefinitely until
one of the parties gives a notice to quit. The House of Lords in Prudential Assurance v London
Randy has two empty cottages on his Blueacre estate which was registered land. When he
heard that his old college friend, Barry was out of work and looking for somewhere to live, he
wrote to him offering him one of the cottages, Cozy Cottage, saying, “I have no use for the
cottage at present. You can stay there for as long as you need it. I would charge you a nominal
weekly rent but I would expect you to keep the cottage and the garden in good condition.”
Oliver, another friend of Randley asked him if he could rent the second cottage, Neat Cottage
for 10 years. The agreement for a ten year lease was drawn up in a deed and it was titled
“Licence Agreement”. The terms of the agreement stated that Randy will keep a set of keys to
the cottage and that every week there would be a cleaning crew coming in to tidy the place
up.
Recently Randy sold Bluearce (including the two cottages) to Penny. The sale was expressly
subject to Barry’s right. Advise Barry and Oliver of their proprietary rights over the cottages.
In advising Barry and Oliver of their proprietary rights over the cottages, this paper will consider
whether the agreement they signed would be a lease or a licence. This is very important as a
licence is not protected under any statutes and could be revoked at any time without prior
notice. As per Vaughn CJ in Thomas v Sorrell, a licence passes no interest in the land. It merely
makes an unlawful act (trespass) lawful. A licence is a personal right incapable of binding a third
party whilst a lease constitutes a proprietary right which could be binding upon a third party.
As stated by Lord Templeman in Street v Mountford, the elements of certainty of duration,
exclusive possession, and rent payment must be satisfied in order to establish an agreement as
a lease. Though rent payment is now seen to be unnecessary to establish a lease as per s.
205(1)(xxvii) of the Law of Property Act 1925 (LPA 1925) and Ashburn Anstalt v Arnold.
i) Barry
The element rent payment could be satisfied based on the facts. The issue to consider here is
the certainty of duration. The general rule was laid down in Lace v Chantler [1944] where the
maximum duration of the lease must be ascertained at the beginning of the lease. In that case,
it was held that the term ‘for the duration of the war’ amounted to an indeterminate duration
and hence could not constitute a lease. On the facts, Randy told Barry that he could stay there
‘for as long as he likes’ which seems to indicate that there is no fixed period of time.
However, it can be seen in Hammersmith LBC v Monk that a periodic tenancy can be created if
the rent was paid on a periodic basis, and that the agreement can continue indefinitely until
one of the parties gives a notice to quit. The House of Lords in Prudential Assurance v London
