Lease or licence: exclusive possession for a term at a rent (Street v Mountford)
Marco owns a row of lock-up workshops in Coventry, England. He let one unit to Siobhan, a furniture restorer, under a written document headed 'Licence Agreement'. It gives Siobhan sole use of the unit from month to month for a monthly 'licence fee', and says expressly that the parties do not intend to create a tenancy. Marco provides no services, keeps no key and has reserved only a right to enter on notice to inspect and carry out repairs. No other person uses the unit.
Which of the following best describes Siobhan's legal position?
Choose one answer to see the reasoning.
Worked answer
Correct answer E: She is a tenant, because she has exclusive possession for a periodic term at a rent, whatever label the parties used.
THE RULE TO REMEMBER
Save in exceptional circumstances, an occupier granted exclusive possession for a fixed or periodic term at a rent is a tenant, regardless of how the agreement is labelled.
Lease or licence: exclusive possession for a term at a rent (Street v Mountford)
In Street v Mountford [1985] UKHL 4 the House of Lords held that, save in exceptional circumstances, the grant of exclusive possession for a term at a rent creates a tenancy, whatever the parties call it. Lord Templeman said that if an agreement satisfies the requirements of a tenancy, the parties cannot alter its effect by insisting they only created a licence. A term may be fixed or periodic. Siobhan has sole use of the unit, Marco provides no services and keeps no key, and she pays a monthly sum for a monthly term. Marco's reserved rights to enter to inspect and repair are limited and, as Lord Templeman explained, only emphasise that the occupier otherwise has exclusive possession. Nothing suggests an exceptional relationship such as service occupancy. Siobhan is therefore a monthly periodic tenant.
Why A is wrong: The parties' professed intention or label cannot turn a tenancy into a licence.
Why B is wrong: Whether an agreement is a lease or a licence depends on its substance, not on whether a deed was used.
Why C is wrong: A periodic term certain, such as month to month, satisfies the requirement of a term.
Why D is wrong: Limited reserved rights of entry to view and repair are consistent with, and emphasise, exclusive possession.
A little more practice done.
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