Beware some charitable acts

A case recently decided at Preston County Court has highlighted the dangers which may arise if a landowner agrees to let land and buildings to a tenant but does not record the terms of the tenancy in writing.

Mr and Mrs Haselden owned a ramshackle farmhouse in Rossendale, Lancashire with 60 acres of land which they offered to a Mr and Mrs Hardy at a nominal rent of £50 per week.  Apparently the arrangement was intended to be temporary and was designed to help the Hardys whilst they experienced some financial difficulties.

Eleven years after moving into the property Mr and Mrs Hardy continued to occupy the three-bedroom farm and were able to secure a Court Order allowing them to remain there for the rest of their lives.  Mrs Haselden was required by the Court to pay a sum of £40,000 in respect of improvements carried out to the Farm by the Hardys since 1997.  She was also found liable to pay £25,000 of legal costs.

In essence, the decision of the County Court means that Mr and Mrs Hardy now have a lifetime tenancy of Brock Clough Farm at a rent of £200 per month.  Mr and Mrs Hardy said that they were told by the late Mr Haselden (he having died in 2008) that they could stay at the Farm for the remainder of their lifetimes and this version of events was accepted by the judge, although no formal tenancy agreement had ever been signed by the parties.

The result of the Court’s judgement seems to have operated rather harshly on Mrs Haselden since she has been required to pay for the improvements undertaken to the farmhouse, but is stuck with a discounted rent of £50 per week.  Furthermore, Mrs Haselden’s legal advisers have suggested that the effect of the tenancy held by Mr and Mrs Hardy has been to reduce the current value of the Farm from £460,000 to a mere £100,000.

If a written agreement had been settled between the landlord and tenant prior to Mr and Mrs Hardy taking up occupation of the Farm, it is more than likely that the problems now facing Mrs Haselden would have been avoided.  In normal circumstances, a tenancy agreement will specify who is to carry out repairs to a property and how the rent is to be reviewed during the lifetime of the tenancy.  Typically, the agreement would also state whether compensation should be paid to the tenant for the improvements carried out to the property during the tenancy.

The Court of Appeal has recently been asked to review the County Court’s decision and their judgment is awaited with interest.

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