An equitable lease is created when one person contracts with another to assign or create a lease, in circumstances where the lease should be created by deed or registered. For most purposes, the lessee will be treated in litigation as if the formalities had been observed, under the equitable doctrine of ‘equity sees as done that which ought to be done’. However, if the lessee wished to assign the lease to another (see: Assignment land and property), the presence of covenants (see: Covenant) does not bind the assignee in the same way as for a legal lease.
An agreement for the grant of an interest in land on terms that correspond to a legal lease but do not comply with the necessary formal requirements of a legal lease.
An agreement for the grant of a legal lease interest on terms that correspond to a legal lease but do not meet the formal requirements of a legal lease. For example, if L purports to grant T a seven-year lease but the transaction is performed by a simple written lease grant contract rather than a deed, the court may enforce the lease grant contract between the parties. This is consistent with the idea that “equity considers as done that which ought to be done” (see maxims of equity) (Walsh v Lonsdale (1820) 21 Ch D 9). T’s rights under the contract could also be recognised as an estate contract, binding any third person who acquires L’s stake in the land.
An equitable lease is a legal concept that arises when a property owner grants another party the right to possess and use the property for a specified period, even though a formal lease agreement has not been executed. It is recognised in equity, providing certain protections and obligations similar to those of a formal lease.
An equitable lease can be created through various means, such as an oral agreement, conduct of the parties, or by operation of law. For example, if a property owner allows someone to occupy their property in exchange for rent payments, an equitable lease may be established even without a written lease agreement.
An equitable lease imposes rights and obligations similar to those of a formal lease agreement. These may include:
- The right to possess and use the property for the agreed-upon period.
- The obligation to pay rent or other consideration in exchange for the use of the property.
- Responsibilities for maintenance, repairs, and compliance with lease terms.
- Protections against eviction or arbitrary termination of the lease by the landlord.
Yes, an equitable lease is enforceable in court, and parties to an equitable lease have legal remedies available to them to enforce their rights or seek redress for breaches of the lease terms. However, enforcement may be subject to the specific circumstances of the case and applicable legal principles.
An equitable lease differs from a formal lease agreement primarily in its formality and legal recognition. While a formal lease is typically documented in writing and governed by specific statutory provisions, an equitable lease may be established through less formal means and is recognised based on equitable principles rather than strict legal requirements.
An equitable lease can be terminated through various means, including mutual agreement between the parties, expiration of the agreed-upon lease term, or by operation of law. Additionally, certain circumstances such as non-payment of rent or breach of lease terms may give rise to termination rights for the landlord.
If a dispute arises over an equitable lease, the parties involved may seek resolution through negotiation, mediation, or by pursuing legal action in court. Courts will consider the circumstances surrounding the creation and enforcement of the equitable lease and may issue rulings based on principles of equity and fairness.
In some cases, an equitable lease may be assigned or sublet by the tenant, subject to any restrictions or conditions outlined in the lease agreement or imposed by law. However, the ability to assign or sublet an equitable lease may depend on the specific terms of the arrangement and applicable legal principles.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 29th March, 2024.
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