When a tenant signs a lease agreement with a landlord, they would be forgiven for thinking that is the end of any concerns on that score – but, as a recent case shows, this is not always the case.
The circumstances surrounding the case were complex but led to a result that seems quite unfair when looked at from the tenant’s perspective. The tenant had signed a 20-year lease with the landlord, which was the successor in title to a developer. The landlord did not actually own the let premises (which were built over a river), but effectively occupied them under licence.
After the ‘leases’ had been granted by the landlord, the Local Development Authority (LDA) became the owner and wished to take possession of the property so that it could undertake a scheme of development. The tenant made strenuous efforts in court to show that the various agreements between the landlord and the LDA constituted leases by virtue of their operation (a lease may be implied where the wording warrants it, no matter what the occupancy is called) and that, as a result, the developer’s successor in title could grant effective leases.
The tenant failed. A landlord cannot pass to its tenant a better title to let premises than it holds itself.
If you are considering leasing premises, it is important to understand the exact nature of the title held by the landlord or an unpleasant surprise may await you.
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