2.3 Leases - Assignment

Question 1

How is registered title deduced?

Answer 1

Assignor to provide Assignee

• Register official copies
• Title plan
• Lease (official copy)

Absolute leasehold title

• Guaranteed by HMLR
• Buyer NOT required to investigate title to freehold/superior leases

Good leasehold title

• NOT guaranteed by HMLR
• Buyer required to investigate superior titles

Question 2

How is unregistered title deduced?

Answer 2

Assignor to provide Assignee;
- Epitome/Abstract of Title

Epitome/Abstract of Title

• Good root of title (assignment of lease > 15yo)
• Post-root docs (mortgages, subsequent assignment)
• Identifies lease as first pre-root doc

If superior title NOT sent to HMLR;

• HMLR will grant good leasehold title
• Buyer to investigate superior titles > HMLR can then register as absolute leasehold title

Question 3

What should Seller include in their contract bundle for Buyer as part of pre-contract searches and enquiries?

Answer 3

Residential lease

1) Property Info Form > Replies (TA6)
2) Fittings and Contents Form > Replies (TA10)
3) Leasehold Info Form > Replies (TA7)
4) Enquiries made re Landlord/Managing Agent > Replies (LPE1/LPE2) (Landlord/Management Co can use)
- Service charge/management accounts (last 3 years)
- Landlord’s building insurance policy
- Ground rent receipt
- Info re deed of covenant/consent

Commercial lease

1) Draft sale contract
2) Leasehold title (Registered - Register official copies, Title plan; Unregistered - CLCS search vs Landlord and all owners from and including root onwards, Index map search, Epitome of title and referred docs)
3) Lease w coloured plans
4) Change (if any) of Registered Owner’s name and explanation
5) Relevant CPSEs > Replies
6) Freehold and intermediate titles
7) L’s consent
8) Planning permissions, buildings regulations consent, guarantees
9) Energy Performance Certificate

Question 4

What is the rule for Landlord’s consent to assign?

Answer 4

Tenant
- Applies for consent (own expense) (all reasonable efforts)

TP
- Provide all info + references reasonably required

Landlord
- Provide consent (within 3 working days of completion)

NO consent given
- Either party may rescind contract > Non-fault basis > Serve notice on other party

Consent unreasonably withheld/NOT decided within reasonable time

• Continue assignment (NOT breach of covenant)
• Seek declaration of acting unreasonably + damages (tort - breach of statutory duty)
• Burden of proof => Landlord

Question 5

When may optional clauses be included in a deed of assignment?

Answer 5

Assignee pays premium to Assignor
- Assignor pays reverse premium to Assignee

Assignee gives express indemnity covenant

• Rent
• Title docs
• Lease obligations

Lease is held over

Assignor commenced renewal proceedings

Party pays/contributes to legal costs

Question 6

When are assignments registrable?

Answer 6

Term =< 7 years

• Registered land > Takes effect as overriding interest
• Unregistered land > Binding at large

Term > 7 years

• Registered land > Register within priority protection period (30 working days) > Change register (Form AP1)
• Unregistered land > Register at HMLR (Form FR1) (within 2 months of completion, otherwise void) > Bind world at large

Question 7

What is required for applying to register assignments?

Answer 7

Registered land > Form AP1 (T’s solicitors)

• Completed transfer certified copy (TR1)
• Discharge evidence (if L’s title is mortgaged)
• New charge copy (if mortgage used to aid purchase)
• L’s licence to assign (if consent required)
• SDLT5 certificate
• Form D1 (overriding interests affecting property)
• Certified copies > Other docs needed to prove title and/or ownership

Unregistered land > Form FR1 => HMLR

• Form DL (deeds, docs of title > epitome of title (unbroken chain of ownership from Assignee to Current Buyer))
• Assignee’s pre-completion searches vs Assignor
• Assignee’s mortgage on assignment + Vacating receipt duly endorsed
• New charge copy (if T has mortgage)
• L’s licence to assign (if consent required)
• SDLT5 certificate
• Form D1 (overriding interests affecting property)
• Certified copies > Other docs needed to prove title and/or ownership

Question 8

What is required after the assignment is registered?

Answer 8

Check title info of doc

Give notice to Landlord of dealing

Deal w deeds + docs

Question 9

What is an authorised guarantee agreement (AGA)?

Answer 9

Landlord can require T to enter AGA

• Guarantee Assignee’s performance
• If Assignee breaches covenants => Landlord can sue T/Assignee (UNLESS term ends/subsequent assignment)
• Prevents T’s exemption from liability

a) Residential lease
- Reasonable to do so

b) Commercial lease

Absolute covenant vs assignment (L’s consent required)
- L can require T to enter AGA

Qualified covenant vs assignment (NO L’s consent required)

• Express provision (pre-condition to L’s consent) => L can require T to enter AGA
• NO express provision => Reasonable to do so