⇒ In Street v Mountford [1985], the House of Lords held an occupation agreement amounts to a lease if and only if:

1. It confers exclusive possession of land.
2. In return for rent and/or a lump sum payment (a "premium").
3. For a certain term/

⇒ The fact that the agreement is described as a licence does not prevent it from being a lease if the above characteristics are present.

⇒ Exclusive possession means the legal right to occupy land to the exclusion of all others.

⇒ Exclusive possession is NOT the same as exclusive occupation (which is a factual, not legal, right); they are independent concepts that should not be confused.

• I.e. Although you may have exclusive possession of land (i.e. only you own it), you may not have exclusive occupation because you always have people staying over. On the other hand, you may be the only person on the land (giving you exclusive occupation), the fact that there is a right for someone (e.g. a landlord) to potentially live with you in the future demonstrates that you do not have exclusive possession.

⇒ This leads to the question, when will an agreement fail to confer the legal right to exclusive possession? (If an agreement fails to confer the legal right to exclusive possession there cannot be a lease).

1. When occupation is conferred on multiple people (except joint tenants).
2. The the agreement gives the grantor or a 3rd party the right to enter into occupation alongside the occupant.
3. The agreement gives the grantor extensive access to the land for the purpose of cleaning, repairs, etc.

⇒ There can only be one right to exclusively possess a property. If more than one person has the right to possess the property, there cannot be a lease.

⇒ However, a single right to exclusively possess a property can be held by multiple occupants if they are joint tenants i.e. joint tenants (e.g. university housemates) can hold a single right of exclusive possession of land.

⇒ For people to be joint tenants they must satsify the four unities:

1. Unity of possession: the occupants must possess rights over the same piece of property.
2. Unity of time: the occupants' rights must have arisen at same time (i.e. they all contracted to possess the property at the same time).
3. Unity of title: the occupants’ rights must have arisen from same transaction (i.e. from a single agreement).
4. Unity of interest: the occupants must have a single set of legal rights/obligations (e.g. they must be jointly liable for the rent).

⇒ If the grantor or some other 3rd party has the right to join the occupant in occupation of the land, this prevents the conclusion that the occupant has exclusive possession (even if the occupant is never, in fact, joined in occupation).

⇒ In other words, the grantor/3rd party’s legal right to join the occupant prevents the occupant from having legal right to exclude all others from the property ⇒ therefore, the occupant cannot have a lease.

⇒ If this situation arises, the occupant would have an in personam licence i.e. the occupant would have a personal right instead of a proprietary right.

• See the topic notes on the distinction between personal and proprietary rights.

⇒ Exclusive possession involves the ability to exclude ALL others, including the grantor of right. So, if you do not have the ability to exclude all others you cannot have a lease.

⇒ However, limited landlord inspection (i.e. the ability for the landlord to occasionally inspect the property) is consistent with exclusive possession. So, a landlord can do this and you can still have exclusive possession.

⇒ If the grantor reserves the right to have extensive access to the property for repairs/cleaning then it will not be possible to say that the occupant has exclusive possession ⇒ and, therefore, the occupant will not be said to have a lease.

⇒ This leads to the following question: when is access extensive enough to preclude the occupant's exclusive possession?

• In Aslan v Murphy [1990] it was said that if the grantor is obliged to provide "genuine services" it is "possible to infer the occupant is a lodger" (i.e. a licencee without exclusive possession).
• In Street v Mountford [1985] it was said that an occupier is a lodger (i.e. a licencee) if the grantor of the right to occupation provides attendance or services which require him, or his servants, to exercise unrestricted access to, and use of, the premises.

⇒ Lord Templeman in Street v Mountford [1985] said payment in the form of a rent or a premium (i.e. a lump sum payment) was essential to create a legal lease.

⇒ BUT, Fox LJ in Ashburn Anstalt v Arnold [1988] disagreed with Lord Templeman on the basis that such a view would be inconsistent with the Law of Property Act 1925, section 205(1)(xxvii). This section states that a "term of years absolute" is a "term of years... whether or not at a reent", so requiring payment in the form of rent in the formation of a lease would work contrary to this section.

⇒ Following the case of Ashburn Anstalt v Arnold [1988] it is generally accepted that a lease may exist in the absence of rent.

⇒ Nevertheless, Templeman in the case of AG Securities v Vaughan [1988] reiterated his view in Street v Mountford [1985]. However, most acdemics accept a lease can exist without there being a rent.

⇒ A lease must relate to a term of certain maximum duration (if there is no certain maximum duration there cannot be a valid lease).

• For example, in Lace v Chantler [1944], the right of occupation was to last 'for the duration of World War 2'. The Court of Appeal held that no valid lease had been granted because the duration of the war, at the time, was not certain.
• Also, in Prudential Assurance Co Ltd v London Residuary Body [1992], the local council granted a right of occupation "until the land... is required by the council for the purposes of widening of the highway". The House of Lords held that the agreement failed to grant an estate in the land" (Lord Templeman) i.e. there could be no lease because the length of the term was not certain.

⇒ A periodic tenancy is a tenancy which runs from week to week or month to month or year to year, continuing indefinitely until either landlord or tenant gives notice to terminate.

⇒ Originally, periodic tenancies were seen as having no maximum duration (Gandy v Jubber (1865)). However, this contradicted the requirmeent for a certain term.

⇒ Now, periodic tenancies are seen as a series of individual leases. So, periodic tenancies are valid leases as they comply with certainty of term (Barrett v Morgan [2000]).

⇒ Periodic tenancies can be expressly granted (e.g. "I lease Blackacre's Barn to Bill from month to month at a rent of £500 per month") or impliedly granted.

⇒ As noted above, the express lease in Prudential Assurance Co Ltd v London Residuary Body [1992] was void for uncertainty of term. However, the court held that there existed an implied periodic tenancy.

⇒ In the case, the purported tenant had entered into possession and paying a yearly rent of £30. Thus, there was an implied yearly periodic tenancy.

⇒ The Supreme Court held an occupation agreement of uncertain maximum term will be held to be a valid 90yr lease. This is quite a big move!

⇒ The Claimant agreed to let a property to the defendant from month to month for a weekly rent. Clause 5 of the agreemnt said that he could end the agremenent by giving one month's notice. Clause 6 of the agreement said the claimant could only end if, for example, the rent was in arrears for a certain time.

⇒ The Supreme Court held that this was not a monthly periodic tenancy because of clauses 5 and 6 which restricted the circumsances when it could be ended. It would have, therefore, been void due to its uncertain duration. However, the court held it took effect as a lease for life and so was saved by operation of section 149(6) of the Law of Property Act 1925, which converted leases for lives into leases for 90 years.

⇒ The limitations to this case are as follows:

• It only applies to individuals (i.e. it does not apply to corporations) and;
• Counsel for Mexfield argued that transformation into a life tenancy should occur only if, on a fair reading of the agreement, that was what the parties intended. The Supreme Court dismissed this argument as "inconsistent with the weight of authority" (Lord Neuberger).

⇒ Check the previous topic notes to make sure you know the distinction between a licence and a lease.

⇒ Some other helpful legal resources on leases:

• Leases and Licences Distinction
• Law Teacher: Licences