Leases — creation and certainty of term

A valid lease requires three cumulative elements: (1) certainty of term — the maximum duration must be ascertainable from the outset (Lace v Chantler [1944]); (2) exclusive possession — the tenant must be able to exclude all others including the landlord (Street v Mountford [1985]); and (3) compliance with formalities — legal leases exceeding three years require a deed (s 52(1) LPA 1925), though leases of three years or less at market rent taking effect in possession need no formality (s 54(2)). The certainty rule means a lease 'for the duration of the war' or 'until required for road widening' is void, even if it functions for decades (Prudential [1992]). Where formalities fail but a specifically enforceable contract exists, equity recognises an equitable lease under Walsh v Lonsdale (1882). The rationale is that property rights must be clearly defined to facilitate conveyancing and protect third parties — uncertain terms would blur the distinction between leases and freeholds.

Lace v Chantler [1944] KB 368: A wartime lease 'for the duration of the war' was void for uncertainty. Establishes that the term must be certain or capable of being rendered certain at the outset — the foundation of modern certainty doctrine.

Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386: A lease from 1930 'until required for road widening' was void despite functioning for 60+ years. The House of Lords confirmed certainty remains fundamental despite 'bizarre' results — only Parliament can change such entrenched doctrine.

Street v Mountford [1985] AC 809: Agreement labelled 'licence' was held to be a tenancy. Lord Templeman established the three hallmarks test: exclusive possession + term + rent = tenancy, regardless of label. Restored doctrinal coherence to lease/licence distinction.

Walsh v Lonsdale (1882) 21 Ch D 9: Agreement for seven-year lease without deed created equitable lease. Jessel MR: 'in equity the agreement is as good as a lease'. Where specifically enforceable contract exists, equity treats lease as already granted — but now requires s 2 LP(MP)A 1989 compliance.

Bruton v London & Quadrant Housing Trust [2000] 1 AC 406: Charity with no estate granted 'licence' held to create non-proprietary lease binding only parties. Controversial: introduces lease without proprietary effect, severing the traditional link between leases and estates in land.

Courts apply a sequential analysis: First, check certainty — is maximum duration fixed/ascertainable? Periodic tenancies satisfy this (each period certain though renewable indefinitely). If uncertain, arrangement is void but periodic tenancy may be implied from rent payments. Second, assess formalities: deed required unless within s 54(2) (≤3 years, possession, best rent, no premium). Without deed, check for s 2-compliant written contract (all terms, both signatures) creating equitable lease via Walsh v Lonsdale. Third, verify exclusive possession using Street v Mountford — examine substance not labels, but recognise exceptions (service occupancy, charity, no legal relations). For registered land, leases >7 years need substantive registration (s 27(2)(b) LRA 2002); shorter legal leases are overriding interests. Where creation fails, courts may find: periodic tenancy implied from conduct, tenancy at will if formal lease contemplated (Javad v Aqil), or rarely a Bruton non-proprietary lease if grantor lacks estate.

Misapplying s 54(2): Students assume any short lease escapes formality — but all four requirements are cumulative (≤3 years, possession, best rent, no fine). A peppercorn rent or £5,000 premium disqualifies it. Ignoring s 2 for equitable leases: Walsh v Lonsdale requires written contract signed by both parties since 1989 — oral agreements create no equitable lease. Confusing certainty with intention: Parties intending a lease get nothing if term uncertain ('until needed') — check for implied periodic tenancy instead. Treating Bruton as mainstream: It's a narrow exception where grantor lacks estate — normal leases remain proprietary.