certainty of term leases

THE CERTAINTY OF TERM REQUIREMENT IN LEASES: NOTHING LASTS FOREVER. Underlying the criticism of the certainty of term rule is the tension in the law of leases between the foundation of leases in contractual arrangements and their existence as property rights. PC 359; 1 E.R. Gray, Elements of Land Law, 5th ed. lease term if there is a significant event or changes in circumstances that could affect the lease term. Any attempt to grant land without a specified duration would be construed as a grant for life. Maintaining the certainty of term rule has been described by Hansmann and Kraakman as a consequence of “a natural tendency toward doctrinal scholasticism among courts and legal scholars”.Footnote 10 It is thus apposite that it seems to be a consequence of the inclusion of the leasehold estate in the complicated medieval thought surrounding the wider system of estates in land. Chandler: ‘wartime’ isn't certain. However, some uncertain terms risk creating genuinely perpetual estates, conflicting with the nemo dat principle. And for lessors it affects lease classification. Bracton does consider what would occur if land were granted without a certain term. 586. In Re DWS [2001] Ch. Closing material contracts or leases; Annual spending budgets and exceptions; Changes to the bylaws or the charter ; Depending on how the voting majority on this topic is defined, it allows the holder of the instrument to block any of the above actions. To access this article, please, Editorial Committee of the Cambridge Law Journal, Access everything in the JPASS collection, Download up to 10 article PDFs to save and keep, Download up to 120 article PDFs to save and keep. The estate created is therefore not within s. 149(6). 25, pp. Better financial justification for the required investment. The “doubt” is unsurprisingly imprecise, but the leasehold estate being either void or voidable would be consistent with quare ejecit not being available. 95 This problem was noted in relation to forfeiture under the mortmain legislation by Earl Jowitt in Attorney-General v Parsons [1956] A.C. 421, 435. Found inside – Page 541... in sec- certainty that the second option will tion 267 ( b ) exists independently of fam- also be exercised , the term of the lease ily status , the brother - sister exception shall , beginning with such subsequent does not apply . Let’s clarify by an example. [25], per Lord Neuberger, at para. 29. 404–06CrossRefGoogle Scholar). This would be difficult were escheat land subject to a potentially indefinite leasehold estate. Commencing Date . Certainty of term and the payment of a rent correct incorrect. A valid lease must be granted for a "term certain" or on a … If there is reasonable certainty that the lessee will obtain ownership by the end of the lease term, the period of expected use is the useful life of the asset; otherwise the asset is depreciated over the lease term or its useful life, whichever is shorter. 24 Mexfield Housing Co-Operative Ltd. [2011] UKSC 52; [2012] 1 A.C. 955, at [33], per Lord Neuberger. This outcome is hardly likely to be what the parties intended. The certainty of term rule should be understood as tied to the place of leases within the common law of real property, rather than simply as a species of contract. the depreciation policy for assets held under finance leases should be consistent with that for owned assets. In a finance lease the financier purchases the vehicle and then leases it to the customer. 568, the majority of the Court of Appeal also avoided finding that property passed as bona vacantia under the Administration of Estates Act 1925. [88], per Lady Hale. But what exactly is it, and why does it still matter? This book, first published in 2006, is about the meaning, significance and practical effect of the concept of possession in contemporary land law. British Constructional Steelwork Assoc Ltd, Directors – competing in breach of fiduciary duty. 38 and K. Gray and S.F. *Note: An asterisk (*) at the end of a Bill's short title indicates the Bill is a private member's Bill. 7 Say v Smith (1563) Plowd 269; 75 E.R. A lease for a specific period that is not continuous, eg for particular days or weeks of the year, will include reference to the specific time periods in the lease notification. However, on occasion the question will be about one of two questions: 1. So are the criticisms of the rule.Footnote 1 In the recent Supreme Court case of Mexfield Housing Co-Operative Ltd. v Berrisford, the rule was strongly criticised.Footnote 2 The Justices cited Lord Browne-Wilkinson in Prudential Assurance Co. Ltd. v London Residuary Body, where the rule was described as “bizarre” and merely an “ancient and technical rule of law”Footnote 3 – a complaint exacerbated by Lord Neuberger's observation that the rule has “no apparent practical justification”.Footnote 4 The application of the rule can easily be avoided by granting a lease for a certain term with an additional uncertain determining condition,Footnote 5 and seems to be particularly problematic in relation to periodic tenancies, where there is clearly no maximum duration for a tenant's occupation of the premises.Footnote 6 Typically, the cases in which the certainty of term rule arises are ones in which the parties have deliberately tried to enter into unusual arrangements,Footnote 7 or situations of poor conveyancing where the problem could easily have been avoided.Footnote 8 This article will show that the rule does have a plausible doctrinal underpinning, addressing issues which continue to be relevant, although they were more prominent earlier in the history of the common law. Found inside – Page 26In the case of leases made under a power , if there be any restriction in the power as to the commencement of the terms ... The continuance of the term , in a lease for years , must be ascertained with certainty , either by the express ... The Crown in Scotland has a prerogative right to bona vacantia which is expressly unaffected by the abolition of feudal tenure (s. 58(2)(b)(i)). The advantage here is that neither party has to give notice to terminate the lease, it simply ends on the specified date. This text aims to provide a comprehensive exposition of the law relating to landlord and tenant. Found inside – Page 159This concern with discrete temporal definition highlights once again the tension between proprietary and contractual perspectives on the law of leases. The 'certainty of term' rule embodies a ... The common law doctrine of estates recognises no perpetual rights in land. Found inside – Page 100Lord Templeman saw no difference between leases for a term and periodic leases. He stated that the latter pass the certainty test because, at any one time, it is possible to state the maximum duration (for example, the year's end). Leases Flashcards by Robin Pearce, updated more than 1 year ago More Less Created by Robin Pearce about 5 years ago 1 2 0 Description. South African contract law is 'essentially a modernized version of the Roman-Dutch law of contract’, which is itself rooted in canon and Roman laws. Ltd . Found inside – Page 60In a case in which the facts show with reasonable certainty that the lease will be renewed , extended , or continued , the term of the lease shall , beginning with the taxable year in which such reasonable certainly is shown ... A lease is an interest in land that gives the lesse exclusive possession over a fixed period of time, usually in return for some consideration. When one understands that seisin was a substantive right, one realises that the reasoning in the Supreme Court is like suggesting that giving possession in a lease is merely a “formality” requirement, rather than the conferral of an essential element of the estate itself. Depending on the rent review terms of the lease, a long term lease allows you to calculate your rental expenses over the long term. ), Readings and Moots at the Inns of Court in the Fifteenth Century, vol. The Law Commission had expressed a desire to review feudal land law, and in doing so would necessarily have considered escheat and by consequence the certainty of term rule. Despite progress, solar energy still only represents 2.5% of energy production in the United States. Found inside – Page 158Leases to CH . V. Seo . 6. next ensuing , the said term to commence and begin immediately after Term granted the ... it is sufficient , for until that time it may depend upon an unthe happening of Contin- certainty ; either upon a ... The argument of this section is that all estates in land are temporally limited. To avoid problems, any attempt to allow uncertain leasehold estates needs to address this difficulty. ♦New Leases –Lease Term Driven ♦Magnitude of Capital Investment ♦Requirement: Certainty of Pricing and Liability Commodity Terminal Leases - Authority is Landlord ♦Lease Driven with threshold Incentives ♦Magnitude of Capital Investment ♦Requirement: Certainty of Pricing and Liability ♦Highly cyclical business model . Investment landlords are generally keen for commercial leases to have initial terms of 10 years or more to provide certainty of income and enhance their investment value. This article stresses that “our land law has its roots in the feudal past”.Footnote 11 While the rule does operate as a bar to contractual freedom, it does so as a consequence of the contracting parties trying to create proprietary rights which must fit within that wider system. The interpretative approach found in Bracton would render it impossible to grant a lease for an uncertain term. © 2015 Editorial Committee of the Cambridge Law Journal Which is the best example of an indirect loss? ), Megarry and Wade, the Law of Real Property, 8th ed. There are no perpetual estates in land. Further details of the case Berrisford v Mexfield Housing Co-operative Ltd (Rev 1)(2011) can be found here. Found inside – Page 8553Since $ 1.178–3 Reasonable certainty test . is 40 years . ... For term of the lease shall , beginning with erwise , to the effect that Corporation A will have any renewal options ; and that any the taxable year 1961 , however , neither ... 1592, 1602. However, some uncertain terms risk creating genuinely perpetual estates, conflicting with … 793. Housing Legislation Amendment Act 2021. Found inside – Page 207If the lessor leases property to a corporation of which he owns 80 percent or more in value of the outstanding stock ... show with reasonable certainty that the lease will be renewed, extended, or continued, the term of the lease shall, ... 3. The approach to construction of a grant “to X” found in Bracton no longer applies, as s. 60(1) of the Law of Property Act 1925 means that the grant would be construed as one in fee simple, unless a contrary intention appeared by the conveyance.Footnote 37 The remedial basis for the Bracton construction has also been lost: the same actions have been used to recover freehold and leasehold land for centuries. The code provides only by certainty of the contract it comes before one of a material we examine the indefinite . Co . The amendments deliver rental law reforms to improve safety, security and certainty for the Queensland rental market and aim to strike the right balance between … If X marries, the estate determines automatically. Considers ways that the Common Law has addressed issues of uncertainty and the difficulties that have been encountered in so doing. 69 (accessed 25 May 2015). The term was uncertain and therefore void. While actuarial calculations can be used when valuing a life interest, it seems less likely that an actuary would be able to provide calculations about some of the uncertain terms which appear in the cases, such as requiring land for road widening or the date of the Second World War ending. 79 There may also be further benefits in such a change; see Harpum, C.a, “Does Feudalism Have a Role in 21st Century Land Law?” (2000) 23 Amicus Curiae 21, 23–25Google Scholar. The case remains controversial, precisely because commentators identify the case as one which breaches the nemo dat principle.Footnote 50 Nevertheless, Lord Hoffmann did acknowledge the nemo dat issue, observing that a “lease may, and usually does, create a proprietary interest called a leasehold estate or, technically, a ‘term of years absolute.’ This will depend upon whether the landlord had an interest out of which he could grant it. Nemo dat therefore explains why leases making reference to uncertain determining conditions or conditions for notice which may become impossible cannot be made. Does Feudalism Have a Role in 21st Century Land Law? It gives more certainty to the business, while providing the opportunity to expand. An attempt to grant land “forever” failed to convey a fee simple.Footnote 40 A fee simple was a grant of land “to X and his heirs”.Footnote 41 If X died without heirs, or his line of heirs ended at any point, the fee simple estate would end and the land escheat to the feudal lord, now more or less invariably the Crown. Adverse possession of land and relativity of title for chattels both strive towards certainty, albeit in different ways.Footnote 81 Similarly, an adjudicator at the Land Registry has recognised that it is better that land should be “owned than left in limbo”.Footnote 82 As the Court of Appeal have observed, “continuing uncertainty” is not desirable.Footnote 83 The current system of escheat causes a state of uncertainty in practice. Found inside – Page 327Tenants under short residential leases have a right to enforce a repairing obligation against their landlords which is implied into leases of less than seven ... In the absence of this certainty of term, the grant of a lease will fail. Laws that will guarantee 900 historical mining leases set for expiry in November have been passed by the Queensland parliament.The Resources and Other Legislation Amendment Bill 2021 was passed to clarify some minor administrative aspects of mining and petroleum leases across the state. 324Google Scholar. For further discussion of continuing feudal elements in English land law and the difficulties of their interaction with land registration, see E. Nugee, “The Feudal System and the Land Registration Acts” (2008) 124 L.Q.R. 50 E.g. Other objections, rooted in policy, would still remain. However, any prospective landlord or tenant should always seek appropriate professional advice before entering into a binding agreement such as a lease, and is strongly advised to consult the pan-industry Code of Practice Commercial Property Leases in England and Wales1. A lease must be granted for a term that is certain ( Say v Smith (1563) 1 Plowden 269, 75 E.R. 40 There is a good demonstration of this difficulty in a commentary on Littleton by the Elizabethan lawyer William Fleetwood (British Library Manuscript Harley 5225, f. 14). 315, 178, applied in Scmlla Properties Ltd. v Gesso Properties (BVI) Ltd. [1995] B.C.C. Please contact [email protected]. 5 Prudential Assurance Co. Ltd. [1992] 2 A.C. 386, 390. All of these situations might also apply when a decision is made to disclaim in insolvency, e.g. 49 Bruton v London & Quadrant Housing Trust [2000] 1 A.C. 406. 11 M. Dixon, “The Past, the Present and the Future of Land Registration” [2013] Conveyancer 463. 81b, 81b–82a; 76 E.R. "isUnsiloEnabled": true, 71, p. 44). There are no perpetual estates in land. 410 seems to fall into this category. A lease must be granted for a term that is certain ( Say v Smith (1563) 1 Plowden 269, 75 E.R. Kelvin F. K. Low * The common law rule that requires leases to have a fix ed ter min us from the outset is one that. 7.3 Long-term scenarios .....58 7.4 Other considerations .....59 7.5 Scenario results .....59 References ..... 62. Certainty of term: o Begin by outlining the case law and defining the rule. A fee simple was therefore not an estate to be granted by the word “forever”. The High Court was more sceptical, but regarded the “limbo” point as a technical one about genuinely ownerless property ([2012] EWHC 978 (Ch), at [111]–[112]), rather than taking the approach of the Court of Appeal, that “limbo” referred to uncertainty about, rather than absence of, ownership of the land. However, it does not explain why leases cannot be made by reference to determining conditions which, while uncertain, cannot become impossible. 14 See text at notes 40 and 41 below. These should be full and repairing leases (i.e. Maximum credit of €120,000 available for online applications and over the phone. The grant of a term of years was not the grant of a free tenement, unlike the grant of a fee simple or a freehold life estate.Footnote 32 In the fifteenth century, it became clear that the grantee of a term of years received a different type of right over the land than the tenant in fee simple or for life. Budget for drilling operations under its existing oil and gas leases. 1 (London 1952), vol. The article shows that the common law addressed this difficulty, not entirely consistently, before 1925, but there are still real difficulties in the operation of escheat were uncertain terms to be permitted. Medieval and early-modern lawyers understood this point very well. more or less space throughout the term. Found inside – Page 623( L ) What Certainty is requisite to Leases for Years , & c . days , since days are part of and go to make up the ... Lease , 13. BA demise from A to B , for the term of bis natural life , may inure either as a demise for the life of A ... Found inside – Page 183THE NEED FOR CERTAINTY OF TERM As we have already seen, running through the rules about types of leases is a worry about timing—the idea that a lease must not go on forever. Put more precisely, leases must be for a certain term. Licences, unlike leases, do not usually create or grant any legal interest in the land for the licensee. 42 Administration of Estates Act 1925, ss. Cancellation. Found inside – Page 1074The lease reads that , for the payment therefore this state is frequently called a of taxes as rent , Hunter ... for years is not certainty of term required in a tenancy created , for the lease violates the definition for years . If such a term is uncertain, it contravenes the certainty of term rule in the same way as any other non-periodic tenancy. We can handle your term paper, dissertation, a research proposal, or an essay on any topic. Innominate Terms and the lack of certainty it brings causes issues with commercial contracts. A tenant can then apply to acquire the fee simple, rather than an escheat occurring. The committee acknowledges calls for the removal of ‘end of tenancy’ as an approved ground for agreement termination by organisations such as Tenants Queensland and the Queensland Human Rights Commission. A valid lease must be granted for a "term certain" or on a periodic basis. Under s. 1017, anyone with an interest in the disclaimed property, or a liability in relation to it, may apply to the court for an order vesting the property in someone entitled to it or a person subject to such a liability on such conditions as the court thinks fit.Footnote 91 Special provision is made in s. 1016 to ensure that any tenants or subtenants of disclaimed land are notified of the disclaimer, which does not take effect until such notice has been served, which enables such individuals to apply to the court under s. 1017. In Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 the House of Lords had upheld the certainty requirement for all leases, although the case concerned a purported fixed term lease. The lease term includes any renewals or termination clauses of the lease contract. There are no practical circumstances where the lessor's perspective can affect lease term because IFRS 16:B34 is clear that each party's rights have to be considered and IFRS 16:B37 states the economic incentive is an important consideration in determining 'reasonable certainty' of the extension option or termination option. 35 See Baker, Introduction to English Legal History, pp. (Oxford 2008), 321–26. The agreement permits the lessee to buy the leased asset for one dollar at the end of the lease term. 43 Insolvency Act 1986, ss. While Lord Templeman suggested the parties could have created a five- or 10-year term determinable on the land being needed for road widening, it seems likely that the short-term arrangement envisaged by the parties was not intended to last even that long. If an individual's trustee in bankruptcy or a company's liquidator exercises his statutory power to disclaim the land, the land will escheat.Footnote 43 The second is the dissolution of a company.Footnote 44 If an English company is dissolved, the company's property will pass to the Crown as bona vacantia.Footnote 45 The Crown may disclaim the property, at which point escheat occurs.Footnote 46 If a foreign company is dissolved, escheat occurs automatically.Footnote 47 The Explanatory Notes to the Land Registration Act 2002 observe that 300–500 cases of escheat occur every year – a figure which remains accurate.Footnote 48 The perpetual fee simple therefore remains unknown to the common law.

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