17.3.2. Alienability

Leases and bailment 641

assignment of the tenant’s lease: Milmo v. Carreras [1946] KB 306, CA, above). A subletting does not operate in the same way as an assignment: in a subletting the tenant is not disposing of its interest to the subtenant but carving a lesser interest out of it. The subtenant does not therefore step into the tenant’s shoes as an assignee does, but takes possession from him on terms agreed between the two of them, which may well be different from the terms contained in the headlease. Consequently, there is no direct relationship between head landlord and subtenant: the intermediate tenant remains liable to the head landlord to observe the terms of the headlease, and simultaneously, while the subtenancy continues, the subtenant is liable to the intermediate tenant to observe the terms of the sublease.

Effect of termination of lease on derivative interests

In principle, since derivative interests such as subleases and mortgages and charges of the lease are carved out of the lease, they will automatically be extinguished when the lease ends. This is not always a just or convenient result, particularly where the tenant ends the tenancy voluntarily and/or prematurely by surrender, disclaimer or serving notice to quit, or loses it by forfeiture. The courts have a variety of statutory and equitable jurisdictions which enable them to grant relief in some form or another to the derivative interest holder in some but not all of these cases: for details reference should be made to standard landlord and tenant textbooks.

Alienability of landlord’s interest

Another consequence of the proprietary status of the lease is that it is enforceable against third parties, in particular against any person to whom the landlord assigns her interest. This leaves the landlord free to assign her interest at any time to whomever she wants without reference to the tenant (again, subject to any agreement to the contrary). The assignment will have no effect on the validity or enforceability of the lease (assuming any necessary registration requirements have been satisfied), and, subject to the complications noted below, the assignee will step into the assignor’s shoes as landlord under the lease. The same applies on any assignment of the landlord’s interest by operation of law.

Concurrent leases and other derivative interests granted by the landlord

The landlord’s interest is, necessarily, one that carries with it the right to possession for a period which is longer than that which has been granted to the tenant – usually the freehold interest in the land. This interest is an interest which is reversionary on the lease, i.e. the right to possession will revert to the landlord when the lease ends. There is no reason why the landlord should not grant derivative interests, such as mortgages or charges or easements, out of this reversionary interest (in principle not binding on the tenant, although this may be affected by enforceability rules: see Chapters 14 and 15 above). It may even grant another lease of the same land to another person out of the reversion, with the