Q&As

A building owner granted a three year licence to share occupation of a floor of a building, which cannot be terminated before expiry of the term unless there is a breach of the licence provisions. The owner now wishes to go into a voluntary arrangement, terminate the licence and sell the building with vacant possession. Can this be achieved and what if any remedies would the occupier have against the owner?

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Published on LexisPSL on 11/09/2015

The following Property Disputes Q&A provides comprehensive and up to date legal information covering:

  • A building owner granted a three year licence to share occupation of a floor of a building, which cannot be terminated before expiry of the term unless there is a breach of the licence provisions. The owner now wishes to go into a voluntary arrangement, terminate the licence and sell the building with vacant possession. Can this be achieved and what if any remedies would the occupier have against the owner?
  • Lease or licence?
  • Revocation of licence
  • If it has not or cannot be revoked, will the licence bind successors in title?
  • Winding up of LLP

Lease or licence?

In Street v Mountford the House of Lords identified the hallmarks of a tenancy as:

  1. exclusive possession

  2. of defined premises

Payment of rent might also be an indication of a tenancy but is not essential.

Determining whether the agreement proposed will be a lease or a licence will depend upon the substance of the agreement as a whole, rather than the form, ie if the parties in fact have reached an agreement which amounts to exclusive possession, this cannot be offset by simply labelling an agreement in a certain way. Even if properly drafted at the outset as a true licence, it appears to be possible for the parties' conduct to alter the nature of the agreement so that a tenancy is subsequently created. In this regard, see Practice Note: Using licences and tenancies at will and commentary from Hill and Redman’s Division A paragraph 290 onwards.

Certainty as to the term of the tenancy is also required. However, that does not mean that a fixed term must be specified at the outset.

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