Business expert: When writing is the best policy
8th February 2019
Professional drafting of any legal agreement really is essential when dealing with any interest in land.
Without one, at best there is uncertainty and at worst you could end up in court. This is highlighted in a case where informal occupation of commercial premises gave rise to intractable and costly High Court proceedings.
The occupiers of three commercial units each claimed to have a right to some sort of tenancy. They argued that such a right derived from a 10-year tenancy that had been granted orally to one of them, a company. Alternatively, they submitted that the company had a periodic tenancy, either quarterly or monthly, to be inferred from the landlords' conduct in accepting regular rent.
Upon seeking summary judgment against the occupiers, the Court noted, by operation of Section 52 of the Law of Property Act 1925, a lease for a term of more than three years is void unless made by deed. The claim to a 10-year oral lease was therefore struck out.
The Court, however, noted that it is well established that a periodic tenancy can come into existence by inference where a person occupies land with the owner's consent and periodic rent is paid and accepted. There was evidence that the company had been conducting business from the premises for some years and that rent had been demanded and paid on a quarterly basis.
In these circumstances, the issue at hand could not be fairly disposed of summarily and would have to be considered at a full hearing. It was also arguable that the company had a business tenancy subject to, and protected by, Part II of the Landlord and Tenant Act 1954. The occupiers had raised serious issues to be tried and the Court issued an injunction to protect their position and to maintain the status quo pending trial.
The lesson to be learned is if you have an interest in land make sure it is in writing.
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