Lease Requirements
Based on Contract
Irish landlord and tenant legislation is relatively unique in that it is stated to be expressly based on contract. That is to say, the relationship is determined in large measure by the terms of the express or implied contract written or verbal between the parties.
This important principle was declared in the Landlord and Tenant Law (Amendment) Act (Ireland) 1860 referred to as Deasy’s Act, after the Attorney General who sponsored it. The Act consolidated Irish landlord and tenant law gave it some distinctive and fundamental features that are different from landlord and tenant legislation at common law and under statute in England.
The Act, as interpreted in an early case, allows for the grant of a lease for ever without the reversion of an interest. This is at odds with English property law, which prohibits the imposition of conditions on freehold estate. See the separate chapter on redundant legal interest. Existing fee farm grants are preserved by the 2009 legislation. It prohibits new fee farm grants.
It is possible for multiple layers of leases to be granted. It is possible for a landlord who has granted a lease to grant a lease of the reversion. This is a lease s effect immediately after an existing lease. Effectively, this gives the lessee of the reversion the right to collect the rent under the existing lease for the period term of that “reversionary” lease. This may be a very valuable right.
Lease v Licence
The essential characteristics of a lease or tenancy, as distinct from a licence, is the existence of a landlord and tenant relationship, and the tenant’s right of exclusive possession. This includes the right to exclude all others, including the landlord, from the property.
An issue that sometimes arises and can be of great practical importance is the distinction between a lease and a licence. A lease gives the tenant exclusive possession of and complete dominion over the area concerned. In contrast, a licence is a consent to use land. Leases often enjoy statutory rights , while licences do not.
For example, the right to renewal of a business tenancy or lease and statutory freedoms to assign, sub-let, change use and make alterations, depends on there having been five years’ continuous letting under a lease or tenancy.
Distinguishing Lease from Licence
Many attempts have been made in the past to avoid these rights by deeming the arrangement to be a license. However the courts have consistently looked at the substance of the arrangement.
Both the British and Irish courts have taken the view that if a document and /or the actual arrangement constitutes a landlord and tenant relationship in substance, in particular by giving exclusive possession to the tenant then it is deemed a lease or tenancy irrespective of being labelled as a licence.
The labelling of a document or a verbal arrangement as a lease or tenancy agreement is of relevance but is not conclusive. The terms of the document and the nature of the rights granted are of relevance. The actual manner of implementation at the property is considered, if it does not accord with the position under the document.
Key Characteristics
See the separate chapter on licences. Some licences have many characteristics of a lease. However the hallmark of exclusive possession is of key importance, in determining whether there is a licence or lease / tenancy.
Traditionally, the presence of exclusive possession was absolutely determinative of whether there is a tenancy/ lease or not. In recent years, the UK courts have said that is some cases exclusive occupation for a period may constitute a licence rather than a tenancy, where there are other factors consistent with a licence.
In recent years, the courts have placed more emphasis on the terms of the document and how it is described, than before, where it is has been negotiated by businesses at arms’ length. Where such parties have contracted on terms that designated the relationship to be a licence, in some cases, this has been the determining factor.
The court respects that both parties, dealing at arm’s length have contracted deliberately in these terms. In contrast it appears that in residential cases, the courts have been more protective of the residential tenants as consumer.
Rent
Generally, a rent is required for a lease. It is required for a lease under the terms of Deasy’s Act. There is an argument that a relationship of landlord and tenant without a rent may be a so called common law lease. However, it is not certain that this is the legally possible. Some courts take the view that a rent is an absolute prerequisite to the existence of a lease.
Term / Period
A lease is usually for a certain terms or period or a succession or periods. A lease for an indefinite period such as for life or the duration of the war is invalid. A lease for an uncertain period of time maybe held void. The courts may seek to save the arrangement, by interpreting it as a lease for a certain period where some other certain period is expressly or impliedly referred to.
The 2009 Act provides that a grant of a lease for
- a life or lives,
- a life or lives combined with a concurrent or reversionary term of any period,
- any term coming to an end on the death of a person or persons,
and any contract for such a grant made after the Act commences on 1st December 2009 is void both at law and in equity.
A lease under Deasy’s Act contemplates a term; a certain period of time or recurring periods, irrespective of whether term is uncertain or is liable to be terminated by law. It is arguable that this allows leases for uncertain periods from the outset.
Requirement for Writing
A lease or a contract for the grant of a lease by which the relationship of landlord and tenant is to be created for a period not being from year-to-year or less is to be by deed executed, a note in writing signed by the landlord or his agent authorized in writing.
There must be some minimum contractual certainty as to the key terms, including the parties, the events, the term, the premises, the commencement date and the rent.
Agreement for Lease
An agreement for the grant of an interest of land must be in writing signed by the person to be charged (enforced against) under the terms of the Statute of Frauds. The statute of frauds has been modernised, but without substantial change in wording, under the 2009 land law reform.
Where an agreement for lease is signed by the landlord or his agent not authorised in writing, it may be enforceable as an agreement for lease under the Statute of Frauds provisions (now in the 2009 Act) notwithstanding that it does not satisfy the requirement of a lease under Deasy’s Act. It may be enforceable by one party only, where the other party has not signed the memorandum or note.
The Statute of Fraud provisions do not require the agreement to be in writing. It requires them to be evidenced in writing. A verbal agreement for a term longer than a year may be evidenced by writing which later comes into existence.
Equity regards that which ought to be done as done. A contract for a lease may be regarded as being as good as a lease. This is particularly so when the entire terms of the lease are defined by a contract. The contract for lease is distinguished from a lease in that it may not be granted and would lack specific leasing language.
The court of equity may regard an agreement for lease as being good as a lease, provided that it is sufficiently defined so that it can be enforced by an order of specific performance. Therefore a lease which lacks the basic legal formalities may still hold good as a contract for a lease, which can be order to be specifically performed.
Formalities Lacking
An agreement which is not formalised as a lease may be enforceable if it meets the test for part performance. See the section on part performance. There may be part performance, where there is a verbal agreement which is implemented by substantial acts of perform consistent with its terms.
A verbal agreement which is partly performed may be enforceable as an agreement for lease. The part performance must unequivocally referable to the contract. Part performance is an equitable principle. It may apply where there is a verbal agreement where one party induces the other to perform allowing him to do so without objection, in circumstances where it would be in equitable and a breach of good faith to allow the former to rely on the Statute of Frauds.
Status of Equitable Lease
Although it is said that the agreement for lease is as good as a lease, this is not entirely true. It is almost as good as a lease. The equitable principles of specific performance are discretionary. If the remedy cannot be granted then there is no effective agreement for lease / equitable lease /lease in equity.
An equitable lease as is the case with other equitable interests are vulnerable to being defeated and overridden by legal rights granted in favour of third parties who have no notice of it. The mere right to assert an equitable right is a mere equity and is subject to further vulnerabilities..
Periodic Tenancies
Leases for periods of a year-to-year or less may be verbal. Periodic lettings or tenancies are commonly for periods such as weekly, monthly, quarterly, six monthly or yearly.
Periodic tenancies may come into existence informally by a the offer of rent by the tenant and its acceptance by the landlord. They may be terminated by service of a notice to quit for a period generally equivalent to the period of the tenancy, to expire on a rent day. Residential tenancies are now subject to detailed mandatory terms.
Implied tenancies may arise in other cases where rent is paid in return for possession. A weekly or monthly tenancy may be readily implied.
If, after the end or termination of the term agreed upon in any lease, the tenant continues in possession for more than one month after demand of possession by the landlord or his agent, that continuance at the landlord’s choice is deemed to be a letting from year to year, subject to the former rent and to such of the agreements contained in the lease or instrument as may be applicable to the new holding.