PDA

View Full Version : Question on contract length/type/notice



simons03
31-03-2009, 09:50 AM
Hi,
I'm a tenant and wish to move out, but my landlord has claimed my notice is invalid - I'm interested in anyone's views on the validity of either side. Here's the background info:

I initially checked the contract, and it stated a two month notice period. I gave notice which the landlord recieved (in writing) on 17th March (he confirmed reciept by text message). However, yesterday 30th March I recieved a letter saying that the notice was invalid, as the contract cannot be terminated except for a two month's notice prior to the anniversary of the agreement.

I double checked the contract, and unfortunately he is correct that this is stated in a clause.

However, on fully reading contract, I'm confused, as it doesn't fit into any 'usual' categories as far as I can see from internet research.

It states it is a 48-month fixed term contract, but that two months notice can be given in advance of the anniversary of the contract. (which by pure coincidence is 31st March!).

I am 24 months into this 48 month term. (This contract replaced an original one-year contract - so have been resident for three years in total).

I originally assumed that it meant only the first year would be compulsory and from after that it would be two months notice. Obviously I didn't read it closely enough!
However, is such a contract (i.e. with annual break clauses) actually viable?

Second, my understanding is that contracts over 3 years fixed term require a signatory/deed by solicitor. This was not done. Does this apply here?

Also the landlord never issued any reminder that the window of notice was approaching.

Also the landlord has increased the rent during the contract, which I would have thought would not be possible if truly a fixed term.

I'd much rather leave amicably, but feel rather trapped now that there is only one specific time of year that I am able to leave, despite being here for so long. So I am forced to look for reasons to why the contract might not hold up.

To be fair, he has stated that he will allow me to leave if I can 'assign the agreement to someone suitable'. I am currently checking whether he simply means locating new tennants to start afresh, or whether he's implying I need someone to take on my contract and still be liable for them.

Any help appreciated!
I have actually already put down an initial offer on a new rental, as the landlord sent me a text message to state the notice was recieved on 17th - but didn't get a letter saying it was invalid until yesterday (30th).

thanks,
Simon

jeffrey
31-03-2009, 10:05 AM
My understanding is that contracts over 3 years fixed term require a signatory/deed by solicitor. This was not done. Does this apply here?
No, that's not so.
LETTING RULES (summary)
up to (or equal to) 3yrs.- can be oral but written is better.
over 3rs.- must be written but Deed not required.
over 7yrs.- Deed required, because needs registering at HMLR.

simons03
31-03-2009, 10:19 AM
Thanks Jeffrey for clarifying.
The reason I thought it was, is because I read it in a few places on the net.

e.g.

Term: since the changes introduced by the Housing Act 1996, an assured shorthold tenancy need not now be a term certain of at least six months - it can be any length of time. If the fixed term is to exceed three years, then the agreement must be drawn up by deed (consult your solicitor for details).
http://www.letlink.co.uk/letting-factsheets/factsheets/factsheet-19---assured-shorthold-tenancy-agreements.html


If the fixed term of the AST is to exceed three years the agreement must be drawn up by deed. The services of a solicitor are required for this task.
http://www.mypropertyguide.co.uk/articles/display/10040/the-tenancy-agreement.htm

Are these outdated? Or just plain wrong!?

jeffrey
31-03-2009, 10:28 AM
Thanks Jeffrey for clarifying.
The reason I thought it was, is because I read it in a few places on the net.

e.g.

Term: since the changes introduced by the Housing Act 1996, an assured shorthold tenancy need not now be a term certain of at least six months - it can be any length of time. If the fixed term is to exceed three years, then the agreement must be drawn up by deed (consult your solicitor for details).
http://www.letlink.co.uk/letting-factsheets/factsheets/factsheet-19---assured-shorthold-tenancy-agreements.html


If the fixed term of the AST is to exceed three years the agreement must be drawn up by deed. The services of a solicitor are required for this task.
http://www.mypropertyguide.co.uk/articles/display/10040/the-tenancy-agreement.htm

Are these outdated? Or just plain wrong!?
They're wrong about the 'three years' bit, for the time being. HMG does intend to reduce (from seven years to three years) the lease length above which compulsory registration will apply; but the change has been delayed for (I understand) at least a couple of years.

Lawcruncher
31-03-2009, 14:25 PM
I think the learned Jeffrey has momentarily confused the need for a deed with the need to register.

Unless there has been an amendment to section 54 (2) of the Law of Property Act 1925 that has escaped my attention, any grant of a tenancy for a term exceeding three years must be by deed. Indeed, the grant of some tenancies for three years or less may also need to be by deed. The precise wording of the sub-section is:

Nothing in the foregoing provisions of this Part of this Act shall affect the creation by parol of leases taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without taking a fine.

jeffrey
31-03-2009, 14:51 PM
I think the learned Jeffrey has momentarily confused the need for a deed with the need to register.

Unless there has been an amendment to section 54 (2) of the Law of Property Act 1925 that has escaped my attention, any grant of a tenancy for a term exceeding three years must be by deed. Indeed, the grant of some tenancies for three years or less may also need to be by deed. The precise wording of the sub-section is:

Nothing in the foregoing provisions of this Part of this Act shall affect the creation by parol of leases taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without taking a fine.
1. Look at the words 'by parol', underlined by me. They mean 'orally'.
2. So a lease for 3yrs. or less can be oral or written.
3. A lease for >3yrs. must be written. Section 53(1)(a) says so, in effect.
4. Read s.52(1) and s.52(2)(d), then state where it is demanded that a Deed is needed on a lease/letting for >3yrs.
5. Many LZ threads deal with the executory status of Tenancy Agreements, as you know,
6. BUT HMLR will certainly demand:
a. a Deed if the lease is creating a legal estate subjected to compulsory first registration; and
b. that the Prescribed Clauses appear in it.

Lawcruncher
31-03-2009, 17:33 PM
Here are sections 52-55 in full:

Conveyances to be by deed

52. (1) All conveyances of land or of any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed.

(2) This section does not apply to-
(a) assents by a personal representative;
(b) disclaimers made in accordance with section fifty-four of the Bankruptcy Act, 1914, or not required to be evidenced in writing;
(c) surrenders by operation of law, including surrenders which may, by law, be effected without writing;
(d) leases or tenancies or other assurances not required by law to be made in writing;
(e) receipts not required by law to be under seal;
(f) vesting orders of the court or other competent authority;
(g) conveyances taking effect by operation of law.

Instruments required to be in writing

53 .- (1) Subject to the provision hereinafter contained with respect to the creation of interests in land by parol-
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law;
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorised in writing or by will.

(2) This section does not affect the creation or operation of resulting, implied or constructive trusts.

Creation of interests in land by parol

54. (1) All interests in land created by parol and not put in writing and signed by the persons so creating the same, or by their agents thereunto lawfully authorised in writing, have, notwithstanding any consideration having been given for the same, the force and effect of interests at will only.

(2) Nothing in the foregoing provisions of this Part of this Act shall affect the creation by parol of leases taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without taking a fine.

Savings in regard to last two sections

55. - Nothing in the last two foregoing sections shall-
(a) invalidate dispositions by will; or
(b) affect any interest validly created before the commencement of this Act; or
(c) affect the right to acquire an interest in land by virtue of taking possession; or
(d) affect the operation of the law relating to part performance.

We start with section 52 (1) remembering that section 205 (1) (ii) defines "conveyance" as including "lease". Looks like all leases need to be by deed. However, we then go to section 52 (d) and see that "leases or tenancies or other assurances not required by law to be made in writing" are excluded.

Section 53 explains what needs to be in writing without it necessarily having to be by deed. There is no reference to leases in this section, but it is expressed to be subject to what is said later about interests created by parol.

Section 54 (1) states that interests created by parol take effect at will only, but section 54 (2) excludes not only the effect of section 54 (1) but also sections 52 and 53 in relation to "the creation by parol of leases taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without taking a fine".

Nothing in section 55 is material to the present discussion.

So, unless a lease is one which is the exception referred to in section 54 (2), it must by virtue of section 53 (1) be in writing if it is not to take effect as an interest at will; it must also by virtue of section 52 be by deed if it is not to be void for creating a legal estate since it will not be excluded by section 53 (2) (d).

We can safely say that:

1. Any lease for a term exceeding three years created by parol takes effect at will only.

2. Any lease for a term exceeding three years created by writing, but not by deed, takes effect in equity only.

3. The only type of lease that can be created by parol and be a legal estate is one for a term of three years or less taking effect in possession at the best rent which can be reasonably obtained without taking a fine.

Registration has no bearing on the above. However, as only legal estates are registrable, HMLR will need to be satisfied that the legal requirements to create a legal estate have been met before a lease can be registered.

Finally, it may be noted for the record that, by virtue of section 52 (2), a lease can be created by assent or court order though I have never seen an instance of either.

simons03
01-04-2009, 13:36 PM
Thanks for the repsonses. I see another thread runnning has also covered the 'fixed term over 3-years must be by deed/witness' topic:
http://www.landlordzone.co.uk/forums/showthread.php?t=2591

So I have a contract stating it is a fixed term of 4 years that was never witnessed or drawn up by deed. Does this mean it is invalid?

Immediately prior to this contract, I had a one-year fixed term contract (for my first year) which was superceded by this one when it ended.

But could one not argue that in fact, if this 4-year contract could be construed as invalid due to no deed/witness, that the original contract instead lapsed into a rolling periodic implied contract?

Meaning notice can be given based on the rental payment cycle (in my case, monthly, hence one month notice).

My goal here is to move out, following two months notice given. But the landlord is trying to hold me to a clause stating I can only give notice on the anniversary of the contract (the four year one mentioned above).

thanks,
Simon

jeffrey
01-04-2009, 14:03 PM
No matter what, the contract (Letting Agreement) is valid. The academic discussion turns on what type of estate or interest is created.

simons03
01-04-2009, 14:53 PM
Thanks,
Sorry to sound ignorant here. But if we assume for the moment that this rule is true:

"If the fixed term of the AST is to exceed three years the agreement must be drawn up by deed."

And here we have an AST that exceeds three years but was not drawn up by deed.

Then surely it is either invalid or becomes something else?

Otherwise why have the rule, if you can ignore it and still have a binding agreement?

jeffrey
02-04-2009, 10:17 AM
Thanks,
Sorry to sound ignorant here. But if we assume for the moment that this rule is true:

"If the fixed term of the AST is to exceed three years the agreement must be drawn up by deed."

And here we have an AST that exceeds three years but was not drawn up by deed.

Then surely it is either invalid or becomes something else?

Otherwise why have the rule, if you can ignore it and still have a binding agreement?
Answer
1. If an Agreement etc needs to be by way of Deed to create a legal estate but it's not by Deed, it cannot create a legal estate.
2. This means that it will not bind the property nor the parties' successors.
3. However, it can nevertheless create an equitable lease which does at least bind the present parties.