Estoppel is the basis of surrender by operation of law. When does payment of rent give rise to a periodic tenancy?

A surrender by operation of law arises independently of the intention of the parties where the conduct of the parties unequivocally amounts to an acceptance that the tenancy is ended. Whether payment of rent on a weekly or monthly basis gives rise to a periodic tenancy depends on the intention of the parties. If the payment can be satisfactorily explained on the basis of some intention other than that of an intention to create a periodic tenancy then none will arise.

In Mattey Securities Ltd v Ervin ((1999) 77 P & CR 160 CA (Eng)) the defendant had given the landlord a guarantee that the tenant would pay rent. The tenant went into administration owing rent arrears. A new company took possession and the landlord accepted rent arrears and rent from the new occupier which also ran into financial difficulty. There was no assignment of the lease to the new occupier although the landlord and the occupier had been in negotiation after the occupier had gone into the property concerning a possible assignment. Could the landlord enforce the guarantee of the lease? Or had acceptance of the rent from the new occupier amounted to a surrender by operation of law so that the guarantor had no liablility for arrears that accrued after that date?

A surrender by operation of law does not depend on the intention of the parties. It is based on estoppel and arises when the conduct of the parties unequivocally amounts to an acceptance that the tenancy is ended. Here the negotiations for an assignment showed that the parties assumed the continuation of the original lease even after the new occupier took over possession and paid rent.

Whether payment of rent on a weekly or monthly basis gives rise to a periodic tenancy does depend on the intention of the parties. Here the landlord had accepted rent because it was due under the original lease and he did not care who paid it. There was no intention to create a periodic tenancy.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: