Part III         

co-occupation Agreements

Introduction

                    3.1               As noted at the outset of this paper, CP 162 was written on the deliberately simplistic assumption that the landlord would be entering into a contract granting the right to occupy premises with one person – the occupier. This was necessary to explain the basis of our proposed scheme.

                    3.2               In this part we consider:

                    3.3               At present, the rights of those who have entered agreements to share property are determined primarily by the principles of the law on joint tenancy and tenancy in common, found in land law. It is important to stress that these principles apply to all cases where there is co-ownership of land, not just to cases where land has been rented.[1] Furthermore, the principles do not apply to licensees who are sharing.

                    3.4               While it is not necessary for the purposes of this paper to give a full account of this law, a number of points should be noted.

                    3.5               First, an important distinction between joint tenancy and tenancy in common is that under joint tenancy a “right of survivorship” applies. This means that, on the death of one joint tenant, the survivor takes over the whole of interest in the property. This will often suit those who have lived together for many years, whether as husband and wife or in other long-term relationships. But where property has been acquired on the basis of sharply different contributions this may be unfair. Tenancy in common provides that property is held on undivided shares but, on the death of a co-owner, the interest holder has full testamentary powers to leave his or her share by will to another.

                    3.6               Secondly, another feature of joint tenancy (as opposed to tenancy in common)is that liability to meet the obligations under the joint tenancy agreement is, unless there is any provision to the contrary, “joint and several”. This means that each tenant is liable to meet in full the obligations under the agreement. This is so even where one tenant who was supposed to contribute to meeting those obligations fails to make the proper contribution, for example to payment of the rent.[2]

                    3.7               Thirdly, the law relating to joint tenancy limits the number of persons to whom a legal joint tenancy can be granted to four.[3] Any further joint tenants have only an equitable interest in the property. These are rules of long-standing, well understood by conveyancers and an integral part of the land registration requirements of HM Land Registry.

                    3.8               While these principles can be applied relatively easily in cases where the co-tenants are all named on the tenancy agreement, problems start to arise where premises are shared by a number of people, but only one is named on the agreement; or where one or more of the co-tenants leaves and the remaining ones wish to bring in new occupiers to take the place of those who have quit.

                    3.9               Our starting point is that we want to adapt those principles of the current law relating to co-ownership which are relevant to fit our proposed scheme of housing law. Our aim is to allow more flexibility by allowing a greater degree of access to and departure from a continuing co-occupation agreement, without affecting other co-occupiers.

                3.10               Thus we will seek to reproduce for the purpose of our scheme the principle of the joint and several liability of joint tenants, and – where relevant – survivorship.

                3.11               But we propose a new right whereby occupiers may seek to bring a new occupier into the agreement, with the consent of the landlord. This would replace the present legal position, which requires the original tenancy agreement to be assigned, or terminated and a new one created.[4] We regard this process as unnecessarily cumbersome and poorly understood.

                3.12               Turning to the termination of joint agreements, we propose that individual occupiers should have the right to terminate just their own interest in a joint agreement, rather than, as at present, requiring them to bring the whole agreement to an end when they wish to leave.

                3.13               We also consider whether there is any need to entrench in the occupation agreement a compulsory term giving occupiers the right to regulate who should live in their home on a non-contractual basis. And we make proposals for procedural changes to enhance the position of non-contractual occupiers in possession proceedings.

                3.14               We do not seek to disturb the current land law rule that the number of persons to whom a legal joint tenancy can be granted should be limited to four. In the context of the scheme we are proposing, however, we think that the distinction between legal and equitable interests involves a great deal of legal technicality, which serves only to confuse landlords and occupiers.

                3.15               We see no reason why, for the purpose of our scheme, when a landlord seeks to enter an occupation agreement under our proposed scheme they should be required to treat the first four occupiers named on the agreement any differently from any others.

                3.16               There are, of course, good reasons to limit the numbers who may live in any particular home, which derive from more general considerations of public health. But these can quite properly be regulated through the law relating to overcrowding.[5]

                3.17               We provisionally propose that there should be no limit to the number of people to whom joint rights of occupation may be granted, subject to the overall limit imposed by the laws against over-crowding.

                3.18               This provisional proposal would not prevent a landlord making an express stipulation limiting the total number of occupiers to fewer than would be permitted by rules on statutory overcrowding.

                3.19               The law on land registration would continue to require that the only first four named joint occupiers in agreement covered by our new scheme which counted as leases, rather than licences, could be registered at HM Land Registry. We have proposed that our scheme should apply to all agreements for periods of up to 21 years.[6] While currently none of the agreements covered by our new scheme would need to be registered, on the coming into force of the Land Registration Act 2002, leases for seven years or more will have to be registered and there will be voluntary registration for leases between three and seven years.[7] Nevertheless in the vast majority of cases, registration of occupation agreements will not be required as they would be for a period of less than three years.[8]

Joint occupation agreements – liability

                3.20               We suggested above that questions relating to the extent of the liabilities that arise under joint occupation agreements should be based by analogy on the current law of joint tenancy. This would mean that joint occupiers would have joint and several liability to meet the terms of the contract during the life of the agreement. In addition, when a joint occupier dies, the remaining joint occupiers should normally take over the rights and obligations under the agreement through the principle of survivorship.[9]

Joint and several liability

                3.21               Landlords frequently want to enter a contract granting the right to occupy premises as a home to more than one person. This may be for any number of reasons. A very practical one is that the market rent of a flat or house may be beyond the means of an individual occupier, but be within the collective means of a group.

                3.22               Under the present law relating to joint tenancy, each member of the group is normally liable to meet his or her obligations under the tenancy “jointly and severally”.[10] Thus each member of the group would be liable, individually, for the whole of the obligations imposed by the tenancy.

                3.23               Although an arrangement may have started on the basis that each joint occupier will make a contribution to the rent, should one or more occupiers fail to keep up their contribution, responsibility for the total rent will fall on the shoulders of the remaining joint occupiers.[11]

                3.24               In practice, while the original members of the group remain the same, there will not usually be a problem. But it should be clear that the group as a whole remains responsible for the payment of the whole rent and for meeting the other obligations of the agreement.

                3.25               Problems often arise where one of the group leaves the premises, and the occupiers are either unable to replace that person or under the terms of their agreement are prevented from doing so.[12] The question then arises: what rent should the remaining member(s) of the group be paying? And more generally, what is the scope of their liability under the contract? If there is joint and several liability under the contract, then the remaining party or parties to the contract remain liable for the payment of the whole rent, not just a proportion of it.

                3.26               In our view, the notion of joint and several liability is well established and understood in the residential rented sector. Landlords would certainly expect to impose it when entering agreements under our new scheme. This appears to us to be reasonable.

                3.27               Our judgement is that it would be right to make joint and several liability the normal contractual position that should apply if the agreement is silent on the point. That position can be achieved if there were a default term in all occupation agreements that joint occupiers would be liable jointly and severally. The parties will then be at liberty to depart from this.

                3.28             We provisionally propose that, where an occupation agreement is entered into by more than one occupier, there should be a default term that liability of the occupiers under that agreement should be on the joint and several basis.

                3.29               Next we consider whether there are circumstances in which a new person, not a party to the original joint agreement, might be able to be brought into the agreement, and if so how this might be achieved.

                3.30               Currently there is no statutory provision which entitles a new joint tenant to be brought into a joint tenancy agreement. It can therefore only be done with the consent both of the existing tenants and of the landlord.

                3.31               Under the present law of landlord and tenant, this can be achieved in two ways. Either there can be an assignment of the interest by the current tenant or tenants to the current tenant(s) plus the new tenant or tenants; or there can be a surrender of the old tenancy to the landlord and the grant by the landlord of a new tenancy to the new parties. While either route achieves the same result, there can be differences on the extent to which pre-existing liabilities are carried forward into the post-assignment/grant situation. We are anxious that our proposed scheme should not be bedevilled by any uncertainties that may arise from such a distinction.

                3.32               We have therefore considered whether there should be circumstances in which an occupier should be entitled to require the landlord to permit a new person to be added to the agreement as a joint occupier.

                3.33               A number of steps have already been taken in this direction:

                                            (1)             In 1996 the then Department of the Environment issued a circular,[13] now replaced by statutory guidance to which local authorities must “have regard”,[14] dealing with cases where there is a long term joint commitment to the home which is likely to continue. Situations envisaged included joint commitment by spouses, friends, or unpaid live-in carers. The guidance provides that local authorities “should normally” grant joint tenancies to such groups, subject to there being no adverse implications for good use of the stock. It also says local authorities should tell applicants of the availability of joint tenancies and give written reasons for any refusal to grant one.[15]

                                            (2)             The Housing Corporation’s “Assured Tenant’s Charter” states that assured tenants are entitled to know their landlord’s policy on the giving of joint tenancies.[16]

                                            (3)             The Housing (Scotland) Act 2001, section 11(5) goes further and creates a right to bring in a joint tenant. The existing tenant and a potential new joint tenant can apply jointly in writing to the landlord for the new person to be included as a new joint tenant. The incomer must either already live at the property as their only or principal home, or must intend to do so, but there is no requirement for any particular relationship to exist between the incomer and the current tenant.

The right is not an absolute one. The landlord can refuse the application. But the landlord must consent unless it has reasonable grounds not to. The Act does not define what would qualify as reasonable grounds. Like the rest of the Act the provision only applies to the social rented sector, not the private rented sector. It also applies to short Scottish secure tenancies.[17]

                3.34               In the light of these developments, we think it would be appropriate to propose that, at least in relation to type I agreements, it should be possible for an occupier to be able to apply to his or her landlord to request that a new person should be added as a joint occupier. If granted, the agreement to occupy should be expanded to include that person. The right should not be absolute, but conditional on the landlord giving consent.

                3.35               In accordance with our general approach, consent should not be unreasonably withheld. The assessment of reasonableness would include the risk of prejudice to the landlord from the possibility that the proposed new joint occupier might become the sole occupier, but this should be based on an objective assessment of risk, rather than an unreasonable fear. Such possibilities might be relevant where the landlord thinks the applicant does not have a need for the type of housing provided by the particular landlord; or, in the case of social housing, is seeking to exploit the right to joint occupation to jump the housing queue; or, more generally, is unlikely to be able to pay the rent.

                3.36               We also think that one of the factors that the landlord should take into account is whether the addition of one or more joint occupiers will raise the number of occupiers in the premises above that which the landlord regards as reasonable or desirable.

                3.37               We have asked ourselves whether the provision in the occupation agreement providing for the right to apply to bring a new joint occupier into the agreement should be a default term, which the parties can amend, or a compulsory one, which they cannot. We anticipate that were the term to be a default one only it would be so frequently contracted away as to render the proposed new right illusory. In view of the developments listed at paragraph 3.33 above, we have come to the provisional view that the term should be a compulsory one.

                3.38               We seek views on whether the right to apply to become a joint occupier should be an open one, so that any one can apply; or whether it should be limited to particular categories of people – for example, spouses or cohabitees (whether of different or the same gender); or, as in section 11(6) of the Housing (Scotland) Act 2001, those whose only or principal home is, or is intended to be, the property in question.

                3.39               We have also asked ourselves whether the proposed new right should apply to all types of agreement or be limited to type I agreements. We accept that there is an argument that the desire of occupiers to bring new parties into a home is something that will occur in all parts of the rented sector of the housing market. If we do not provide for it across the board, occupiers will in practice enter into arrangements with joint occupiers without any reference to the landlord. On the other hand it could be argued that the policy developments relating to joint occupiers (see paragraph 3.33 above) have occurred exclusively in the social rented sector, and that therefore these proposals should be similarly limited. It could also be argued that private landlords should be able to have greater control over the identity of their occupiers.[18]

                3.40               We provisionally propose that there should be a compulsory term in the agreement that an occupier should be able to apply to the landlord for permission to have someone else brought into the agreement as a new joint occupier. The landlord should be able to refuse consent unless it is unreasonable to do so.

                3.41               In this context, the assessment of reasonableness should take account of all relevant circumstances including in particular any prejudice to the landlord that might arise if the new person ended up as sole occupier.

                3.42               It should also take account of the numbers that would reside in the premises and the landlord’s interest in retaining control over those numbers.

                3.43               We invite views on whether the right to apply for a joint occupation agreement should be limited to particular categories of people. If so, we invite views on what those categories should be.

                3.44               We invite views on whether the provisional proposal should be limited to type I agreements only, or should apply to all agreements falling within our proposed scheme.

                3.45               If the landlord refuses consent and the occupier regards the refusal as unreasonable, we consider that it is necessary that the occupier should be able to apply to the county court to determine the question. The court would then have the power to determine the reasonableness or otherwise of the refusal of consent.

                3.46               If the court agrees that the refusal of consent was unreasonable, we see no benefit in suggesting that there should be further formalities to be completed before a new joint occupier is added to the agreement. We therefore propose that, in an appropriate case, the court should have power to order that a new occupier be added to the agreement, as the result of which the new occupier would become a co-occupier from the date of the order or any other date fixed by the court.[19] We think it right to ask whether the court should, at the same time, have a power to amend any of the other terms of the agreement.

                3.47               We provisionally propose that where the occupier regards the refusal of consent as unreasonable, he or she should have the right to apply to the county court for a determination of the matter.

                3.48               We further provisionally propose that, in appropriate cases where the landlord was held to have been unreasonable, the court should have the power to add a new occupier to the agreement.

                3.49               We invite views on whether the court should have any wider power to vary the terms of the agreement.

                3.50               In any event, the order would take effect as a variation of the original agreement. It would therefore entitle both the new and existing occupiers to seek a revised version of the agreement from the landlord, taking account of this variation.[20]

Effects of applications to bring in new joint occupiers

                3.51               If the landlord consents, or a court order is obtained, the person will become a joint occupier under the agreement. Their status will then, in respect of the future of the agreement, be the same as that of other joint occupiers. They will therefore have joint and several liability with the original occupier as against the landlord, as outlined above.

                3.52               There is a separate question as to whether the new joint occupier should take a joint part in rights and liabilities under the agreement in respect of the period before they entered the agreement.

                3.53               There is no obvious reason why they should obtain benefits. For instance it would not seem right that they should be able to sue, under the agreement, for the effects of disrepair during a time when they were not a party to the agreement.

                3.54               If they are not to obtain benefits, it would seem wrong for them to be saddled with liabilities arising before they entered the agreement. The most common example would be that they should not acquire joint liability for rent arrears built up by the original occupier. This will mean that they cannot be sued for damages or debt in relation to such defaults. That still leaves open the question of whether they can be evicted on the basis of the original occupier’s previous breach of contract.

                3.55               We do not think it is appropriate to allow the possibility of eviction in such circumstances. As joint occupiers cannot be evicted singly, this means the original occupier will effectively become free of the threat of eviction for their previous breaches (although they would still be liable, solely rather than jointly, for damages).

                3.56               The consequence of this, we believe, would be that it would generally be reasonable for a landlord to refuse consent to the addition of a new joint occupier to the agreement where the existing occupier(s) were in significant breach of the agreement at the time the application to join was made. The only exception would be where the breach was so minor that a court would not consider it reasonable to evict the occupiers for it anyway. If that were the case, the landlord would not have lost an effective remedy (that is, the ability to take possession proceedings in respect of the breach) by giving consent. We do not believe it is overly burdensome to expect landlords to check for such breaches before deciding whether to give consent, given that part of good management is to check that occupiers are observing the terms of their agreement on an ongoing basis anyway.

                3.57               If the landlord does not consent, and a court order that the refusal was unreasonable is not obtained, the person will not become a joint occupier. They might of course still move in to the property, but this will give them no contractual rights as against the landlord. Nor will it in itself give them any contract with the occupier. Their status will therefore be the same as other non-contracting occupiers, as outlined below at paragraphs 3.113 to 3.140. This will not directly affect the landlord. In fact they may commonly already have had this status before applying to become joint occupiers, for instance as the co-habitee or adult child of the occupier.[21] If they wish to enter into a contract to occupy the property, then they will have to do so with the occupier, rather than the landlord. They will then become the occupier’s lodgers or sub-occupiers, as described in Parts IV and V below.

                3.58               If a failed applicant for joint occupation does move in, and the landlord starts knowingly to accept rent from them, this may alter the position. It will be a question of fact, for the court to decide in the last resort in any dispute, as to whether the landlord has thereby entered a new agreement with them, and whether it is joint with the original occupier (who may or may not have abandoned). It will be much harder for the failed applicant to demonstrate that the landlord has accepted a joint agreement than it will be in other cases where the occupier is replaced by the new person. The landlord will be able more easily to argue their behaviour is consistent with the continuation of the original agreement. This is especially so where the failed applicant is the spouse of the occupier, who thereby has a right to tender rent on behalf of the occupier, as described below at paragraph 3.134.

                3.59               There may be many reasons why those who have jointly entered an agreement giving them the right to occupy a dwelling find that the arrangements cannot continue as originally envisaged. A couple may fall out and decide to live apart; a group of friends may find they are not getting on as well as they anticipated; one joint occupier may receive an offer of employment in another part of the country, or abroad. It is important that our proposed scheme can cope with these common situations in a clear and flexible way that balances the interests of the occupiers and the landlord better than the current law.[22]

                3.60               We suggest that, in practice, a joint occupier who wants to withdraw from a joint agreement will, broadly, do so in one of two ways. Either he or she will make a decision to leave by taking the proper steps and following any formalities required; or he or she will simply depart without letting anyone know what his or her intentions are. We accept that there will be many withdrawals that fall between these two extremes.

                3.61               We discuss first what the formal route of withdrawing might be. We then consider the situation when a person withdraws without following the formal route.[23]

The formal route

                3.62             There are two key issues that need consideration:

                3.63             In CP 162, we proposed that there should be a type I agreement which would confer substantial security of tenure on an occupier. We anticipated that this type of agreement would be used primarily by social landlords. We also thought there would be little point in there being a type I agreement for a fixed term, rather than on a periodic basis,[24] and we do not consider the possibility of a fixed term type I agreement further here.

                3.64               In CP 162 we considered the principal ways in which an occupier might bring an agreement to an end, formally, and proposed that the present ability of tenants to give notice should be reproduced in modified form.[25]

                3.65               There is however one particular problem currently associated with the use of a notice to quit by a joint tenant. It is settled law that a notice to quit served by one joint tenant operates to bring the whole tenancy to an end, regardless of the wishes or indeed the knowledge of any other joint tenant.[26] It appears that attempts to attenuate the effect of a notice to quit served by a single joint tenant have so far met with failure.[27] It can be argued that the ability of one joint tenant to end the tenancy without the knowledge of the other, and possibly with the encouragement of the landlord, can cause injustice and hardship.

                3.66               We acknowledge that the current law is commonly relied on, particularly by social landlords where a relationship between two joint tenants has broken down and one joint tenant leaves. Often this is in family sized property. The departing tenant takes the children, leaving the remaining tenant effectively under-occupying the premises. The landlord may agree to re-house the departing tenant in the original property (or elsewhere) only if the departing tenant gives notice to quit.[28] The landlord can then regain possession of the original property because the whole joint tenancy has been ended. Effectively the use of a tenant’s notice to quit operates as a way around the remaining tenant’s security of tenure, as the current repossession grounds only allow for the possibility of obtaining an order for possession on the basis of under-occupation where the tenant has succeeded to the tenancy.

                3.67               We want to ensure that our scheme does not prevent sensible arrangements being made to take care of the various circumstances in which one joint occupier may leave. But we are not convinced that adopting the present rules relating to a joint tenant’s notice to quit achieves this objective.

                3.68               In our view, joint occupiers should be able to withdraw from a joint occupation agreement by serving notice, but without artificially destroying the whole occupation agreement. At the same time, there is an argument that provision should be made to enable landlords to seek repossession in situations where the occupier(s) who have been left behind are not appropriate[29] to the home in question.

                3.69               We are attracted by the provisions of the Housing (Scotland) Act 2001 relating to the right of joint tenants to extract themselves from their agreement. Under section 13 of that Act a joint occupier has a right to serve notice ending only his or her own interest, not the whole tenancy.[30]

                3.70               It may be argued that this could prejudice the remaining occupiers who may find themselves liable on their own for the full rent. However, this is less prejudicial than finding themselves evicted without warning. In any event, the effect of one joint occupier leaving could also be mitigated by provisions which enable a new occupier to be brought into the premises, either as a new joint occupier or as a lodger.[31] Broadly, we think that it is reasonable to expect occupiers to realise that if they jointly take on a property which they cannot afford singly then they may either have to find somewhere cheaper to live if one of the joint occupiers quits or to find another person to join them.

                3.71               We certainly think that the remaining occupiers should be put on notice of the departing occupier’s intention by requiring that person to give a copy of their notice to the remaining occupiers. Alternatively it might be simpler to require the landlord to send a copy of the notice to the remaining occupiers. In either case, the notice would warn the remaining occupiers that they may need to take steps to protect their position in the home.

                3.72               This still leaves the question of prejudice to the landlord. A social landlord with a limited stock of housing designed to meet housing need might be left with an occupier who does not have the degree of housing need normally required for someone to occupy that property, and thus to whom the landlord would not offer an occupation agreement if the occupier intended to live there on his or her own. If the remaining occupier is unable to continue to pay rent (whether by means of housing benefit or otherwise) on too large a property for his or her needs, then the landlord could repossess the property on the basis of rent arrears, in an appropriate case.

                3.73               The current law provides a solution for the landlord in this situation – the departing joint tenant issuing a notice to quit – but it is an artificial one. One irrational side effect is that it gives the social landlord an absolute right to repossess against the remaining occupier, without regard to reasonableness and with no obligation to find him or her alternative suitable accommodation.

                3.74               If it is necessary to allow social landlords to repossess properties in this situation, then we provisionally consider that it would be better to do so directly by means of what we have, in CP 162, called the estate management circumstances justifying repossession.[32]

                3.75               In CP 162, we invited views on whether these circumstances should, for the type I tenancy, broadly follow the model of assured tenancies or the model of secure tenancies. In the first, there is a broad power to gain possession, so long as suitable alternative accommodation is provided. In the second, there is a defined list of estate management reasons set out expressly in the legislation (and again subject to suitable alternative accommodation).

                3.76               If the former option is to be preferred, no special provision need be made. After the departure of the outgoing joint occupier or occupiers, the landlord could use the broad estate management power to move the under-occupying remaining occupier to alternative accommodation.

                3.77               If the latter option is adopted, a new specific circumstance justifying repossession could be included in the list, on the model of that which already exists where a statutory successor succeeds to too large a property.[33]

                3.78               However, it is not clear that such a basis for repossession would be desirable. On the one hand, it assists the social housing landlord to better meet some of its objectives, in securing best use of the landlord’s stock for housing purposes. On the other hand, by doing so at the expense of the security of the occupier, it reduces the level of security of tenure that is the foundation of the type I agreement (and thus may be detrimental to others of the landlords’ objectives, such as the maintenance of a mature, mixed community). Here, again, there is a conflict between the rights of the individual occupier and wider housing management priorities.

                3.79               We therefore consider it appropriate to ask for views on whether our provisional proposal that a joint tenant should be able to give notice without bringing the agreement to an end should be balanced with an extension to the estate management powers of social landlords to allow repossession, with the provision of suitable alternative accommodation, where the withdrawal of one or more joint occupiers renders the property unsuitable for the remaining joint occupier or occupiers.

                3.80               By way of supplementary questions, we also ask, first, whether any such proceedings should be taken within a fixed time period, and if so, what that period should be; second, whether there should be a period before which such proceedings should not be able to be started, during which the remaining occupier(s) could seek to find a lodger or a new joint occupier.

                3.81               It would of course be the case that, whichever route was chosen, an order for possession would be made only if the court found that it was reasonable to make the order.

                3.82               We provisionally propose that a joint occupier under a type I agreement should be able to terminate his or her interest in the agreement by written notice to the landlord without this bringing the whole agreement to an end.

                3.83               We further provisionally propose that a copy of the notice should be served on the remaining occupiers.

                3.84               We invite views as to whether the copy should be served by the occupier seeking to withdraw from the premises, or by the landlord.

                3.85               We invite views on whether, following the departure of one or more joint occupier or occupiers, the landlord of a type I tenancy should be able to seek repossession of the home, subject to reasonableness and the provision of suitable alternative accommodation, if the home is no longer suitable for occupation by the remaining occupier or joint occupiers.

                3.86               If there is to be a special ground of possession, we also invite views on whether the landlord should be required to make use of it within any defined time limit. If so, what should the time limit be? Should there be a period before which the landlord should not be able to take proceedings, to enable the remaining occupiers find a lodger or a replacement joint occupier?

                3.87               In the case of a type II periodic agreement, the issues are less acute, not least because the type II agreement does not attract any great degree of security of tenure.

                3.88               We think that a joint occupier who wishes to withdraw from a periodic joint occupation agreement should be able to issue a notice, on the same basis as with a type I agreement. In other words, it will have the effect of determining his or her obligations under the agreement, but will not bring the whole agreement to an end.

                3.89               The remaining occupier may then seek to bring an additional person into the premises, either through seeking to take in a lodger or by agreement with the landlord to grant a sub-occupation agreement of part of the premises, or – with consent – by bringing in a new joint occupier.[34]

                3.90               However, given the lack of security of tenure, we do not think that there is the same need to confer a special opportunity for the landlord to seek an order for possession. The landlord may achieve this relatively easily by the “notice-only” procedure which attaches to the type II agreement.[35]

                3.91               In any event, as we anticipate that the primary user of the type II agreement will be the private rented sector, the landlord will be more concerned with receiving payment of the rent, than meeting housing need for social purposes.

                3.92               We provisionally propose that a joint occupier under a type II agreement, should be able by written notice to the landlord to determine his or her interest in the agreement without this bringing the whole agreement to an end.

                3.93               In CP 162 we expressed the hope that landlords might be encouraged to “write-up” type II agreements and confer, through the terms of the agreement, a greater degree of security of tenure than would attach to a type II periodic agreement.

                3.94               We also envisaged that, in such a fixed-term agreement, it would be possible to insert a clause analogous to a break clause in a fixed-term commercial lease.

                3.95               Where a joint fixed term occupation agreement is made, with no break clause, all the joint occupiers will remain jointly and severally liable under the agreement for the term of the agreement. Should one of the joint occupiers wish or indeed need to withdraw from the agreement, this can only be achieved by direct negotiation with the landlord.

                3.96               In CP 162 we suggested that it should be possible for landlords and occupiers to agree to bring a fixed-term agreement to an end, by a process analogous to surrender which applies in the context of the law of landlord and tenant. However we proposed that the current requirement that any express surrender be by deed should be replaced by a simple requirement of writing. In the context of a joint agreement, this could only be achieved where all the joint occupiers co-operate and agree to surrender their rights to occupy.[36]

                3.97               Where a fixed-term agreement contains a break clause, we proposed in CP 162 that the occupier should be able to take advantage of any such break clause by giving notice to the landlord on a similar basis to the occupier’s notice to terminate a periodic agreement.[37] It would be possible for all the joint occupiers to act collectively in accordance with such a break clause and thereby terminate the agreement.

                3.98               It would be possible for the landlord and joint occupiers to agree on the extent to which the joint occupiers would, individually, have access to the break clause. By analogy with our treatment of joint tenants under a type I tenancy, however, there is an argument that, at least as a default position, each joint occupier should individually have access to the break clause, which would then have the effect of terminating only his or her obligations under the agreement. It would not bring the entire agreement to an end.

                3.99               The remaining occupier(s) would still have the responsibilities and liabilities under the agreement. He or she would also be able to take advantage of the right to take in a lodger or to grant a sub-occupation agreement of the premises, as may be appropriate and in the latter case as agreed with the landlord.[38]

             3.100               We provisionally propose that it should be a default term of fixed term type II agreements with a break clause that where one of a number of joint occupiers exercises the break clause, it will have the effect of only terminating his or her rights under the agreement and will not bring the entire agreement to an end. The remaining occupiers will be entitled to remain in occupation, having assumed all the rights and obligations under the agreement.

             3.101               On the basis that a former joint occupier has left the premises having issued the appropriate notice, it would be clear that he or she would remain jointly legally liable for any liabilities incurred until the date on which the notice became effective, and would similarly be entitled jointly to the benefit of the agreement in respect of that period. From that date he or she would not be subject to any further liabilities, or benefit from any rights under the agreement.

             3.102               The discussion above deals with the situation where a joint occupier desires to withdraw from the joint agreement, and has followed the notice formalities which satisfy his or her wish to be freed from the agreement, where permitted by the terms of the agreement

             3.103               However, in many cases an occupier will withdraw from the agreement without completing any formalities. While the withdrawing occupier will remain legally liable jointly for the rent and for the other obligations under the agreement, this will be little comfort to either the landlord or the remaining occupiers(s) if he or she cannot be traced or is not worth proceeding against.

             3.104               In CP 162 we suggested the adoption of a procedure for landlords to take possession after serving notice to check if the occupier has treated the agreement as terminated by abandonment, based on section 17 of the Housing (Scotland) Act 2001.[39] Section 20 of that Act provides for a similar procedure for the landlord to use where it appears a joint tenant has abandoned the premises.[40] There are some differences from the procedure for sole tenants, presumably to reflect the different position where there are other tenants still in occupation and so there will be less obvious evidence of abandonment.[41]

             3.105               We think that this procedure should be adapted to the situation under our new scheme in England and Wales where a joint occupier has withdrawn from the premises and effectively disappeared. Of course, it will only be effective where the occupation agreement contains a clause requiring the occupier to occupy the premises. The key feature of the procedure should be that it should apply where it appears that the occupier does not intend to remain bound by his or her obligations under the agreement. As there are greater difficulties in establishing this where the property has not been completely abandoned by all the occupiers, we believe we should reproduce the part of the Scottish provision whereby two warning notices are required.

             3.106               We provisionally propose that the procedure whereby a landlord may seek to terminate an occupation agreement, where it appears that the premises have been abandoned, should also apply where a joint occupier has abandoned the premises. If the first notice produces no response, the landlord should be required to serve a second notice giving the occupier another eight weeks in which to apply to court to challenge the finding of abandonment.

             3.107               The procedure would not terminate the whole of the agreement, but would only terminate the departed joint occupier’s interest in the agreement. It follows that the remaining joint occupiers would continue to be responsible for the obligations under the agreement. In order that they may plan for this, the landlord should also give the remaining occupiers notice of their intention to show that the departed occupier’s interest has been abandoned.

             3.108               It is hard to predict the circumstances in which a landlord might wish to take advantage of the abandonment procedure. However one consequence of the process being completed is that the landlord and the remaining occupiers would then be clear that the departed occupier was no longer a party to the agreement. This might be the precursor to a social landlord bringing proceedings for possession against the remaining occupiers on the possible estate management basis discussed above.[42]

             3.109               We provisionally propose that, when the landlord intends to use the abandonment procedure against a joint occupier who has withdrawn from the premises, the landlord should also notify the other joint occupiers of this intention.

             3.110               We further provisionally propose that where a landlord has used the proposed abandonment procedure against a departed occupier, the remaining joint occupiers would continue to be jointly and severally bound by the agreement in the same way as if the removed occupier had given notice under a notice clause.

             3.111               Departed occupiers may react in four main ways to the initial warning notice:

             3.112               We provisionally propose that, where there is a response from the departed joint occupier to the initial notice, which is equivocal as to whether the occupier has or has not abandoned, there should be a procedure to enable the landlord to obtain an declaration from the court. If satisfied that the occupier has demonstrated an intention no longer to accept being bound by the agreement, the court should declare that the agreement has terminated in respect of that occupier.

             3.113               Where an occupier decides to permit others to live in his dwelling on a gratuitous basis, such arrangements will fall outside the scope of our scheme as there will be no contract which will fall within the scheme.[43]

             3.114               There are, nevertheless, three issues which we think need consideration in this context:

             3.115               In CP 162 we provisionally proposed, at paragraph 12.27, that in exercising its discretion in possession proceedings, the court should be explicitly required to consider various factors including the effects of making an order for possession on the occupier’s household. This is clearly necessary where an entire household may be evicted because of the activities of one of its members.

             3.116               We have noted that section 14(3) of the Housing (Scotland) Act 2001 imposes a specific duty on a landlord to investigate before starting possession proceedings whether there are “qualifying occupiers” in residence. These are defined, by section 14(6), as other people occupying the property as their only or principal home who are the tenant’s adult family members or lawful sub-tenants or sharers. The landlord must serve copies of any notice seeking possession on anyone found, and those people then have a right to be joined as parties to any subsequent proceedings.

             3.117               In mortgage possession proceedings, procedural rules which have a similar effect apply in England and Wales.[44] The mortgagee must serve a notice at the premises 14 days before the hearing, addressed to any occupiers there, that proceedings against the mortgagor are being taken. The occupiers may apply to be joined as defendants, at the court’s discretion. [45] Similarly in landlord and tenant cases if the landlord knows of anyone who may be entitled to claim relief against forfeiture as an under-lessee, the particulars of claim must be served on that person.[46]

             3.118               In order to ensure that there is no unfairness to non-contracting occupiers, we think that a similar principle should be attached to our proposed scheme.

             3.119               Any requirement to notify non-contractual occupiers will only be necessary in cases where the court must exercise its discretion before granting an order of possession. We invite views as to whether the principle should apply to all discretionary cases, or be limited to possession proceedings relating to type I agreements.

             3.120               We provisionally propose that our new scheme should include rights for non-contracting occupiers to be notified of any possession proceedings.

             3.121               We invite views on whether the procedure for so doing should be modelled on the rights of “qualifying occupiers” in the Housing (Scotland) Act 2001, sections 14 and 15, or to the provisions relating to mortgage possession hearings in the Civil Procedure Rules 1998.

             3.122               We further invite views as to whether the people who must be notified should also have a right to be joined as defendants, or should only be able to do so at the court’s discretion.

             3.123               We further invite views as to whether these notice requirements should attach to all discretionary possession proceedings or only those which arise from type I agreements.

             3.124               At present, some rights to succession and assignment depend on the successor living in the property as their only or principal home.[47] At least in theory, therefore, such entitlements could be thwarted if the landlord could prevent the occupier moving into the home those who might claim these entitlements.

             3.125               Traditional covenants against assignment and sub-letting also cover “parting with possession.” This could suggest that no “parting with possession” was to be permitted. Some private landlords go further and use clauses providing that the property should only be used as a home for named people, prohibiting occupation by persons under a particular age, or even restricting overnight guests.

             3.126               Such provisions may or may not be regarded as “unfair” under the Unfair Terms in Consumer Contracts Regulations 1999, depending on the circumstances. The Office of Fair Trading suggest at group 18(h) in their guidance[48] that restrictions will be unfair if they are not required to protect the landlord’s legitimate interests. They state that terms against overnight guests are an example of a potentially unreasonable prohibition.

             3.127               We invite views as to whether there are – currently or potentially – significant problems arising from attempts by landlords to regulate those who may live with the occupier on a non-contracting basis.

             3.128               If there are such problems, it would be possible to move away from the current position, and instead permit the occupier to have primary control over who should be able to occupy the premises on a non-contractual basis.

             3.129               This could be achieved in one of two ways.

                                            (2)             Alternatively, the agreement might contain a compulsory term guaranteeing the occupier’s right to do so.[49]

In each case, the term would be subject to the premises not thereby being rendered statutorily overcrowded, and to the contracting occupier being responsible for any anti-social behaviour by non-contractual occupiers.

             3.130               At least in the absence of evidence of abuse by landlords, we are not at this stage persuaded that a compulsory term is warranted.

             3.131               We provisionally propose that the occupation agreement should contain a default term which allowed the occupier the freedom to control who would occupy the premises on a non-contractual basis, with any departures from the default being regulated under the Unfair Terms in Consumer Contracts Regulations 1999.

             3.132               Nothing in our proposals seeks to alter the effect of the “matrimonial home rights” contained in Family Law Act 1996, section 30.[50] These provisions are mainly concerned with regulating housing rights as between spouses who are occupiers, rather than as between the occupiers and the landlord. Nevertheless, they include an important right in section 30(3), which will need to be preserved, to have payments of rent by the spouse who is not a tenant treated as made on behalf of the other spouse who is the tenant. There is also the right in section 30(4) to have a non-tenant spouse’s occupation of the home treated as occupation by the tenant spouse for the purposes of housing legislation.[51] Under section 35(13) or section 36(13), former spouses and current or former cohabitants who are granted an occupation order also obtain these matrimonial home rights.

             3.133               We provisionally propose that Family Law Act 1996, section 30 be amended to refer to occupiers under our new scheme.

             3.134               Current housing legislation makes provision for those with “matrimonial home rights” in connection with the adjournment, stay, suspension or postponement of possession proceedings.[52] These provisions are commonly interpreted as meaning that the non-tenant spouse should have the same rights as the tenant, and even that the non-tenant spouse should be able to defend against the making of a possession order in the first place.[53] In fact all that the provisions do, on the face of the statute, is to preserve the rights in section 30 of the Family Law Act 1996 to occupy and tender rent. They do not create a right to make applications or put forward defences. If it were not for these housing law provisions those limited matrimonial home rights would terminate, under section 30(8)(b) of the Family Law Act 1996, on the making of a possession order.[54] The housing law provisions allow those matrimonial home rights to continue after the possession order “in relation to, or in connection with any adjournment, stay, suspension or postponement”. The result is that, for example, rent paid by the non-tenant spouse counts as compliance with the terms of the suspension of a possession order or the adjournment of proceedings. In CP 162, we provisionally suggested that the agreement should not end until the execution of a possession order.[55] In that case we believe the matrimonial home rights should continue to the same point.

             3.135               Nonetheless we feel that the position should in fact be amended to reflect the common misunderstanding. Above, we invited views as to whether occupiers, who are not party to the agreement and who do not have matrimonial home rights, should have a right to be joined in any repossession proceedings. We think the argument in favour of joining those with matrimonial home rights is even stronger.

             3.136               We provisionally propose that, in relation to cases where the occupier obtains an adjournment, stay, suspension or postponement of a possession order, a partner’s matrimonial home rights to occupy and tender rent should be preserved until the possession order is enforced.

             3.137               We further provisionally propose that the current law should be expanded so that those with matrimonial home rights are given the right to be joined to possession proceedings with the same rights as the occupier to defend themselves against the making of a possession order and to apply after a possession order for any adjournment, stay, suspension or postponement.

             3.138               We should note that occupation orders are only available between spouses or opposite-sex couples, not between same-sex couples. If those with occupation orders are given preferential treatment in terms of possession proceedings, as compared with other non-contracting occupiers, this will not be consistent with our view of same-sex relationships in the context of statutory succession.[56] However, it is not appropriate for this project to seek to interfere with the basis on which occupation orders are made in family law.[57] Rather the existence of this issue adds to the attraction of the option, suggested above at paragraphs 3.130 to 3.123, of allowing all non-contracting occupiers to join in possession proceedings.

Other matters

             3.139               There are other respects in which non-contractual occupiers are protected by the law. Examples include the following.

             3.140               We do not propose any alteration to these rules.