MLL327 Study Guide - Final Guide: Leasehold Estate, Fee Simple, Specific Performance
24 May 2018
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Property Law Topic 7
• appreciate the contractual foundation of the lease
• A lease over land is an agreement between landlord and tenant to confer exclusive possession, upon
terms, for a specified period of time
• Parties to agreement: Lessor/landlord and lessee/tenant
• Tenancy/lease agreement
• A lease is non-freehold in nature because leases endures for a determinate and specified period of
time
• an interest in land
• a form of real property
• A lease creates an estate in land which confers exclusive possession upon the holder for a specific
period of time
• Upon creation of a lease, a leasehold estate is vested in tenant, whilst the landlord retains
reversionary interest for duration of lease (leasehold reversion)
• To be valid it must be enforceable in law or equity, and it must confer exclusive possession for a
period of time which is certain in duration
• Upon expiry of lease: fee simple estate reverts back to landlord
HISTORICAL DEVELOPMENT
• Contractual agreement
• Remedy limited to a claim for damages (trespass or breach of contract)
• Old real actions unavailable
• Classified under common law as personal property
• Distinction between real property and leasehold
• Served an economic function: treated as monetary rather than land based transaction
• Writ of ejectment was used in 15th century to recover possession
• Conferred status akin to real property
• To late to classify as real property
• Chattels real and personally and realty
• As a contract, a lease is governed by principles of contract
– Upon breach of contract, damages or decree of specific performance
• As an interest in land, it confers exclusive possession for a defined period, creating an in rem right
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• appreciate the proprietary character of the lease
• Proprietary character of leasehold
• Enforceability of a lease contract
• Availability of a range of different remedies:
• Damages
• Decree of specific performance in equity
• A right to enforce the writ of ejectment and allow the tenant to recover possession
• Popularity as a commercial and domestic device
• Harwood: adjunct to a freehold and a monetary and contractual transaction (rather than land
transaction)
• Difference between leasehold and freehold:
• Holder of the freehold retains seisin of the land, but the holder of the leasehold has
exclusive possession, entitling them to exclude the landlord
• The leasehold estate owners cannot fragment their estate into a life estate, nor can they
grant a future interest
• A lease constituting a property interest may be assigned or sub-leased
• The essential elements of any lease are:
• exclusive possession;
• for a certain period of time
• If exclusive possession is not granted, only permission to enter and occupy, it will be a licence
• Term is sometimes difficult to determine
• Usually leases are granted for a nominated rental payment but this is not essential element
DIFFERENT FORMS OF LEASES
• A variety of different forms of leases may arise, each based upon the period of time for which the
lease is express to endure
• Period may be expressly set out or inferred from the circumstances
• Types:
– Fixed term lease
• Exists for a specifically defined period of time specifically agreed upon between the
parties
• Period of lease is expressly created
• A fixed term lease may be for any period of time mutually agreed upon, provided
period of time is certain
• Three certainties: commencement, duration and end
• It expires automatically at end of period without need for notice by either party
• Any ambiguity concerning the duration would prevent it from being classified as
fixed term lease
• If ended prior to fixed term it does not prevent it from constituting a fixed term
lease, provided the term is ascertainable from the outset
– Periodic tenancy
• Lease that continues indefinitely from one period to another until determined by
proper notice
• Endures for any recurring period dependent on rent payment
• Exists for the period of time that rental is paid and tenant is entitled to stay on land
• Succession of periods – weekly, monthly, yearly
• Payment of rent in advance for period
• Can be ended by notice equivalent to rental period
• Expressly: fixed term period allowing further period
• Presumption of yearly tenancy where holding over after fixed term of 1 year or
more: Moore v Dimond (1929)
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• Modified by statute: unspecified lease is transformed into a tenancy at will
determinable by one months notice in writing: s 127(1) CA NSW
– Tenancy at will
• Enters into possession pursuant to a lawful right with consent of the owner and
remains in possession until terminated
• Examples:
• Where a prospective purchaser is allowed to enter into occupation of property
pending finalisation of sale
• Where a prospective tenant is allowed to enter possession while the lease
agreement is being negotiated
• Can be granted expressly or implicitly
• Tenant enjoys exclusive possession with consent of landlord without payment of
rent on a regular periodic basis for an indefinite period
• Either party may terminate at any time without prior notice
• Landlord can seek compensation for use of land
• Simple mechanism to protect a tenant – right to real actions
– Tenancy at sufferance
• Tenant enters possession lawfully then stays on after expiration of leasehold estate
without ladlods express consent and without paying rent
• Implied tenancy
• Only difference from trespasser is tenant entered lawfully
• If a landlord expressly objects a tenancy at sufferance can not arise
• No obligation for tenant to pay rent because of the status of tenancy at sufferance
as an implied arrangement with no formal agreement
• Landlord can recover possession at any time and seek compensation for use of land
• A real tenancy? Or a convenient label?
• Simply a possessory title
• If consent is given by landlord, it will turn into tenancy at will
• If consent is given, rent paid in advance and accepted by landlord, it will be a
periodic tenancy
• No consent given and continues for limitation period will be adverse possession,
landlord will lose right of action
– Equitable leases:
• The Walsh Losdale euitale lease
• Tenancy by estoppel
• Lease in terms of the doctrine of part performance
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