Leases — creation and certainty of term

A lease is both an estate in land and a contractual relationship. That dual character explains much of the difficulty in this topic. As an estate, the lease can bind third parties and take priority within the registered-title system. As a contract, it is produced by agreement, contains covenants, and may generate obligations even where proprietary consequences fail. Week 8 is therefore a hinge point in Durham Land Law: it links the foundational taxonomy of estates and interests from Week 1 with the conveyancing and priority machinery studied in Weeks 2 to 4.

The present topic is confined to creation and certainty of term. It does not attempt the whole law of landlord and tenant. The central questions are these: when does an arrangement amount to a lease rather than a licence; what formalities are needed for legal or equitable effect; when must the lease be registered; and why does the common law insist that the maximum duration of the term must be certain at the outset?

The orthodox definition remains deceptively short. A lease is a grant of exclusive possession for a term, usually in return for rent, though rent is not indispensable. Exclusive possession distinguishes a lease from a licence. A certain term distinguishes a lease from an indeterminate permission to occupy. Formality determines whether the lease exists at law, in equity, or merely in contract. Registration determines whether the legal estate is fully completed and how it ranks against purchasers of registered land.

Students often understate the severity of certainty of term. The rule is not a loose evidential requirement. At common law, the lease must have a certain commencement and a certain maximum duration. A grant for the duration of the war, or until land is needed for road-widening, may be perfectly intelligible in commercial terms, but it fails as a lease because the law cannot know at the outset the latest possible date on which the term will end. This is the logic of Lace v Chantler and Prudential Assurance. Mexfield complicates the picture, but it does not simply abolish the rule. It shows how old property doctrine can sometimes rescue an otherwise uncertain arrangement by characterising it as a tenancy for life, now converted into a 90-year term by statute.

For Durham purposes, the best answers resist two temptations. First, do not treat lease/licence classification as a matter of labels. Street v Mountford is the governing authority: substance, not drafting language, is decisive. Secondly, do not treat formality as an afterthought. In a registered-title problem, it is not enough to say that a lease has been agreed. One must ask whether it is legal or equitable, whether it falls within the short-lease exception, whether it required registration, and whether it may bind a disponee as an overriding interest. The creation question is therefore also a priority question.

The modern lease is a product of a long transition from personal obligation to proprietary estate. Medieval English law did not originally treat the termor as holding a real estate of the same dignity as the freeholder. The tenant for years began as someone with a contractual or quasi-contractual claim against the lessor. Over time, and especially as the action of ejectment developed, the term of years became protected in a way which made it an estate in land. By 1925, the term of years absolute was recognised as one of the two legal estates capable of subsisting in land.

That history matters because the lease still carries traces of both contract and property. A lease is commonly created by contract, and landlord and tenant covenants are enforceable by ordinary contractual reasoning. Yet the term itself is proprietary: it confers a right to possession and may bind successors. This is why land law is more exacting than contract law about duration. A contract may say that one party may occupy premises until an uncertain event occurs; the contract can be meaningful and enforceable between the parties. But a proprietary estate must be placed somewhere in the architecture of landownership. The old formula was that a lease must have a certain beginning and a certain end.

The 1925 property legislation rationalised this structure. Section 1 of the Law of Property Act 1925 recognises only the fee simple absolute in possession and the term of years absolute as legal estates. The lease is therefore not a minor exception to the freehold system; it is one of the two basic forms of legal estate. The same legislation imposed deed formalities for conveyances of legal estates, while preserving a practical exception for short oral leases taking effect in possession. This compromise reflects the social reality of letting. It would be absurd to require a deed and registration for every short residential, agricultural, or commercial letting; but it would be equally disruptive to allow substantial long leases to arise informally and bind purchasers without a public record.

Registration has sharpened this distinction. Under the Land Registration Act 2002, the grant of many leases out of registered land must be completed by registration before taking effect at law. The modern system expects longer or commercially significant leasehold estates to appear on the register. Short leases, however, remain capable of binding through possession and through the overriding-interest scheme. That is why a lease for seven years or less may be more powerful in practice than students expect: it may be legal without registration and may override a registered disposition if the statutory conditions are met.

The certainty requirement has been more controversial. Traditional doctrine demanded that the maximum duration be ascertainable when the lease took effect. In Lace v Chantler, a tenancy for the duration of the war failed. In Prudential Assurance, a lease until the land was required for road-widening failed, although both parties had acted on the arrangement for many years. The House of Lords thought itself bound by principle and authority. Lord Templeman invited legislative reform, but none has occurred in a general form. Mexfield later revealed that the old law contained a technical escape route for some arrangements: a purported lease to an individual for an uncertain term might take effect as a tenancy for life, then be statutorily converted into a 90-year lease. This result is historically elegant but conceptually uneasy. It preserves the surface of certainty while permitting outcomes that ordinary parties would never have contemplated.

The historical lesson is therefore not merely antiquarian. Lease law is full of survivals: the term of years absolute, the deed requirement, the short-lease exception, the tenancy-for-life conversion, and the distinction between legal, equitable, contractual and personal rights. Good problem answers show how those survivals operate within the registered-title system rather than treating them as isolated technicalities.

1. A lease requires exclusive possession. The starting point is Street v Mountford. If an occupier has exclusive possession for a term at a rent, the arrangement is presumptively a lease, regardless of the label chosen by the parties. A document called a licence may be a lease; a document called a tenancy may fail to create a lease if exclusive possession is absent. Exclusive possession means the right to exclude others, including the grantor, subject to limited rights of entry reserved for inspection, repair, or other legitimate purposes. It is not the same as exclusive occupation as a matter of fact. The question is one of legal entitlement.

The exceptions should be stated carefully. There may be no lease where there is no intention to create legal relations, where the occupation is referable to friendship, family arrangement, service occupancy, or charitable provision, or where the grantor lacks an estate from which to carve out a proprietary term. The last point is complicated by Bruton, which recognises that an occupier may hold a lease as against the grantor even though the grantor has no proprietary estate sufficient to create a lease binding the true owner. That is not a normal proprietary lease; it is better understood as a non-proprietary or contractual lease between the immediate parties.

2. Rent is usual but not essential. Historically, rent was central to the lease. Modern law does not require it as an essential definitional element. This matters in problem questions where a family member, charity, co-operative, or public body grants occupation without market rent. Absence of rent may be evidentially relevant to intention and classification, but it is not fatal if exclusive possession and term are present and the formalities are satisfied.

3. There must be a certain term. A lease must have a certain commencement and a certain maximum duration. A lease from 1 October 2026 for five years is certain. A lease from completion of building works may be uncertain if the commencement date is not objectively ascertainable when the lease is to take effect, though contracts for future leases may be specifically enforceable once the date is ascertainable. A lease until the landlord requires the premises, until redevelopment, until road-widening, or for the duration of an uncertain event is vulnerable because the maximum duration cannot be known at the outset.

The case law begins with the insistence that a lease is a matter of substance. Street v Mountford remains the canonical authority. The occupier signed an agreement described as a licence, but she had exclusive possession of rooms for a term at a rent. The House of Lords held that the arrangement was a tenancy. The decision rejects drafting devices designed to avoid statutory protection. The court will examine the legal rights actually conferred, not the label used by the parties.

Antoniades v Villiers reinforces that principle in the context of sham or artificial sharing clauses. Separate but interdependent agreements were used for an unmarried couple occupying a flat. Clauses purporting to allow the landlord to introduce others were inconsistent with the practical and legal reality. The House of Lords held that the occupiers had exclusive possession and were tenants. The case is particularly useful when problem facts contain multiple documents, identical terms, or implausible reservations of rights.

Lace v Chantler is the classic certainty case. A tenancy expressed to last for the duration of the war was held void as a lease. The event was objectively identifiable, but the maximum duration was not ascertainable at the outset. The case supplies the severe traditional rule: a term must be certain from the beginning. It is not enough that the tenancy will necessarily end when the event occurs.

Prudential Assurance applied that rule in a commercially unattractive setting. A strip of land had been let until required by the council for road-widening. The arrangement had operated for many years, but the House of Lords held that it could not be a valid lease because the maximum term was uncertain. A periodic tenancy arose from payment and acceptance of rent, and it was then determinable by notice. The case is frequently criticised because it defeated the parties commercial expectations, but it remains the central modern statement of the certainty rule.

Mexfield Housing Co-operative Ltd v Berrisford is the difficult case. An agreement provided that the tenant could determine by notice but the landlord could determine only in limited circumstances. On orthodox analysis, the maximum duration was uncertain. The Supreme Court held that at common law the arrangement took effect as a tenancy for life, because it was granted to an individual for an uncertain term, and that such a tenancy was converted by statute into a 90-year lease. The decision did not overrule Prudential. It exposed a technical route around it for certain grants to individuals. It is least likely to assist corporate tenants, commercial grants, or arrangements incapable of being treated as tenancies for life.

Bruton v London and Quadrant Housing Trust shows the lease concept operating at the boundary between property and contract. The housing trust had only a licence from the local authority, yet it granted Mr Bruton exclusive possession for a term. The House of Lords held that, as between the trust and Mr Bruton, there was a lease. The result was necessary to impose statutory repairing obligations. But the trust could not grant a proprietary estate binding the freeholder beyond its own title. Bruton therefore warns students not to assume that every lease is proprietary against the world.

Finally, Ashburn Anstalt v Arnold is useful for two propositions. First, rent is not essential to the existence of a lease. Secondly, an agreement to occupy until redevelopment may fail for uncertainty and may amount only to a contractual licence. The case also rejects an over-broad doctrine that a purchaser with notice of a licence is necessarily bound by it. For Durham examinations, its value lies in forcing the classification question before the priority question: one cannot decide who is bound until one knows what the right is.

See practice questions section below.

See further reading section below.