Business, Legal & Accounting Glossary
If a person grants a Lease of his land, then grants another lease to another person, what does the second Lessee get? If the second lease is longer than the first, he gets a right to take possession at some point in the future, but what rights does he have before then? Doctrinally a second lease that is shorter than the first is only a lease of the reversion; it is not (sorry about the terminology) a reversionary lease. A lease of the reversion allows the lessee to exercise the powers of the landlord, for what that is worth. Concurrent leases are leases of the reversion, each typically one day longer than the last. They are, or rather were, a device used to grant multiple Mortgages of the same land. If a freeholder granted a mortgage, he did this by granting a Demise (a lease, in effect) to the lender. This gave the lender his security over the land. However, if the freeholder wanted to create a mortgage over land that was already leased to a tenant, he could not do this by granting another ordinary lease, as the tenant already had a right of occupation. However, by granting a concurrent lease one day longer than the tenant’s lease, he gave the lender some form of security, which took the form of a right to exercise the landowner’s powers to collect rent from the tenant.
The use of concurrent leases to protect loans is relatively unusual these days; however, there are provisions in the landlord and tenant covenants act (1995) to grant concurrent leases to protect former tenants from the defaults of their assignees. See overriding lease for more details.
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This glossary post was last updated: 5th April, 2020 | 54 Views.