This can have important consequences for an occupier's right to stay on the land, and the ownership of any structures put up on the land.
This was demonstrated in the recent case of Gilpin v Legg.
The defendant was the freehold owner of land at the seafront in Dorset. The claimants occupied beach huts on the defendant's land, in exchange for an annual fee. There was no clear written agreement between the parties, and it was not clear whether the claimants had leases of the huts, or whether they just had licences to occupy them.
The landowner therefore served two notices on the tenants to require them to leave the huts:
The court was first asked to decide whether the claimants had leases of the huts, or licences to use them. The court looked at what the parties had intended when they made their original agreement, and what was done in practice, rather than any subsequent attempts to define the agreement or impose new agreements on the occupiers.
The court found that the claimants had been granted exclusive possession of the patch of land on which each hut stood, for a term, at a rent. The court therefore held that the claimants had been granted leases of the land on which the huts stood.
The court was also asked to decide whether the huts were fixtures (which formed a part of the land) or chattels (which did not). The court held that the huts were chattels.
In reaching this decision, the court found that the huts were not significantly annexed to the land (only enough to enable the huts to stand securely), and that they could be moved relatively easily. The court considered how easily the huts could have been moved when they were first put up, and discounted the fact that some of the older huts could not be moved without damage, due to their age and their deterioration since they were installed.
The court also suggested that, if the huts had been fixtures, then it would have been implicit in the agreement that the claimants would have been entitled to remove the huts at the end of the lease (whereupon they would have become chattels in any event).
This case is a useful reminder of the importance of clarifying an occupier's status when putting an agreement in place, and of making clear what can be done with structures built on the land. Making these points clear at the outset can help to avoid disputes later down the line.