Issues
The transactions Callum completed with Erin reveal two common issues: (i) whether Dylan, Leo and Jasmine entered into valid leases with Callum: (ii), subject to the issue (i) analysis, whether the termination notice Erin subsequently serves on each tenant is valid. The requisite legal analysis vary as determined by the specific circumstances of each transaction.
Applicable law
1. Lease versus licence
Law of Property Act 1925 (LPA 1925) provisions establish the relevant legal foundation. LPA 1925 s. 1(1) confirms an estate for a term of years absolute as a subsisting property right. A valid fixed term tenancy must include a commencement date, with either an express termination date or means to calculate this date. A landlord and …show more content…
This agreement is prima facie consistent with the Street v Mountford exclusive possession, rental payments, and certainty of term requirements. However, there is doubt that this agreement satisfies the LPA 1925 requirements that any lease of less than three years’ duration includes the best rent ‘reasonably obtainable’. The agreed £100 per week rent is 75 percent of the market rate. Although the facts provided are not entirely clear regarding this issue, it is assumed that had Callum exposed this property to the market, prospective tenants would pay rent very close to or at market rates. The issue is thus distilled to determining whether Callum’s desire to ‘get a tenant in quickly’ at this agreed £100 rate is reasonable within LRA 1925 meaning. It is clear that prior to completing the sale transaction, Erin would have known two facts whilst undertaking a reasonable pre-purchase inspection: (i) Dylan was in actual occupation ; (ii) a written agreement existed between Callum and Dylan. The notice to terminate is only valid if she can establish that the agreement is a licence …show more content…
Leo and Jasmine
This agreement meets the various implied periodic tenancy requirements outlined above. Further, Leo and Jasmine have executed the document consistent with their joint tenancy status. It is apparent that on the facts provided, as Leo and Jasmine have honoured all agreement payment and related terms, they created a legal lease. For these reasons, Erin must comply with periodic lease termination rules. The purported notice to terminate effective 31 December exceeds the required four weeks she must provide them.
Conclusions
It is likely that Dylan will be able to resist notice to terminate, and rely on his two year leasing term. As a practical matter, given the ’75 percent’ rate injects variability into the analysis that might persuade a court that the agreement is a licence or equitable lease (and thus terminated on one month’s notice), Dylan ought to approach Erin to determine whether a higher rent (with appropriate term guarantees) might resolve this issue. Leo and Jasmine have a valid periodic tenancy; the notice Erin served them is sufficient to legally require them to leave the
The transactions Callum completed with Erin reveal two common issues: (i) whether Dylan, Leo and Jasmine entered into valid leases with Callum: (ii), subject to the issue (i) analysis, whether the termination notice Erin subsequently serves on each tenant is valid. The requisite legal analysis vary as determined by the specific circumstances of each transaction.
Applicable law
1. Lease versus licence
Law of Property Act 1925 (LPA 1925) provisions establish the relevant legal foundation. LPA 1925 s. 1(1) confirms an estate for a term of years absolute as a subsisting property right. A valid fixed term tenancy must include a commencement date, with either an express termination date or means to calculate this date. A landlord and …show more content…
This agreement is prima facie consistent with the Street v Mountford exclusive possession, rental payments, and certainty of term requirements. However, there is doubt that this agreement satisfies the LPA 1925 requirements that any lease of less than three years’ duration includes the best rent ‘reasonably obtainable’. The agreed £100 per week rent is 75 percent of the market rate. Although the facts provided are not entirely clear regarding this issue, it is assumed that had Callum exposed this property to the market, prospective tenants would pay rent very close to or at market rates. The issue is thus distilled to determining whether Callum’s desire to ‘get a tenant in quickly’ at this agreed £100 rate is reasonable within LRA 1925 meaning. It is clear that prior to completing the sale transaction, Erin would have known two facts whilst undertaking a reasonable pre-purchase inspection: (i) Dylan was in actual occupation ; (ii) a written agreement existed between Callum and Dylan. The notice to terminate is only valid if she can establish that the agreement is a licence …show more content…
Leo and Jasmine
This agreement meets the various implied periodic tenancy requirements outlined above. Further, Leo and Jasmine have executed the document consistent with their joint tenancy status. It is apparent that on the facts provided, as Leo and Jasmine have honoured all agreement payment and related terms, they created a legal lease. For these reasons, Erin must comply with periodic lease termination rules. The purported notice to terminate effective 31 December exceeds the required four weeks she must provide them.
Conclusions
It is likely that Dylan will be able to resist notice to terminate, and rely on his two year leasing term. As a practical matter, given the ’75 percent’ rate injects variability into the analysis that might persuade a court that the agreement is a licence or equitable lease (and thus terminated on one month’s notice), Dylan ought to approach Erin to determine whether a higher rent (with appropriate term guarantees) might resolve this issue. Leo and Jasmine have a valid periodic tenancy; the notice Erin served them is sufficient to legally require them to leave the