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Property e-bulletin – Issue 2

We are pleased to bring you the second edition of Druces’ property e-bulletin.

Aimed at a property professional/adviser readership, our intention is to bring you a regular collection of interesting recent property and planning focused news items.  The topics covered will be broad ranging, with each article a bite-sized consideration of some of the sector’s most topical issues.

We would welcome feedback on the content covered below and any comments you may have on the future focus of this e-bulletin.

I look forward to hearing from you.

Nicholas Brent, partner and head of Druces’ property team.

 


Be careful what occupation rights you grant

The law is replete with cases in which two parties to an agreement differ in their interpretations of what they had agreed. Such disagreements can have profound implications for landlords as there are many legal rights attaching to the occupation of property.

A recent case illustrates the point. A social landlord wished to make sure that a residential home for the elderly, which was empty, was protected from occupation by squatters or from damage. In order to achieve this, it appointed ‘guardians’ who lived on the premises, though with access only to a small portion of the property. The case was brought by one of the guardians who had been allocated the use of two rooms (which could be locked) and access to communal kitchen and bathroom areas.

The occupation was by way of ‘licence’, which gave the guardian the right to occupy the property, but not any exclusive rights over any part of it.

When the council wished to take possession of the property again, it issued the guardian with a notice to leave. He refused, arguing that his terms of occupation made him a tenant under an ‘assured shorthold tenancy’, a form of tenancy which gave him legal rights, including the right not to have the tenancy terminated at short notice.

When the County Court analysed the terms of his occupation, it concluded that the agreement was not inconsistent with the grant of exclusive possession of the property. The landlord’s rights of entry were similar to those granted in leases so that landlords can undertake repair and maintenance work. The fact that the agreement was described as a licence could not alter the legal reality.

The guardian was therefore an assured shorthold tenant, with the protection against eviction that such tenancies provide.

Granting any rights over property should be done with great care.  Drafting labels will not help if the contents / accuracy of the drafting do not match up to the label. This case particularly points up the difficulty in the lease / licence distinction. If a document has the characteristics of a lease then calling it a “Licence” doesn’t help…”

 


Court of Appeal applies commercial clarity to contract terms