An important change in the manner in which inherited land situate in Jersey can be occupied came into force last year. Any land inherited after 10 March 2006 is deemed to have been acquired subject to the condition that any existing unit of dwelling accommodation on the land or any unit subsequently created on the land shall not be occupied other than by:-
1. the person who inherited the land; or
2. a person holding housing qualifications.
The position in respect of inherited property prior to the amendment has not changed. There is also a saving provision whereby a licensee who occupied inherited land prior to 14 November 2006 can continue to occupy that land as licensee if, subsequent to 14 November 2006, that land was inherited by another person from the first inheritor.
A loophole existed prior to this change (and indeed still exists in respect of property inherited prior to 10 March 2006) whereby without residential qualifications persons could occupy the inherited property provided that their right to occupy was not by way of a transaction caught by the terms of the Housing (Jersey) Law 1949 (the "Housing Law"). Whilst a Housing Consent is required if one enters into a lease or tenancy of residential accommodation the Housing Law does not require a Housing Consent to be obtained if the right to occupy arises from a "licence" to occupy. If a person (other than the person who had inherited the property) without Housing Qualifications wished to occupy inherited property he would only be able to occupy such property if a licence to occupy was entered into rather than a lease or tenancy.
The distinction between a lease and a licence is a complex area of law and is still vital in respect of property inherited prior to 10 March 2006. If someone without Housing Qualifications occupies inherited dwelling accommodation (other than a bona fide guest or lodger of the owner who also resides in the property) then they are potentially breaching the Housing Law and may face criminal prosecution as will the owner of the property.
It is still therefore important that the transaction that is entered into in respect of property acquired on inheritance prior to the change in the Housing Law is that of a licence as opposed to a lease.
A properly drawn up licence will not be merely a lease with the description of the parties altered to that of "licensor" and "licensee". The rights of the licensee will be fundamentally weaker than those of a tenant. Essentially, a licensee will have the right to use the accommodation but will not have the right to "exclusive occupation" which in many ways is the hallmark of a lease or tenancy. One of the other issues which a properly drawn up license will address is that of security of tenure or rather, the lack of it. The licence agreement will make it clear that the licensee has no security of tenure and can be evicted with little notice.
Although the form of the document is important, there is clear legal authority that it is the substance of the arrangement, i.e. the way that the parties conduct their relationship once the documentation has been concluded that is also crucial. It should be stressed here that there is always the risk that the parties will fail to strictly adhere to the terms and spirit of the licence with the effect that over a period of time the relationship of the parties "degenerates" from that set out in the agreement and in truth, becomes that of landlord and tenant. If this happens then the parties are committing a criminal offence and risk prosecution.
The issues of the lack of exclusive occupation and lack of security of tenure are touched upon above. Another key element to a licence is often stated to be the provision of services such as the provision of cleaning services or linen. Again, whilst this is important and should be an element present in any licence arrangement, it is not in our view conclusive.
The issues of non-exclusive occupation, lack of security of tenure and the provision of services are all important elements in a genuine licence type arrangement. If there is a key factor, however, it is that of the degree of control exercised by the owner of the property. This to an extent is an issue closely connected with that of the lack of the right to exclusive occupation. Essentially, if there is to be a genuine licence arrangement the occupier cannot enjoy rights of exclusive occupation. The owner effectively retains control and possession of the property occupied by the licensee. The owner not only has the right to enter the premises whenever he wishes, he should also actively exercise that right. There are various decisions of the Royal Court which draw the distinction between a lease and a licence. In one case the owner made a habit of entering the accommodation which was occupied by the "licensee" on at least a daily basis. He ensured that the relevant accommodation was properly cleaned, maintained and aired. He did things like opening windows, emptying ashtrays and clearing away rubbish. Essentially, he was interfering and made a nuisance of himself. In the circumstances the Court had little hesitation in concluding that there was not a tenancy and the occupier of the room was quite clearly a licensee. The owner was regularly exercising control of his premises.
A genuine licensee is in many ways little more than a paying houseguest. Not only should he have no security of tenure or right to exclusive occupation, he should moreover, have limited privacy. He effectively should never be able to lock the door on the owner of the property as a tenant can do.
Control therefore is the paramount factor. Accordingly, those types of arrangement where the owner of the property does not live in an adjoining unit or is resident abroad need to ensure that the appropriate amount of control is exercised.
Despite the changes to the Housing Law, all existing arrangements in respect of inherited land acquired prior to 10 March 2006 occupied by persons without qualifications will still need to be occupied by way of a bona fide licence arrangement rather than a lease save that the person who inherits the property can still occupy it whether or not they have residential qualifications.
For detailed advice concerning inherited property in Jersey, please contact Peter Bertram.
The information and expressions of opinion contained in this article are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.