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A lease created only verbally is good for a term of up to three years

A worked RES examination question on lease formation and form, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.

Paper 1Lesson 7Lease formation and formFree — no sign-up

The question

A landlord and tenant agree only verbally on a lease of a shophouse, meaning it to run for ten years. There is no written agreement and nothing is registered. A dispute later arises over how long the tenant is entitled to stay under the arrangement they made.

Which statement is correct?

  1. A. The verbal lease confers nothing at all, a lease of a shophouse requiring writing to exist.
  2. B. The verbal lease is good for the full ten years, a spoken term binding just as a written one.
  3. C. The verbal lease is good for a term of up to three years, not the ten years they intended.
  4. D. The verbal lease is good for seven years, that being the ceiling for an unregistered lease.

The answer, and why

Answer: C

The rule. A lease created only verbally is good for a term of up to three years. It cannot confer a longer term, however long the parties intended, because a longer lease must be made in writing.

Why C is correct. The parties meant a ten-year term but put nothing in writing. As a verbal lease it is good for up to three years only; the intended ten years cannot take effect.

The other options.

  • B gives the full ten years. A verbal lease cannot exceed three years.
  • A says it confers nothing. A verbal lease is valid up to three years.
  • D picks seven years. Seven years is the registration threshold, not the ceiling on a verbal lease.

Exam note. Verbal leases top out at three years. The seven-year figure is about registration, a different rule.

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