The Law Commission RENTING HOMES 2

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The Law Commission RENTING HOMES 2 The Law Commission Consultation Paper No 168 RENTING HOMES 2: CO-OCCUPATION, TRANSFER AND SUCCESSION A Consultation Paper London: TSO The Law Commission was set up by section 1 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law. The Law Commissioners are: The Honourable Mr Justice Toulson, Chairman Professor Hugh Beale QC Mr Stuart Bridge Professor Martin Partington CBE Judge Alan Wilkie QC The Secretary of the Law Commission is Mr Michael Sayers and its offices are at Conquest House, 37-38 John Street, Theobalds Road, London WC1N 2BQ. This consultation paper, completed on 22 August 2002, is circulated for comment and criticism only. It does not represent the final views of the Law Commission. The Law Commission would be grateful for comments on this consultation paper before 15 November 2002. Comments may be sent – By post to: Matthew Waddington Law Commission Conquest House 37-38 John Street Theobalds Road London WC1N 2BQ Tel: 020-7453-1208 Fax: 020-7453-1297 By e-mail to: [email protected] It would be helpful if, where possible, comments sent by post could also be sent on disk, or by e-mail to the above address, in any commonly used format. All responses to this Consultation Paper will be treated as public documents, and may be made available to third parties, unless the respondent specifically requests that a response be treated as confidential, in whole or in part. The text of this consultation paper is available on the Internet at: http://www.lawcom.gov.uk 83-250-04 THE LAW COMMISSION RENTING HOMES 2: CO-OCCUPATION, TRANSFER AND SUCCESSION CONTENTS Paragraph Page PART I: INTRODUCTION 1 Introduction 1.1 1 Scope of our proposals 1.3 1 Exclusions 1.4 1 The subordinate nature of this consultation paper 1.6 2 Issues addressed in this paper 1.20 4 The nature of the occupation agreement 1.24 5 Structure of the contract 1.25 6 The persons to whom the agreement will apply 1.31 6 The period of time over which the agreement will last 1.32 7 Regulatory impact 1.35 7 PART II: OBTAINING CONSENT 8 Introduction 2.1 8 Structure of consent requirements 2.5 8 The current position 2.5 8 Simplifying the options 2.16 11 Withholding consent: reasonableness in consent requirements 2.27 12 Special cases 2.34 13 Effect of transactions where necessary consents have not been obtained 2.45 15 Our approach 2.47 15 PART III: CO-OCCUPATION AGREEMENTS 20 Introduction 3.1 20 The current law of joint occupation 3.3 20 Our approach 3.9 21 Joint occupation agreements – creation 3.14 22 Joint occupation agreements – liability 3.20 23 Joint and several liability 3.21 23 New joint occupiers entering the agreement 3.29 24 A right to a joint agreement? 3.32 24 iii Paragraph Page Effects of applications to bring in new joint occupiers 3.51 27 Joint occupiers seeking to withdraw from the agreement 3.59 29 The formal route 3.62 29 The informal route 3.102 35 Non-contractual arrangements 3.113 38 Possession proceedings – proposals for protection 3.115 38 Restricting the landlord’s power to regulate non-contractual occupiers? 3.124 39 Amending the Family Law Act 1996 3.132 40 Other matters 3.139 42 PART IV: THE RIGHT TO TAKE IN LODGERS 43 Introduction 4.1 43 Type I agreements 4.3 43 Definition of “lodger” 4.6 43 A consent requirement? 4.20 46 Application to type II agreements 4.29 47 Should lodgers have a written agreement? 4.37 48 The effect of a lodger on the head landlord 4.42 48 PART V: SUB-OCCUPATION AGREEMENTS 50 Introduction 5.1 50 The current law 5.4 50 Statutory provisions 5.6 51 Our approach 5.9 52 Type I agreements 5.11 52 Sub-occupation agreements of part of the premises 5.12 52 Sub-occupation agreements of the whole of the premises 5.19 53 Type II agreements 5.30 55 The type and content of the sub-occupation agreement 5.34 55 The type of agreement 5.35 55 The terms of the sub-occupation agreement 5.47 57 Formalities 5.57 58 The effect on head landlords of authorised sub-occupation agreements 5.59 59 The resulting liabilities of landlords and sub-occupiers 5.67 60 PART VI: TRANSFERRING RIGHTS OF OCCUPATION 62 Introduction 6.1 62 Transfers 6.3 62 The current position 6.3 62 Our approach 6.5 63 Transfer of Rent Act statutory tenancies 6.12 63 iv Paragraph Page Special cases 6.14 64 A right to transfer by mutual exchange 6.15 64 Transfers to potential successors 6.42 68 Transfer by order of family courts 6.57 70 Effects of the transfer of the right to occupy to another 6.72 73 Consent 6.73 73 Method of transfer 6.75 73 Formalities 6.78 74 The position of parties after a transfer 6.82 74 The relationship between sub-occupation agreements and transfers 6.103 79 Transfers of the residual periods of long leases 6.113 81 PART VII: THE EFFECTS OF THE DEATH OF AN OCCUPIER 82 Introduction 7.1 82 The effect of the death of the occupier on the agreement 7.2 82 The current law 7.2 82 Our approach 7.6 83 Termination of the agreement 7.16 85 A statutory right of succession 7.42 88 The present position 7.48 89 Our provisional proposals 7.50 90 Who should have the right to succeed? 7.55 91 How many successions should be permitted? 7.71 93 What counts as a use of succession rights? 7.82 95 When can the status of successor be lost? 7.88 95 To what should successors succeed? 7.97 96 Should there be separate treatment of fixed-term agreements? 7.101 97 Should joint succession be possible? 7.102 97 How should disagreements about who should succeed be resolved? 7.105 98 An alternative approach? 7.110 98 Effects of succession on past and future rights and liabilities under the agreement 7.113 99 Survivorship in joint agreements 7.120 100 Statutory succession 7.122 100 Termination of the agreement on death 7.127 101 PART VIII: OCCUPATION AGREEMENTS AND THIRD PARTY RIGHTS: TRANSFERS OF LANDLORD’S RIGHTS AND OTHER MATTERS 103 Introduction 8.1 103 The need to use principles of land law? 8.4 104 v Paragraph Page Housing law and land law 8.10 105 The policy of land law 8.12 105 Statutory exceptions to the land registration scheme 8.16 106 Overriding interests 8.26 108 The impact on licences 8.30 109 Conclusion 8.37 110 Rent Act 1977 statutory tenancies 8.43 111 Other third party matters 8.47 112 Application of the land law approach to landlords’ successors in title 8.49 112 Registration of title 8.50 112 Informal leases 8.54 113 Mortgages 8.58 114 Landlords’ superior landlords 8.64 115 The responsibilities of the new landlord: the effects of assignment of the landlord’s reversion 8.74 117 The current position 8.75 118 Our approach 8.80 119 Other matters 8.88 120 Where occupiers can stop a landlord dealing with the landlord’s interest 8.105 122 Social landlords 8.107 123 Private sector landlords 8.112 124 PART IX: SUMMARY OF PROVISIONAL PROPOSALS AND CONSULTATION QUESTIONS 125 APPENDIX: THE EXISTING SUCCESSION RULES 141 The Rent Act 1977 A.2 141 Member of the family A.7 142 Residence A.8 142 Determining priority A.10 143 The Housing Act 1985 A.11 143 Member of the family A.13 143 Successor A.14 143 Determining priority A.16 144 The Housing Act 1988 A.18 144 The Housing (Scotland) Act 2001 A.24 145 Qualified persons A.26 146 Order of priority A.28 147 vi PART I INTRODUCTION INTRODUCTION 1.1 In the first consultation paper arising out of our current project – Renting Homes 1: Status and Security, Consultation Paper 162 (henceforth “CP 162”) – we set out our provisional proposals for the simplification of the law relating to the status and security of tenure of those with the right to occupy premises as a home, other than as freeholders or long leaseholders. At the heart of those proposals was the proposition that the granting of rights to occupy premises as a home should be seen primarily as a matter of contract between the parties. The terms of the contract would be shaped by principles of consumer law which would outlaw terms that were unfair. 1.2 We argued that this consumer approach would have two principal advantages: (1) The contract would contain a full statement of the legal rights and obligations of both landlords and occupiers under the occupation agreement. Particularly, if expressed in Plain English, we argued that this should assist both sides to the contract to understand their legal position more readily than they can at present. (2) This approach would be generally more suitable for this sector of the housing market. It would replace the complex and frequently incomprehensible combination of contract law, landlord and tenant (real property) law and statute law which had characterised the legal regulation of the rented sector of the housing market in the past. SCOPE OF OUR PROPOSALS 1.3 The scope of our proposals was deliberately set wide. We argued that it should cover the vast majority of arrangements whereby the right to occupy a home has been granted by a landlord to an occupier.
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