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jennywren
23-03-2010, 10:56 AM
Can anyone advise me please as to the implications of letting to someone who is under 18?

The background: I let out a property to students. Back in January a group of 5 first year students signed an AST for the period Sept 2010 to Aug 2011. They took joint and several responsibilty for the monthly rent between them. At the end of Feb, two of the students told us they would no longer be here next year as they were changing courses and universities.

This obviously creates a major problem for us and the group which we are working together to resolve. I have readverised the property as having 2 rooms vacant. Last week I had a request from someone who will be under 18 at the start of the tenancy. She asked if her mother could sign on her behalf and she would be an equitable tenant. I understand that only the first 4 tenants are legal tenants and so the fifth perosn would be an equitable tenant anyway. So would it matter if the fifth person is 17? Does her mother need to sign? If so, how would I word the contract and what are the implications?

I suspect that she is not in a postion to sign a contract at this stage and I will have to tell her to make contact again with me at the end of August but I would like to know the legal position regarding this situation. Thanks in anticipation!

jeffrey
23-03-2010, 11:05 AM
1. You are correct. A minor cannot hold a legal estate or interest.
2. My view (other members disagree!) is that a legal tenancy cannot be held by >4 people.
3. So let to people 1-4 (the adults) and, if you like, allow the minor to co-occupy. You'll have no legal rights against her, anyway.

Preston
23-03-2010, 16:58 PM
If you purport to grant a tenancy to a minor, you will in fact be holding the tenancy on trust for them until they are 18. Once they are 18, the law allows them a reasonable period of time to repudiate the tenancy or to accept it. Unfortunately, there is no strict definition of reasonable in this context and so, for this reason, it is worth specifying a time period in the original agreement (it won't necessarily be binding but may be helpful to you) and to contact the individual as soon as they reach 18 to remind them of the above and ask them to let you know what they intend to do.

A minor can enter into a binding contract for "necessaries", however. Although this has not always been the case, it is likely that accommodation would be regarded as a "necessary". In theory, therefore, you could charge the minor a "rent" (technically it would be an occupancy charge, rather than rent) and sue them if they don't pay. The complication, though, is that in order for you to sue they would need to be represented by an adult which usually means that you, as landlord, would need to apply to the court for a guardian ad litem to be appointed (that is, someone fulfilling a quasi parental role) before you could commence the normal possession proceedings.

So, if I were you the minimum I would want is a guarantor (both for the period before the occupant is 18 and afterwards, just in case they repudiate).

When doing the above, my advice would be to grant a licence rather than a purported tenancy and have this professionally drafted.

Finally, you might also consider granting an ordinary contractual tenancy to the parent or guardian who in turn allows their child to live in the premises. That way your contractual relationship is directly with the an adult whose means, presumably, you are comfortable with.

Hope this helps, but good luck in any case.

jennywren
24-03-2010, 00:13 AM
Many thanks to you both for your helpful replies.

Some more questions if you don't mind. If I take out a contractual tenancy with her mother, how would that affect the other students on the contract? Does that give her mother the right to live there? And would the under 18 year old's name need to appear somewhere, somehow, on the joint AST contract?

Thanks again.

Preston
24-03-2010, 00:46 AM
Sorry, I should have said that my advice assumes a sole letting of one room in the house, rather than a joint tenancy with others.

If you were to purport to grant a joint tenancy to 5 people one of whom was a minor you would be creating a rather messy situation I think. The minor could not be a legal tenant. Were the other joint tenants less than four in number then it is they who would be holding the joint tenancy in trust until the minor reaches the age of 18. However, as Jeffrey points out, the maximum number of legal joint tenants is 4, so it would be, at best, uncertain as to what is actually being held in trust where the notional number exceeds this. It would seem an unnecessarily complex and uncertain situation for you as landlord to contemplate creating.

Lawcruncher
24-03-2010, 10:59 AM
A purports to grant a tenancy to a minor B (and no one else). What is the position?

There are two questions to answer:

1. If B bound by the obligations imposed? The answer to that is to be found in the law of contract and, as suggested above, depends upon whether the arrangement is deemed to be a necessary.

2. Is there a tenancy? To answer that it is necessary to remember that in land law there is a difference between estates and tenure. Space does not permit explaining the difference between the two and for most purposes the difference is unimportant. There are only two types of legal estate: (a) a fee simple absolute in possession and (b) a term of years absolute. There are only two types of tenure: (a) freehold and (b) leasehold. A fee simple involves having freehold tenure and a term of years involves leasehold tenure. However, whilst estates are dependent on tenure, tenure is not dependent on estates. Whilst freehold tenure is equivalent to (but not the same as) a fee simple, leasehold tenure is not equivalent to a term of years since it is possible to have leasehold tenure without holding a term of years (although if you have a term of years you must have leasehold tenure).

As a matter of law, a legal estate cannot be held by a minor. As mentioned above, the purported grant of a legal estate to a minor takes effect as a declaration of trust. When it comes to tenure it is straightforward. If all the conditions for a tenancy are present there is a tenancy. Where there is a tenancy there is a landlord and a tenant. If the only person who can be the tenant is a minor that does not stop him being the tenant.

The position is therefore that when A grants a tenancy to a minor B, no legal estate is vested in B, but he is still the tenant.

Taking into account the difference between estates and tenure resolves Jeffrey's point about whether or not you can have more than four tenants. On the purported grant of a tenancy to V, W, X, Y and Z the legal estate vests in V, W, X and Y and it is V, W, X and Y who can deal with the legal estate, for example transferring it to M, without the concurrence of Z. However, V, W, X, Y and Z are the tenants.

jeffrey
24-03-2010, 13:33 PM
In fact, L's attempt to let to a minor (M) makes L trustee for M. Result: L cannot terminate (breach of trust)!
See Alexander-David v. Hammersmith & Fulham LBC [2009] EWCA Civ. 259, here: http://www.bailii.org/ew/cases/EWCA/Civ/2009/259.html

Preston
24-03-2010, 20:17 PM
Yes, this is an interesting case and has, as you might imagine, generated quite a reaction in the housing management world - not least a rash of "equitable tenancy agreements" which attempt to avoid any purported legal transfer and so prevent the creation of a trust.

I still prefer the licence option, not least because Alexander gives some very helpful advice on how to do this.

Either way, landlords should not underestimate the potential complications in pursuing legal action - particularly an application for possession - against a minor, whatever their tenure.

jennywren
24-03-2010, 22:34 PM
Thank you for your detailed answers.

I have looked at the link you gave and tried to follow the argument! I apologise for asking more questions but can you recommend anywhere that explains granting a licence in more detail please? If I had it drawn up professionally how much is it likely to cost? And can you have a joint and several AST and a licence for the same house at the same time or shall I give up now?!!!

Preston
24-03-2010, 23:17 PM
I have looked at the link you gave and tried to follow the argument! I apologise for asking more questions but can you recommend anywhere that explains granting a licence in more detail please? If I had it drawn up professionally how much is it likely to cost?

I don't know I'm afraid, but my guess would be more than £250, probably significantly more.


And can you have a joint and several AST and a licence for the same house at the same time or shall I give up now?!!!

No, if you have rented the whole house on a joint tenancy you cannot then grant a licence to someone else of part of the house. You would need to have at least one room that is not included in the joint tenancy in relation to which you could grant a licence.

Its up to you whether you give up, but if you were to ask me whether I would attempt to grant a joint tenancy to a group of people one of whom is under 18 the answer would be no. Sorry!

jennywren
25-03-2010, 08:39 AM
Thank you for your help.

It is obviously going to cause a lot of problems for us and /or the other tenants whatever route we go down....I will abandon the idea completely!

Thanks again...advice much appreciated.