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You are here: BAILII >> Databases >> The Law Commission >> Renting Homes (Report) [2003] EWLC 284(14) (15 November 2003)
URL: http://www.bailii.org/ew/other/EWLC/2003/284(14).html
Cite as: [2003] EWLC 284(14)

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PART XIV

SPECIFIC ISSUES 5: THE EFFECT OF DEATH ON THE OCCUPATION AGREEMENT

Introduction

Succession rights have been an integral feature of housing law for a long time. As usual in housing law, complexity has arisen:

(1) through the proliferation of statutory schemes, each of which provided different succession rights;

(2) through the interface of contract, property and statutory provisions which suggest different legal approaches to the impact of death on occupation agreements and succession; and

(3) as a result of statutory silence on a number of issues which are significant in practice.

In making recommendations for reforming the law, we want to provide a single and coherent statement of the impact of death upon the occupation agreement which sets out a clear system of succession rights that will apply to both types of agreement.

Clarity matters to all those involved.

(1) Landlords will be concerned that the income flow from the property is not interrupted, that they minimise voids and that they have sufficient information about what is happening in the property to enable them to manage it.

(2) The occupier will be concerned to protect the position of his or her partner and/or family following his or her death.

(3) Other people who continue to live in premises following the death of the occupier need to know their status and, where necessary, have sufficient time to make alternative living arrangements.

(4) The beneficiaries of the estate of a deceased occupier will not want the estate depleted by rent being paid out for what may be an empty property or property occupied by others who should be paying rent rather than the estate.

We have also taken this opportunity to recommend measures to remedy certain injustices which have emerged as more fluid family formations have evolved. We have sought to reflect the contemporary social reality of the family in a manner that is consistent with the Human Rights Act 1998. Thus we recommend extending the definition of spouse found in the Housing Act 1985 to include relationships that have the characteristics of husband and wife, even where both partners are of the same sex or where either party has undergone gender reassignment.

We also want to recognise demands placed upon relatives or others who look after elderly, ill or disabled people. It is often easier to provide the level of care required if the carer moves into the home of the vulnerable person. Many carers find it impossible to maintain their own home if they do this. We should recognise the reality of the sacrifices that such people make in order to provide care and to protect the position of unpaid carers who give up their own home to provide care for another in that other person's home.

We are concerned that the current rather limited succession regime of the Housing Act 1985 precludes succession to a spouse being followed by a succession to a member of the family, even if that person has lived with the tenant all his or her life. We want our scheme to recognise the possibility of passing the agreement on to one's children, while ensuring that this is done within sensible constraints of estate management. We believe that the scheme should be able to protect the normal expectations of a family within rented housing, that the partner and then a child of the family, if he or she has not set up home elsewhere, should be able to succeed to the occupation agreement.

We believe that clarity in succession is best served by providing a strictly limited number of ways by which an agreement can be passed to another person following the death of the contractual occupier.

To achieve this, we recommend that our scheme of statutory succession should be the only way that someone can succeed to an occupation agreement. This is subject to two exceptions:

(1) where there is a surviving joint occupier, to whom the right to occupy passes by operation of the principle of survivorship; or

(2) where there is a fixed term agreement, which, if the contract specifically provides for it, can be transmitted by will or intestacy.

Estate management ground for possession

Whilst concerned to produce a modern and clear system of succession rights, we must also take account of the need for social landlords to be able to use their housing stock efficiently and for the social purposes for which it was provided. We therefore recommend that social landlords should have available to them a ground for seeking possession based on under-occupation of the home following the death of the occupier.

The ground will be based on the current ground 16 of Schedule 2 to the Housing Act 1985. It will only be available where the successor is not a priority successor.

The rest of this Part considers four topics:

(1) the position where an occupier dies, leaving no other joint occupier or statutory successor;

(2) joint occupiers and the principle of survivorship;

(3) the statutory succession scheme; and

(4) the position where an occupier under a fixed-term agreement dies.

The position where an occupier dies, leaving no other joint occupier or statutory successor

We recommend that both type I and periodic type II agreements not held jointly and where there is no statutory successor should terminate automatically on the death of the contractual occupier.

Current common law rules on the effect of death on a tenancy are extremely complex, and do not reflect ordinary people's expectations of what is fair or sensible. We want our scheme to reflect reality. Most occupiers have modest estates; few make wills. Automatic termination will provide certainty. This will be advantageous both for the estate of the deceased occupier and for the landlord. It will also avoid the procedural rigmarole of serving notice on the executors or Public Trustee that landlords are obliged to comply with at present.

We acknowledge that this approach could cause hardship to both landlords and the family of occupiers if the automatic termination of the agreement were to occur instantaneously with death. The landlord may not know of the death and so unfairly lose income, as he or she will not know the premises are available for reletting. The family of the deceased occupier may need time to clear the property and deal with matters arising from the death. If there are other (non-contractual) occupants living in the property at the time of death, they will require time to organise alternative accommodation.

On the other hand, allowing the agreement to run on for any significant amount of time after the death will be expensive either for the estate of the deceased occupier if the landlord pursues the rent, or for the landlord if, as is more likely, the landlord does not choose to recover the rent from the estate.

We have sought to strike an appropriate balance between the competing demands of the various parties. We have also sought to propose a rule that is clear and easily understood by landlords and occupiers.

We therefore recommend that an occupation agreement should terminate automatically one month after the death of the occupier.

It could terminate earlier, on a notice being served on the landlord either by the deceased's personal representatives, or by any remaining non-contractual occupants left in the property. Such notice would have to be signed by all the remaining occupants. Whilst one remaining occupant might seek to sign a notice without the knowledge or agreement of the other remaining occupants, that fact will become apparent when the landlord tries to repossess the property. The notice will not be effective in these circumstances.

We recommend that, subject to the exceptions listed in the following paragraph, there should be a compulsory-minimum term in type I and periodic type II agreements providing that:

(1) occupation agreements should terminate automatically without the need for a court order following the death of the contractual occupier; and

(2) the agreement should terminate either at the expiry of one month after the death of the occupier or on service of a notice by either the personal representative of the deceased occupier or by all of the remaining non-contractual occupants of the property, whichever is the earlier.

The exceptions to the automatic termination of the agreement following death are:

(1) where there is a joint occupier who continues to occupy under the agreement through operation of the principle of survivorship;

(2) if the occupier was a sole occupier and there is a person who is entitled to succeed to the agreement as a result of the statutory succession rules; or

(3) the agreement was a fixed-term agreement, which contains a term permitting the remainder of any period of right to occupy to be left by will or on intestacy.

Joint occupiers and the principle of survivorship

As discussed above,

We provide for a limited exception to these rules in our provisions for joint holding of fixed term type II agreements, where this standard position will nevertheless be the default position.

The statutory succession scheme

A statutory right of succession is clearly a benefit to the occupier and a burden on the landlord. We recommend that the parties should not be able to contract out of the statutory succession scheme save in those circumstances where, as a condition imposed as part of a landlord's consent to adding a joint occupier, transfer or exchange, it is reasonable to require the giving up the right of succession.

The statutory right of succession will be the only means whereby the benefit of an occupation agreement can be passed on following the death of the occupier, except

(1) where there is one or more joint occupiers who survive(s)^[5]; or

(2) where the remainder of a fixed term agreement is passed on by will or intestacy.^[6]

The rationale of our proposals

To create a coherent regime for statutory succession, we recommend amendment of the current rules.

Further, while bearing in mind the legitimate needs of landlords to control use of their homes, we think there should be an expansion of the current succession provisions in the Housing Act 1985. The limited nature of the succession rights in that Act can be seen from the fact that:

(1) only one succession is available (which can be either to a spouse or to a member of the family who has been living with the deceased tenant for the period of 12 months prior to the death);

(2) the Act sets out a range of circumstances where the tenant is treated as a successor, most significantly that he was a joint tenant and has become the sole tenant. (This prevents any child from being a successor where their parents have been joint tenants and where one has predeceased the other so that there is a deemed succession.)

We consider that the people who should be within the scope of the statutory rules of succession are:

(1) partners of deceased occupiers;

(2) members of the family of the occupier and/or the occupier's partner; and

(3) unpaid carers.

Partners should be given priority over the other classes of potential successor.

We do not recommend there should be two successions in all circumstances. Two successions will only occur if there is a surviving partner who succeeds and, following their death, there is a member of the family or carer who also qualifies to succeed. The succession of the member of the family or carer will operate as a final succession whether or not there has been a succession to a partner of the original occupier.

Spouse/partner – the "priority successor"

In general, we expect spouses and partners to occupy under joint occupation agreements. Thus a surviving spouse or partner will continue to hold the occupation agreement after the death of their partner.

Where spouses and partners have lived together but do not occupy under a joint agreement, the statutory right of succession will be available to any surviving spouse or partner. The surviving spouse or partner will have to have been living in the premises as his or her only or principal home at the time of the death.

Spouse or partner should be defined to include not only the person who was the spouse of the occupier at the time of the occupier's death, but also the survivor of couples who have lived together as husband and wife, or of same sex couples who have co-habited. This definition should embrace couples where either partner has undergone gender re-assignment.

We recommend that the surviving spouse or partner, as thus defined, should always take priority over any other person with a statutory succession right. Such a successor can be described as the "priority successor".

The characteristics of priority successors are:

(1) that they have been the partner of the deceased occupier; and

(2) that the property which is the subject of the occupation agreement was their only or principal home at the time of the deceased occupier's death.

A priority succession will always operate as the first succession to an occupation agreement.

Member of the family and carers – the "standard successor"

We also recommend that, in defined circumstances, members of the family of the occupier and unpaid carers of the occupier (whether the original occupier or the successor occupier) can statutorily succeed to the occupation agreement. We recommend that "member of the family" be defined by a list, based on the definition in the Housing (Scotland) Act 2001.

Clearly the reality and complexity of human relationships means that there will be circumstances where a successor spouse enters into a new partnership relationship, and then dies. If the new couple have arranged to become joint occupiers under the occupation agreement, the survivor will take under the principle of survivorship.

However, if they are not joint occupiers, we do not consider that the new spouse or partner of a survivor spouse or partner should be in a privileged position, over and above other members of the family. In short, any new spouse or partner of a priority successor cannot him or herself be a priority successor.

Nevertheless, we do consider that the partner or spouse of a priority successor should receive some protection under the statutory succession rules. The list of members of the family should therefore also include the new spouse/partner of a priority successor. Therefore, in the absence of a joint occupation agreement, the spouse/partner of a priority successor can qualify as a standard successor.

In the light of the consultation responses, and the development of the law in Scotland, we also recommend that the concept of the standard successor should include unpaid carers who have given up their own home in order to reside with and provide care to an occupier or a member of the occupier's family. The carer must be aged at least 16 years; the premises must be the carer's only or principal home at the time of the occupier's death; and the carer must have had a previous only or principal home which was given up.

The Scottish law does not define "carer". Recent statutory provisions covering carers in English law have distinguished between the rights of unpaid carers and those of professional carers. We are only seeking to provide succession rights to unpaid carers who provide more than minimal support and care for the occupier or someone else in his or her family. Statutory succession rights should only extend to carers who are unpaid and who provide or intend to provide a significant amount of care to the occupier or the member of the rental occupier's family. Therefore "carer" should be defined as in section 1 of the Carers (Recognition and Services) Act 1995. Such carers should qualify as standard successors.

Period of residence

To be a standard successor, a period of residence must be established. In essence, the current law rations the right to succeed (other than to spouses) to those who have spent a year living with the deceased occupier. The requirement of residence for a 12 month period seems an appropriate and effective rationing mechanism.

We recommend that a standard successor (including unpaid carers and spouses/partners who do not succeed as priority successors) must either:

(1) have been living in the premises as their only or principal home for a period of at least 12 months prior to the death of the occupier; or

(2) have been residing with the occupier for a period of at least 12 months prior to the death of the occupier and have been living in the premises as their only or principal home at the time of the tenant's death.

Joint successors

Where more than one person is entitled to succeed as standard successor we recommend that more than one person can succeed as joint occupiers. Succession by joint occupiers should be treated as one succession. All the joint occupiers will be successors. This will mean that when one joint successor occupier dies the others will continue to hold the occupation agreement through survivorship, but that when the final surviving successor dies there will be no further succession.

Interface between priority and standard succession

To summarise: we recommend that there should be the possibility of one succession to a priority successor and one succession to a standard successor. A priority succession will only occur if there is a priority successor and if there has not previously been a priority succession or a standard succession. A standard succession will only occur if there is a standard successor and there has not previously been a standard succession. A priority succession will always take precedence over a standard succession, and can never follow a standard succession.

Additionally there can only be one standard succession to an occupation agreement. It can follow either an occupation agreement held by a contractual occupier who is not a successor or an occupation agreement held by a priority successor. It may operate as the first or second succession to an occupation agreement but must always operate as the final succession.

Disputes

Where there is more than one potential successor, and there is a dispute about who should become the contractual occupier, we recommend that the landlord should resolve the matter.

Where there remains dissatisfaction with the solution proposed by the landlord, the matter should be resolved in the county court.

Succession and its relation with our recommendations on adding joint occupiers, transfer and exchange.

The combined effect of our recommendation enabling an occupier to add another party to the agreement, subject to the consent of the landlord which cannot be unreasonably refused, and our succession provisions could mean that the landlord would "lose control" of the premises, especially the ability to reallocate the premises, for a considerable period of time. Concern about this may well influence landlords' decisions with respect to requests for adding parties to the agreement. We accept that these concerns are reasonable.

At the same time, we regard our recommendation relating to the addition of a joint occupier as adding to the personal autonomy of occupiers. We do not want landlords' worries about loss of control to undermine their willingness to give consent to occupiers who have applied to add another to the agreement.

We think an appropriate balance between these two concerns can be achieved by enabling landlords to make it a condition of granting consent to the addition of another that there should be an exclusion of succession. Such an exclusion as a condition of giving consent would still be subject to the reasonableness requirement. We recommend that landlords should have power to grant consent to an application for adding an occupier subject to the condition that the addition counts as a succession. The imposition of the condition must be reasonable.

Such derogations from our succession scheme should extend to consents to transfer or mutual exchange.

These recommendation will not only be of advantage to landlords. They will also enable occupiers to make reasoned decisions about what type of arrangement allows them to best provide for the security of their family. They will be able to use their potential succession rights as a bargaining tool, to enable them to achieve a constructive outcome with their landlord.

Loss of status as successor

There will be circumstances in which a successor loses his or her status as a successor and becomes a straightforward contractual occupier, attracting fresh succession rights.

We recommend that, so long as the successor remains in the same premises under the same or a different landlord, or acquires an occupation agreement by exercise of the right of mutual exchange, that person should retain the status of successor.

However, if the occupation agreement is terminated and a wholly new agreement relating to different premises is made, whether by the same or a different landlord, the occupier should no longer be regarded as a successor.

Where a successor dies, and there are no further rights of succession, but the landlord inadvertently grants an occupation agreement to a new occupier on the mistaken view that that person was entitled as a successor, the agreement will be a fully valid one and the occupier should not be deemed a successor.

If the occupier has misled the landlord as to his or her status as a successor, this should provide the basis for possession proceedings in the normal way.

The position where an occupier under a fixed-term agreement dies

Our recommendations on the rules to apply when an occupier dies are likely to be equally appropriate for most occupiers who rent their home on fixed-term agreements. We therefore recommend that there should be a default term in the fixed-term type II agreement, the effect of which will be that following the death of an occupier the same consequences should arise as follow the death of an occupier with a periodic agreement.

Different considerations may apply when the occupier is someone who has paid a substantial premium for a fixed-term agreement, or where the fixed-term, though by definition for less than 21 years, was nevertheless for a substantial period. We consider that such occupiers should be able to agree with the landlord, as a substitute for the default term, that the remainder of the fixed-term can pass by will or on intestacy. Though the term will not form part of our model agreement and therefore will be subject to the scrutiny of the Office of Fair Trading, as it adds a benefit to the consumer it is unlikely to be regarded as unfair.

Note 1    See para 14.29 below.    [Back]

Note 2    See paras 11.3 – 11.12 above.    [Back]

Note 3    See paras 14.58 – 14.59 below.    [Back]

Note 4    See, for example para 11.19 above and para 14.50 below.    [Back]

Note 5    See para 14.21 above.    [Back]

Note 6    See para 14.58 below.    [Back]

Note 7    We do not therefore consider that our succession regime should operate in the same way as that in Scotland. The Housing (Scotland) Act 2001 provides for two successions to qualified persons and further provides that following the death of the second successor the landlord is obliged to make other suitable accommodation available to someone who would qualify as a successor if there had not already been two successions. In particular we do not recognise a need to provide for succession rights to partners of successor children. We consider that our provisions for adding a party to the agreement provide a more appropriate mechanism for occupiers to achieve security for those whose home they may wish to protect after their death. The requirement for consent, that must be given reasonably, means that there is an opportunity for the landlord to weigh the competing needs of the landlord and the occupier. Our scheme has the potential to be more extensive than the Housing (Scotland) Act 2001 in that, in the Scottish system, the vesting of the tenancy in the surviving joint tenant counts as a succession for the operation of the succession rules. For the purposes of our scheme, a surviving joint occupier who takes over the agreement on the death of another joint occupier will not count as a statutory successor to the occupation agreement.     [Back]

Note 8    See para 14.21 above.    [Back]

Note 9    Section 108(1)(b) and (2). This provides: (1) For the purposes of this Act, a person (“A”) is a member of another’s (“B’s”) family if –… (b) A is B’s parent, grandparent, child, grandchild, brother, sister, uncle, aunt, nephew or niece; (2) For the purpose of subsection (1)(b), (a) a relationship by marriage is to be treated as a relationship by blood, (b) a relationship of the half-blood is to be treated as a relationship of the whole blood; (c) the stepchild of a person is to be treated as that person’s child, and (d) a person brought up or treated by another person as if the person were the child of the other person is to be treated as that person’s child. “Half blood” is an expression found in the Housing Act 1985 as well as the Housing Scotland Act. It refers to a relationship existing between persons having only one parent in common.    [Back]

Note 10    This is based on Housing Act 1985, s 89 and is a system that appears to work well.    [Back]

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