Property Revision Notes - FINAL

Property Revision Notes Page 1 of 30
LGS 1 INTRODUCTION & OVERVIEW
Professional undertakings are promises given between solicitors that are enforceable by the law society.
A property lawyer conducts due diligence, analysing the nature of the property assets of a company,
enabling a client to buy the company with full knowledge of any matters affecting the property.
It is necessary to ‘analyse title’ to produce a ‘certificate of title’ to confirm to a lender that title is
adequate for the lender to use as security for a loan or mortgage.
In a property conveyance the seller wishes to transfer legal title to buyer without continuing obligations in
relation to the property. The buyer wants to ensure that the seller has the right to sell the property and that
any rights benefiting the property are transferred with the property.
The National Protocol is a non-compulsory methodology which includes standard forms and
documentation wherever possible.
From early 2007, sellers of residential property will be obliged to compile a Home Information Pack for
prospective buyers. The Pack will include the title to the property, replies to searches and enquiries, and a
report upon the physical condition of the property, including an energy efficiency assessment.
Stage 1: Pre-Contract
Seller’s Solicitor
1. Obtains details of the title to the property
2. Obtains official copies of the title from the Land Registry
3. Drafts the contract for the sale of the property in duplicate and sends one copy of the contract to the
buyer’s solicitor
4. Answers pre-contract enquiries & queries on the title raised by the buyer’s solicitor
Buyer’s solicitor
1. Carries out pre-contract searches
2. Raises pre-contract enquiries with the seller’s solicitor
3. Checks the seller’s title to the property
4. Ensures that the buyer has adequate funding in place
5. Reports to the buyer upon the title to the property, the results of the searches and enquiries, and the
terms of the buyer’s finance.
6. Approves the draft contract.
Stage 2: Pre-Completion
1. Undertakes to discharge any existing mortgage on the property
2. Approves the transfer deed, which is drafted by the buyer’s solicitor, and arranges execution of the
deed by the seller.
3. Replies to requisitions on title
4. On the day of completion dates the transfer deed.
Buyer’s solicitor
1. Drafts the transfer deed and sends it to the buyer’s solicitor for approval.
2. Sends requisitions on title to the seller’s solicitor: these are further enquiries dealing with the
practicalities regarding completion; the discharge of any mortgage, the amount required on
completion, and the bank account details
3. Requests mortgage funds from the buyer’s mortgage lender.
4. Requests monies from his client - the balance of the purchase price plus the costs of the transaction,
including the search fees, solicitor’s costs, stamp duty land tax and land registry fees.
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5. Carries out pre-completion searches.

6. On the day of completion, sends the balance of the purchase price to the seller’s solicitor.
Stage 3: Post-Completion
1. Reports completion to the seller.
2. Sends the dated transfer to the buyer’s solicitor.
3. Sends the amount required to discharge the seller’s mortgage to the mortgage company together
with the form of discharge (receipt) for execution by the mortgage company.
4. Sends the balance of the sale price to seller.
5. Upon receipt, sends to the buyer’s solicitor the form of discharge duly executed by the seller’s
mortgage company.
Buyer’s solicitor
1. Reports completion to the buyer.
2. Receives the transfer from the seller’s solicitor.
3. Sends amount due in respect of Stamp Duty Land Tax to HM Revenue & Customs
4. Sends transfer, the buyer’s mortgage (if appropriate) and fee to the Land Registry.
Considerations in a property transaction:

 The grant or assignment of a lease of more than 7 years is now registrable.
 A solicitor must consider all relevant planning matters. Planning permission is therefore required for
any building works, or any material change in use.
 All trees within a conservation area are protected and may not be felled or lopped without the consent
of the local authority.
 If building works are to be undertaken in relation to a property, the works must comply with relevant
Building Regulations.
 Solicitors must consider whether Contaminated Land is an issue in every transaction. An owner or
occupier (or even a mortgagee in possession) could be required to clean up polluted land.
 Capital Gains Tax is prima facie payable on the disposal of an interest in land. Note Principal Private
Residence exemption.
 Stamp Duty Land Tax (“SDLT”)
i. £0 – £120,000 Nil
ii. £120,001 - £250,000 1%
iii. £250,001 - £500,000 3%
iv. £500,001 + 4%
 A solicitor must be alert as to the possibility of fraud & Money Laundering
 A spouse may have a statutory right of occupation under the Family Law Act.
 Sharers/co-habitees may have equitable interests by contribution to the purchase £.
Professional Conduct & Client care:
Solicitors owe their clients a duty of confidentiality (Rule 4 of The Code of Conduct).
To act for both a lender and a borrower a solicitor must establish the client’s identity.
A solicitor can act for buyer & lender provided there’s no conflict of interest between the two clients. If
the lender is an individual “at arms length” ie not a relative, the solicitor can not cat for both parties.
Failure to honour an undertaking is professional misconduct.
If a solicitor provides investment services advice (known as “regulated activities” under the FSMA)
without authorisation this can amount to a criminal offence.
LGS 2 DEDUCING (Seller), INVESTIGATION (Buyer) & REPORTING ON TITLE
Deducing title: done by seller’s solicitor who collates all the title documents, reads through them to
ensure the seller owns the property (and is entitled to sell it) and sends them to the buyer’s solicitor. (SCS
4.2.1 and SCPC 6.2.1)
In Registered Land the following documents constitute deducing title:

 Official Copies of the Register
 Title Plan
 Copies of documents referred to in the register that have not been copied out in full on the register.
Investigating title: done by buyer’s solicitor who reads through all the title documents to ensure the
Buyer will obtain good and marketable title.
In Registered Land the aims of the buyer are to:
 Identify the extent of the property and the rights that benefit it
 Identify the class of title (e.g. absolute, qualified etc) Lenders insist on Title Absolute.
 Ensure that the seller has the right to sell the property
 Identify the extent of other people’s rights over the property
The Register comprises three separate registers:
A: Property Register: describes property including the county and district where it is situated, the date
the property was first registered, it identifies the legal estate as leasehold or freehold, refers to a title plan
and address. This register also identifies the rights benefiting the property such as rights of way etc. These
will have been fully extracted, annexed to the register or referred to by reference to a dated conveyance.
B: Proprietorship Register: gives class of title, owner’s name and entries affecting owner’s rights of
disposal. It enables the buyer to check that the seller has the right to sell the property.
C: Charges Register: lists charges affecting property and third party rights over the property
NB Schedule 8 indemnity: if the Land Registry has made a mistake in registering a title with Title
Absolute and a party with an interest in the land suffers loss as a result of an error or omission in such
registration, the Land Registry will indemnify them for their loss.
The registered proprietor, as listed in the proprietorship register, is usually the only person who can sell
the property. This may be either an individual or a company. They may own the property as either
tenants in common or as joint tenants.
In more complex transactions the vendor could be:
 A personal representative of the registered proprietor
 An attorney acting under a power of attorney
 A mortgagee exercising a power of sale
B: Proprietorship Register:
If the seller is registered proprietor and an individual they must sign both the contract and the transfer.
If the seller is registered proprietor and a company the buyer must check that the company has been
registered and still exists, is not subject to any fixed/floating charges and is not being wound-up.
If the sellers are registered proprietor and tenants in common there will be 2 names listed in the
proprietorship register and the Land Registry will have placed a RESTRICTION on the “B:
Proprietorship Register”.
 If both TIC’s are alive they must both sign the transfer & contract.
 If only one is still alive the other TIC’s interest must be overridden by appointing a trustee (the
second trustee is effectively acting as trustee on behalf of the interest of the deceased’s equitable
interest in the property). It will be necessary to see an Official Copy of the death certificate and the
deed appointing the trustee.
If the sellers are registered proprietor and joint tenants there will be 2 names listed in the
proprietorship register but the Land Registry will not have placed a RESTRICTION on the “B:
Proprietorship Register”.
 If both JT’s are alive they must both sign the transfer & contract.
 If only one is still alive it will be necessary to see an Official Copy of the death certificate and the
Grant of representation / probate.
Where the seller is NOT the registered proprietor: (Usually because they have died)
If the sellers are personal representatives (PR’s)

NB all the PR’s must execute the contract & transfer
In order to get good title the buyer must see an official copy of the register and an official copy of the
grant of representation. (It is also good practice to ask for the death certificate).
 If the PR’s are transferring title to a beneficiary under a will, the assent must be in writing, signed by
all PR’s and name the beneficiary to whom the property is being assigned. s36(7) Administration of
Estates Act 1925.
If the sellers are acting under a Power of Attorney

It is necessary to also check:
1. That the power is granted by deed s.1(1) Powers of Attorney Act 1971
2. That the attorney is acting within the ambit of his power and that power has not been revoked (NB
personal bankruptcy revokes a power of attorney).
The maximum period that a buyer may assume a power of attorney is valid for is 12 months s. 5(4)(a)
Powers of Attorney Act 1971
If completion is more than or exactly 12 months after the Power was granted the buyer must make a
statutory declaration that they aren’t aware of a revocation of the power.
NB that the Donor gives the power of attorney therefore the ‘attorney’ is the donee.
If the sellers are lenders exercising their power of sale

The buyers’ solicitors must check that the power of sale exists (by virtue of there being a mortgage on the
property) and that it has arisen (by virtue of a breach of contract) the sellers solicitors must also check
that the power of sale is exercisable (by virtue of unpaid interest for 2 months) s. 103 LPA 1925.
s. 105 LPA 1925deals with the distribution of funds pursuant to a sale by lenders exercising their power
of sale
C: Charges Register:
Identify the extent of other people’s rights over the property
A Buyer will be bound by some third party rights over freehold land (s29(2) LRA 2002):
 Interests registered on the Charges Register and
 Interests overriding registered dispositions (Schedule 3 LRA 2002)
The most common charges found on the Charges Register are;
 Mortgages (property pledged as security for a loan),
 Mortgages are protected by two entries in the Charges Register
 Restrictive Covenants (restricting the covenantor from e.g. using the property as business premises)
 Restrictive covenants are either fully set out in the register or
 By reference to a document annexed to the register.
 Positive covenants (requiring the covenantor to do something e.g. maintain a fence)
 Positive covenants do not run with the land and are therefore only enforceable against the
original covenantor.
 For this reason the vendor will require the purchaser for an indemnity covenant that will
have the effect of indemnifying the vendor for any loss he suffers should he be sued
personally for breach of a covenant.
 A note of the indemnity covenant appears on the B: Proprietorship Register.
The most common interests overriding registered dispositions (Schedule 3 LRA 2002) are;
 Leasehold estates granted for 7 years or less
 Interests of persons in actual occupation
 Legal easements and profits a prendre (these must have been either obvious on reasonable inspection
of the land or used within a year of transfer to be binding)

NB Professional Conduct Rule 2 – Solicitors must keep their client informed.
Official Copies must not be more than 12 months old.
LGS 3 DEDUCING (Seller), INVESTIGATION (Buyer) & REPORTING ON TITLE II
The Land Registration Act 2002 came into force on 13 October 2003. Its key aim is to allow dispositions
of land to be dealt with electronically. It has also increased the number of registrable interests.
Specifically:
 Grants/assignments of leases with 7 years or longer to run are now registrable and all reversionary
leases must be registered.
 Rentcharges, Franchises and Profits a prendre are also registrable.
 A reversionary lease is a lease granted to give possession to a tenant in the future (more than 3
months from today). These are also registrable.
In addition, certain notices, restrictions and cautions may be entered on the register.
 Notices protect ‘encumbrances’, such as a matrimonial right of occupation (Family Law Act),
intended to bind third parties.
 Restrictions prevent dispositions of the estate from being conducted that do not comply with the
terms of the restriction.
 Cautions only deal with unregistered land. They act as a caution to any intended purchaser of e.g. an
easement over the land.
The full list is set out at s. 27(2) LRA 2002. This section also states that if you fail to register a
registerable disposition, the seller will hold the property on bare trust for the buyer until it is registered.
Overriding Interests:
Sections 11 & 12 and Schedule 3 para 3 of the LRA have reduced the number of overriding interests.
Interests should only have overriding status where it is not reasonable to expect, nor sensible to require,
registration. The burden has shifted so that the person with a right over another’s land should protect that
right by registration.
In practice this means that if a buyer carries out a reasonable inspection of the land, his solicitor carries
out the relevant searches and receives honest answers to the relevant questions, that buyer should
purchase a property free from overriding interests. Many categories of overriding interests are being
phased out over the next ten years and will require registration to be enforceable. These include right to
payment in lieu of a tithe and the liability to repair a church chancel. s. 117 LRA 2002
NOTE: Interests of a person in actual occupation are overriding unless:

 their occupation was not reasonably obvious to the buyer,
 and the buyer did not have actual notice of their interest.
Assuming that a buyer carries out an inspection of the property, and it is not reasonably obvious that there
is a third party in actual occupation: if the buyer asks the vendor about persons in actual occupation, and
the vendor does not disclose (when reasonable to do so) that there is a third party in actual occupation (he
may be abroad for a period): the buyer takes the property free of any interest owned by the third party in
actual occupation.
Similar rules apply to easements, a legal easement is an unregistered interest overriding a registered
disposition (i.e. binding) unless;
 it was not reasonably obvious to the buyer,
 the buyer did not have actual notice of the easement
 and the easement has not been used within the year before completion.
Legal easements can be created in 4 ways:

1. Expressly by deed - since Oct ’03 this must be registered s. 27(2)(d) LRA 2002
2. Acquired by prescription
3. Created by implied grant pursuant to s62 LPA 1925
4. Elevated from a licence by transfer under the rule in Wheeldon v Burrows
Entries must be made in the registered title of the servient and the dominant land.
Squatter’s Rights: Schedule 6 LRA 2002

If a squatter has been in possession for an unbroken period of 10 years, he can apply to become the
registered proprietor. Schedule 6 para 1(1) LRA 2002
He cannot make a valid application if there are adverse proceedings against him. Upon receipt of the
application the Registrar must serve notice on all those who would be prejudiced by a successful
application. If a counter-notice is served, the Registrar must reject the squatter’s application unless:
 It would be unconscionable to do so
 The squatter is otherwise entitled to the land
 The disputed possession is a boundary dispute with a neighbour.
Two years later, if the squatter makes a further application and no successful steps have been taken to
evict him, the registrar must register the applicant as proprietor in place of the existing proprietor –
Schedule 6 para (7).
Charges: s. 48 – 57
s. 48(1) LRA 2002 Charges rank in the order they appear on the register.
Section 49 deals with the priority of repayment when an original mortgagee (the lender) wishes to
advance further funds and a second (later) mortgage exists on the register.
 If the first registered mortgage contains details of a pre-arranged maximum it is the maximum figure
that has priority, regardless of the outstanding charge. This means that a first mortgage may advance
pre-approved funds that have priority over a second mortgage. (Offset)
Transactions at Undervalue: s. 341-2 Insolvency Act 1986
If the vendor of a property at undervalue is subsequently declared bankrupt, a trustee in bankruptcy will
be appointed. He has the right to apply to set aside any transactions at undervalue (“TUv”) made by a
donor (vendor) which took place within the relevant time. The relevant time is either 2 years if the donor
was solvent at the date of the transfer or 5 years if the donor was made insolvent by the transaction. If a
buyer can show it bought for value and in good faith a trustee in bankruptcy cannot apply to set aside the
transaction. (Section 342(2A) IA 1986 and Section 86(5) LRA 2002)
If a third party buys land from someone that has purchased land at an undervalue the trustee in
bankruptcy of the first seller may also be able to set aside the second transaction. For this to be successful
the second buyer must be aware of the previous transaction at undervalue. The third party is deemed to be
aware of the transaction if the price paid for the property is obviously low and is noted on the B:
Proprietorship Register. The buyer should then carry out a K16 search at the Central Land Charges
Registry against the donor (i.e. vendor at undervalue), searching back over the relevant period.
If the transaction at undervalue was made by a company, similar to a trustee in bankruptcy for an
individual, the company’s liquidator has the right to apply to set aside any transactions at undervalue
made by a donor company to a connected person which took place within the relevant time (s.238 IA
1986). This applies unless the transaction was undertaken in good faith for the purposes of carrying on a
business AND at the time of the transaction there were reasonable grounds for believing it would benefit
the company.

LGS 4 DRAFTING THE CONTRACT AND EXCHANGE OF CONTRACTS
DRAFTING THE CONTRACT
It is the seller’s solicitor who drafts the contract. Once the contract is agreed the parties will each sign one
copy of the contract. When both parties are ready to proceed, the contract will be exchanged, so that the
buyer will hold the contract signed by the seller, and the seller will hold the contract signed by the buyer.
At exchange of contracts, the date for completion of the purchase is fixed, and the parties have a legally
binding agreement.
There are two sets of standard conditions used in property transactions. The first is used in residential
transactions and incorporates the Standard Conditions of Sale, (‘SCS’) currently in its fourth edition.
The second is more appropriate to complex commercial transactions and is known as the Standard
Commercial Property Conditions (‘SCPC’) currently in its second edition.
Sometimes the transaction will require express conditions to be included; adding special conditions to the
contract does this. The standard forms provide for this on the back of the contract.
The following sections of the contract should be considered:
Date – This remains blank until exchange of contracts.

Seller – Must be a separate legal entity, partnerships are not, so the names of the individual partners must
be set out here. The seller must have legal title.
Buyer – Full names of all the buyers must be set out.
Property – contract must give clear description.
Registered title – description must reflect the wording in the A: Property Register. NB to cross out the
“Root of Title” option.
Specific Incumbrances:
The seller has a very limited duty of disclosure: he is only required to disclose latent encumbrances and
defects in title. This is due to the common law rule of caveat emptor: let the buyer beware. The seller
therefore has no duty to disclose to the buyer patent incumbrances (rights over the property discoverable
on inspection), nor physical defects. NB The seller cannot deliberately mislead the buyer or conceal the
problems.
Defects in title: If it is not possible to remedy a defect in title the contract must be varied by an
appropriate special condition stating that ‘the Buyer will accept such title as the Seller has’. This is
undesirable.
Latent incumbrances: An incumbrance is something which burdens the land and may restrict the owner
or occupier from using the land in a certain way or may restrict the ability to sell freely i.e. consent of a
third party may be needed.
The seller has a duty to disclose latent (“hidden”) incumbrances but not patent incumbrances such as
rights of way. Easements and covenants are examples of incumbrances: Discloseable examples include:
 Covenant not to shoot grouse
 Covenant not to sell alcohol
 Covenant not to park caravans
 Easements regarding a right to drainage
The Standard Conditions of Sale deal with this at SCS 3.1.2 providing that the sale is subject to:
a) Incumbrances specified in the contract
b) Incumbrances discoverable by inspection pre-contract

c) Incumbrances the seller does not know and could not reasonably know about
d) Entries made in any public register pre-contract except the Land Registry, the Land Charges Register
and Companies House (so these must be expressly disclosed in the contract)
e) Public requirements (e.g. public rights of way).
The commercial Standard conditions deal with this at SCPC 3.1.2 they vary the residential conditions at
clause d)
Full/Limited title Guarantee
Title guarantee is the guarantee of the seller’s quality of title to the property. It should not be confused
with the class of title given on registration by the Land Registry, eg Title Absolute. This is the State’s
guarantee as to the registered proprietor’s interest in the land. The seller may choose to give full title
guarantee, limited title guarantee or no title guarantee.
Full Title Guarantee This is in effect a guarantee on the part of the seller that the seller has the right to
sell the property, and that the property is free from all charges and incumbrances and other rights
exercisable by third parties other than those it did not, and could not reasonably, have known about. A
buyer would expect an owner-occupier to give full title guarantee.
Limited Title Guarantee: No guarantee by the seller that the property is free from all third party rights,
charges and incumbrances. Instead, this is replaced by a guarantee that the seller has not since the last
disposition for value subjected the property to charges or incumbrances that still exist, nor granted any
third party rights which still exist. Sellers who have little relevant knowledge of the property, such as
trustees and personal representative, usually give limited title guarantee.
No Title Guarantee: This is where the seller is giving no title guarantees whatsoever, which means that
if there is a difficulty with the title following completion of the sale, the buyer will have no remedy
against the seller.
Note that under the Standard Conditions of Sale, unless the contract states otherwise, under SCS 4.6.2 the
seller will sell with full title guarantee. There is provision on the front of the standard contract to state
expressly which form of guarantee is to apply.
Completion: Date for completion: default is 20 days after exchange, but usually varied by agreeing a date
in contract SCS 6.1.1 (SCPC 8.1.1). Time of day for completion is 2pm but often altered SCS 6.1.2
(SCPC 8.1.2)
Time: is not “of the essence” as regards the completion date. If a party does not complete on the
completion date set out in the contract, then the non-defaulting party may make time of the essence by
serving a notice to complete. At that point, the defaulting party will have a further ten working days
within which to complete. Until time is made of the essence the parties’ only remedy will be
compensation at the contract rate under SCS 7.3.
Completion is usually effected by post using the Law Society’s Code for completion by post.
Contract rate: Rate of interest at which compensation is assessed. No need to prove loss and is designed
to deter late completion. Payable by either party at 4% above base rate of … bank plc.
Purchase Price: Is the amount payable for the property as agreed. SDLT is paid only on purchase price,
not on the amount apportioned for Chattels.
Deposit: SCS 2.2.1 Usually 10% of the total of the purchase price and the chattels price. The deposit is
either held as ‘Stakeholder’ which means that it is held for both parties and can’t be released until
completion or Agents for the seller (i.e. it can be paid to the vendor on receipt) this is unpopular with
buyers as if the vendor goes bankrupt the buyer loses his money.

Chattels/fixtures: The contract must reference any fixtures being removed by the seller because fixtures
form part of the land. Chattels are presumed to belong to the vendor.
PRE-EXCHANGE OF CONTRACTS
Exchange of contracts is the point at which the parties become bound by the terms of the contract. Before
exchange the parties’ solicitors must make sure that nothing is outstanding:
Buyer’s solicitor: Searches and Documentation – Check all documents received and results of
searches. Raise questions or observations on any issues and check these have been satisfactorily dealt
with.
Buyer’s solicitor: Survey – Check whether carried out and whether it is satisfactory.
Buyer’s solicitor: Finance – Check deposit amount has been agreed with seller and cleared funds are in
solicitor’s client account (or buyer relying on SCS 2.2.5). Check that there hasn’t been a reduction in
purchase price. Has the buyer’s mortgage offer been received? Are the terms and conditions satisfactory?
Finally, prepare a draft financial statement to check client will have sufficient funds to complete.
Seller’s solicitor: Existing Mortgage – Obtain redemption figure from mortgagee and ensure that
proceeds from sale will be sufficient to pay off the mortgage. If only part of the property is being sold and
the proceeds will not be sufficient to discharge the mortgage, the consent of the mortgagee is needed.
Seller’s solicitor: Enquiries and Contract – Deal with replies to enquiries raised by buyer and agree
any amendments to contract.
Mechanics of exchange: This is usually done over the telephone, but may be by post or in person. With
the telephone method, exchange takes place at the point in the telephone conversation when the solicitors
agree that exchange has taken place. The Law Society has adopted three formulae for exchange of
contract by telephone.
 Formula A: One solicitor holds both contracts and the deposit. Solicitor holding contracts inserts
agreed completion date into both contracts. Undertakes to send second contract to other side.
 Formula B: Both solicitors’ hold their parties contracts. Buyer’s solicitor still has deposit. Buyer’s
solicitor undertakes to send deposit monies and each solicitor undertakes to send their signed
contracts to the other side.
 Formula C: Used in a chain of transactions.
Effect of exchange:
 Risk / Insurance: The common law position is that the risk for the property passes to the buyer on
exchange of contracts. This is varied by the SCS, but maintained by SCPC. If SCS 5.1 is included the
risk for the property remains with the Seller.
 Seller’s duty of care: The SCS states that the seller owes a duty of care to the buyer to keep the
property in the same state of repair as at exchange of contracts.
 SCPC 7.1: Under the commercial property conditions, the risk for the property passes to the buyer
upon exchange of contracts.
Occupation by the Buyer before completion: This may be to carry out works or take up residence. SCS
5.2 expressly states that such an occupation is to be construed as a licence.
Death or Insolvency between exchange and completion: the deceased’s personal representatives (PR’s)
are bound to complete (even if the mortgage is revoked).
 The PR’s must obtain a grant of representation before they can sell.

 Joint Tenants: A death certificate must be produced. The interest of the JT passes by way of
survivorship to the remaining JT.
 Death of a Tenant in Common: If there are still at least 2 TIC’s that own the property, as long as
payment is made to two trustees, the interests of the deceased (which has passed to his estate) is
overreached.
Insolvency: A buyer will only be affected by the bankruptcy of the seller if it has notice of the bankruptcy
by an entry being made on the relevant register. If the bankrupt is selling, the trustee in bankruptcy is
bound by the sale. If buying the trustee in bankruptcy has the right to disclaim any contracts it considers
onerous.
Contract Races: Under the professional Code of Conduct Rule 10.06, when the vendor’s solicitor is
instructed to deal with more than 1 buyer, he must disclose the existence of a contract race must be
disclosed to all prospective buyers. Immediate written confirmation is required if the disclosure is made
by phone or face-to-face. If a seller client refuses to allow a solicitor to disclose this, the solicitor must
refuse to act further.
A solicitor must not accept instructions to act for two or more clients in the same transaction where
there is a conflict or a significant risk of conflict between the interests of those clients.
If solicitor acting for joint buyers, he may not be able to act for both parties until one party must seeks
independent legal advice with regard to the nature of ownership (JT/TIC). It is essential that you obtain
instructions from each proposed buyer.
When acting for companies it’s important to ensure that the representative of any corporate client has
authority to instruct and to ascertain the extent of such authority.
The Code of Conduct generally prevents a solicitor acting for both the buyer and seller in a conveyancing
transaction at arms-length, unless both parties are established clients and consent in writing.
Solicitors may act for borrower and lender (obviously) Unqualified solicitors may not prepare a contract,
transfer, conveyance, lease or mortgage relating to land for reward. Unqualified solicitors’ undertakings
may not be enforced.
LGS 5 COMPLETION AND POST COMPLETION
Section 52 LPA 1925 requires that all conveyances of land be made by deed. Buyer’s solicitor: The
standard form TR1 is used for the transfer of both freehold and leasehold registered land. This is usually
prepared by the buyer’s solicitor.
PRE-COMPLETION:
The buyer’s solicitor also raises “standard requisitions” – these are not requisitions on title – rather
they are a request for completion information that will be necessary to allow completion to run
smoothly. This information consists of:
Buyer’s solicitor: Finance

 The buyer’s solicitor receives a completion statement from the seller’s solicitor. This includes
apportionments of Ground rent, service charge and the insurance policy.
 The buyer’s solicitor sends a financial statement and bill to the buyer. This sets out, the balance
required to complete (less any mortgage advance), the outstanding solicitor’s fees and disbursements.
 If the buyer’s solicitor is acting for the lender on the property, the solicitor has to send the mortgagee
a certificate of title certifying that it is good & marketable title. This must be incompliance with
Rules 3.16-3.22 of the Code of Conduct.
Buyer’s solicitor: Pre-Completion Searches

 Land Registry Search OS1: This provides the buyer with a priority period of 30 days from the search
result. (Known as the registration gap)
 Bankruptcy search against buyer (if also acting for lender)
 Any company searches should also be repeated
 The Official Copy must be less than 12 months old
 In Unregistered land the solicitor must carry out Central Land Charges searches against the seller
and all previous owners
Seller’s solicitor: Replies to standard ‘requisitions’

 These are set out in SCS 4.3.1 and SCPC 6.3.1
 Includes a form containing an undertaking to discharge the vendor’s mortgage(s)
Seller’s solicitor: Finance

 Completion statement sent to buyer’s solicitor. This sets out the outstanding balance on the purchase
price (i.e. purchase price less deposit) plus the price for chattels and any apportionments.
 Obtain the redemption figure from the seller’s mortgagee and ensure that there are (will be) sufficient
cleared funds to redeem it.
The Purchase deed (TR1) must reflect the terms of the contract. To be valid, a deed must clearly state that
it is a deed, be signed by the seller in the presence of a witness and delivered. If the seller is a company,
for a company to validly execute a deed it must be signed by 2 officers or by company seal.
COMPLETION:
Completion can either take place in person or by post.
The Seller’s solicitor will hand over the following on completion:

1. Deeds - Official Copies if unregistered land
2. Purchase deed TR1
3. Any planning permissions granted
4. Any buildings regulations granted
5. Restrictive covenant indemnity insurance (if so obtained)
6. An undertaking to discharge the mortgage and send a receipted DS1 or END
In his replies to the ‘Standard Requisitions on Title’, the seller’s solicitor will have undertaken to
discharge any mortgages/charges attached to the property (usually out of completion monies). Once this is
done he will forward a receipted Discharge of Sellers Mortgage (DS1) or a copy of the notice of
confirmation from the lender that an Electronic Notice of Discharge (END) has been sent to the Land
Registry, to the buyer’s solicitor. Both of these forms are simply standard wordings promising to
discharge the mortgage.
The Buyer’s solicitor will then:

1. Check the epitome or abstract to ensure that the documentation corresponds with the official
copies/photocopies he received prior to completion.
2. Pay completion monies usually by CHAPS
POST COMPLETION
Seller’s solicitor
1. Reports to clients that completion has taken place and they can release the key
2. Discharge the mortgage – this should be done the on the same day as completion, then forward
the DS1 or END to the buyer’s solicitor
3. Re-assign any life policy
4. Account to seller for balance of proceeds of sale
Buyer’s solicitor
1. Reports to clients that completion has taken place and they can move in!
2. Date the purchase and mortgage deed
3. Pay stamp duty land tax (within 30 days)
4. Register the conveyance pursuant to LRA 2002 (this needs to be within the priority period)
5. Notice of assignment
6. Custody of the title documents
LGS 6 DEDUCING, INVESTIGATING AND REPORTING ON UNREGISTERED
TITLE
A buyer’s has the following aims in investigating unregistered title:

Aim 1: identify extent of land being bought and rights benefiting that land
Aim 2: to obtain “Title Absolute” on registration
Aim 3: ensure person selling has right to sell
Aim 4: identify extent of other people’s rights over the land
NB Under rule 2.02 clients must be kept informed and under rule 3.16-27 the rules for acting for lender
& buyer are set out.
Deducing Title:
This is done by the seller and requires an Epitome of Title. This is a list with photocopies attached. In the
old days, before photocopies, this was called an abstract of title and contained a précis of each document
(no longer necessary). The epitome includes:
 the conveyance to current seller;

 previous conveyances going back at least 15 years if the conveyance to the current seller is less than
15 years old;
 copies of any documents referred to in any of the conveyance(s);
 copies of other documents relating to the land e.g. deeds of easement;
 copies of documents needed to show how each of the sellers obtained title e.g. assents, grant of
probate, deed of gift
 copies of documents evidencing any change of name of an estate owner (eg marriage certificates,
deed poll, statutory declarations); and
 copies of legal mortgages together with evidence of their discharge.
Note: the buyer is only entitled to see title deeds and abstracts dating back 15 years from the date of
exchange of contracts although there are three exceptions to this.
(i) A Power of Attorney under which any document in the epitome has been executed
(ii) A pre-root document referred to by a document in the epitome (eg it refers to restrictive covenants
imposed by a pre-root conveyance, or it describes the property by reference to a plan contained in a pre-
root document)
(iii) A pre-root document creating any limitation or trust by reference to which the property is
disposed of by a document in the epitome
Aim 1: to identify the extent of the land being bought and rights benefiting that land. To achieve this the
buyer must check for a ‘good root of title’ in the epitome. This is a conveyance which is at least 15 years
old at exchange of contracts. The conveyance must:
 Be at least 15 years old. The danger of accepting a short root is that a buyer will be bound by any
incumbrances predating the root.
 Contain an accurate description of the property. This may be done by reference to an earlier
conveyance
 Deal with the legal and beneficial interests in the property. There is a presumption that is the legal
estate is validly dealt with, so is the beneficial interest. The conveyance must be validly
o Executed &
o Stamped.
 Cast no doubt on the seller’s title. Check there is no
o Missing power of attorney
o Copy of grant of probate (if conveyance is by personal representative)
To identify the rights benefiting the land it is necessary to read through the epitome and identify any
rights that have been expressly granted. It is necessary for the client to inspect the land.
Aim 2: to obtain “Title Absolute” on registration the buyer must provide a good root of title, this includes
providing:
 a complete chain of conveyances showing title passing to current seller
 no missing documents (e.g. death certificates, powers of attorney, documents referred to in
conveyances)
 Show that all documents were validly executed (as a deed – signed sealed and delivered (after 1990
the signature also needed to be witnessed))
 Show that all documents requiring stamping were validly stamped within 30 days of completion
£20
0 OR a Certificate of value AND
VALID STAMP DUTY STAMP & PARTICULARS DELIVERED STAMP
The problem with an unstamped conveyance is that the root is not ‘good’ until all conveyances contained
within it are stamped. It thus breaks the chain of title. Penalty sum for late stamping and interest is
payable. These figures can be substantial.
When buying from co-owners, all must sign the conveyance.
When buying from Joint Tenants the buyer should also check:
1. There is no memorandum of severance in the conveyance
2. Perform a bankruptcy search against all Joint Tenants for their period of ownership.
3. The conveyance from sole joint tenant states he is the ‘beneficial owner’.
When buying from Tenants in common the buyer should also check:
1. All TIC’s have signed the conveyance
2. If only one surviving TIC, it is necessary to check the death certificate and overreach by insisting
on a 2nd trustee.
When buying from Personal Representatives the buyer should also check:
1. The PR’s have not already sold the land to another person – this would be referenced by a
memorandum of disposal on the grant of probate
2. The PR’s should state in the conveyance that there has been no previous disposal of the property.
3. The transaction must be authorised:
a. by will
b. the written authority of a beneficiary (of age and capacity)
c. or by the court
NOTE: In registered land the buyer can rely on the registers as proof that the land has not previously been
sold to another person.
When buying from a mortgagee exercising power of sale the buyer should check:
1. The power of sale exists (check the mortgage deed)
2. The power of sale has arisen
Remember that under s.104 LPA 1925 the buyer is not concerned whether the power has become
exercisable.

When buying from a company the buyer should check:

1. The company exists (check companies house)
2. The company is not insolvent
3. The company is not subject to fixed or floating charges (certificate of non crystallisation)
4. No entries regarding winding up/the appointment of receiver.
By virtue of s35A Companies Act 1985 a buyer acting in good faith can rely on the power of the board of
directors to bind a company without having to make further investigations into the articles.
If buying from a person exercising their power under a power of attorney the buyer must see a certified
copy of the power if attorney.
Aim 2: to identify the extent of third parties’ rights over the land.
It is necessary to carry out all relevant searches and inspections.

 In unregistered land third party rights are protected by registration at the Central Land Charges
(“CLC”) Registry. These are registered against the proprietor, not the property.
 The buyer’s solicitor must therefore check that all CLC searches were carried out against the correct
names of ALL previous estate owners referred to anywhere in the epitome of title documents for
the correct period of their ownership.
 The buyer’s solicitor must also check that each conveyance completed within the “protection
period” given at the top right hand side of the Central Land Charges Search result. If not, he should
carry out fresh CLC searches on form K15 to check whether or not any third party rights were
registered after the date of the Central Land Charges Search. Results of these searches may pick up
o Class C(iv) – Contract for pending purchase
o Class D(iI) – Restrictive Covenant
o Class C(iii) – Equitable easement
o Class F – Spouses marital rights of occupation
 It is also necessary to see an index map search.
The list of interests overriding first registration includes:

1. Leases of more than 7 years
2. Interests of persons in actual occupation
3. Legal easements and profits a prendre
4. Customary/public rights
5. Local land charges
6. Mining rights
7. Franchises/manorial rights/Crown rents/sea-wall or embankment rights/payments in lieu of tithes
Third party rights: Covenants These might be either positive or restrictive.

 Positive covenants require the covenantor to do something, or incur expenditure. The burden of
positive covenants does not run with the land. (Under the law of contract, the original covenantor
remains bound by the covenant even after it has sold the property for this reason he will require an
indemnity covenant to be signed by the buyer).
 Restrictive covenants are covenants prohibiting the covenantor from doing something with their land
and can bind a buyer in one of two ways:
o By registration – entered as a D(ii) Land charge or,
o By a complete chain of indemnity covenants
NB The charge may only be registered against the name of the original covenantor.
Third party rights: Easements - these may be legal or equitable.

 Legal easements are binding
 Equitable easements

Third party rights: Mortgages - If a mortgage is not released over a property at completion, the
property will be transferred subject to the mortgage.
Discharge of mortgages should either be by:
 Deed of discharge executed by the lender and included in the epitome or,
 Receipt by validly executing a receipt on mortgage deed.
Sale of Part - In unregistered land, as the Seller’s title documents will not be handed over on completion
of the sale of part (because the evidence the Seller’s title to the remainder of the land and the Seller needs
to retain them), the Transfer must contain an undertaking on the part of the Seller to keep the title
documents safe and to produce them if necessary (eg to prove title to a subsequent buyer).
SUMMARY
The key steps for investigating unregistered title can be summed-up as: “SCRAPPED”.
Searches
Co-ownership
Root of title
Ad valorem/PD stamps/Certificate of Value
Positive/Restrictive Covenants/Easements
PRs and other unusual sellers (eg mortgagees, sale by power of attorney)
Execution of Deeds
Discharge of Mortgages
Remember to check;
1. Who owns the land
2. The extent of the land
3. Who is selling the land
4. Who has rights over the land
LGS 7 SALES OF PART
A sale of part occurs where the seller sells part of the land comprised in the seller’s title.
Unregistered title
 Title documents: The seller’s solicitor will deduce title in the usual way by supplying the buyer’s
solicitor with an abstract/epitome to investigate.
 Searches: The buyer’s solicitor will carry out the usual pre-exchange and pre-completion searches
and enquiries. The searches in respect of the unregistered title will comprise:
a) Central Land Charges
b) Company
c) Index Map at Land Registry (Form SIM).
 Completion/post-completion: The purchase deed will comprise either a conveyance or Land Registry
transfer of part (TP1)

If the seller’s mortgage is not to be discharged then the buyer’s solicitor must obtain a deed of release to
be completed by the lender releasing the part of the property being sold from the mortgage. Sale of part
triggers registration of the part sold, not the retained land.
Registered title
 Title documents: The seller’s solicitor will supply official copies of the entries on the register and title
plan.
o With the sale of a plot on a building estate a certificate of inspection of the title plan in
Form CI may be supplied instead of a plan. This confirms that the plot is within the seller’s
registered title.
 Searches: The searches in respect of the registered title will comprise:

a) Land Registry search OS2
b) Company
 Completion/post-completion: The purchase deed must be a Land Registry transfer of part TP1. If the
seller’s mortgage is not going to be discharged on completion, the lender must complete a Form DS3.
The description of the property must be adapted because only part of the property is being sold. The
description in the previous conveyance/on the register will be for the plot prior to division. This
description needs to be “clear & accurate and refer to a plan”.
 The plan must be to a metric scale and may not be for identification purposes only. Instead it must
contain the phrase, “Property more particularly delineated…”
EASEMENTS
On the sale of part easements are granted in favour of the buyer and reserved in favour of the vendor.
Easements can be created in 4 ways:
1. Expressly by deed – this must be for a period equivalent to a freehold or leasehold
2. Acquired by prescription (20 years without force, stealth or secrecy)
3. Created by implied grant pursuant to s62 LPA 1925 this elevates a right or privilege to the status
of an easement
4. Elevated from a licence by transfer under the rule in Wheeldon v Burrows
[This only applies in favour of the transferee (buyer). The easement must be in use at the time
of the sale, reasonably necessary and necessary for the reasonable enjoyment of the property]
An implied easement of necessity must exist at the time of the conveyance and be so essential to the use
of the property that the property cannot be used at all without the easement. This is usually only possible
for a right of way.
An easement may be implied by common intention. Wong v Beaumont - Chinese restaurant air venting.
The Standard Conditions of Sale contain a provision relating to the sale of part: S.C.S 3.4 Retained land
The buyer gets not right to right to light and air from the vendor, worsening the buyer’s common law
position. Subject to this, the effect of the condition is to give to both the buyer and the seller the rights
that the buyer only would have at common law, for example implied rights under Wheeldon and Burrows.
The Standard Commercial Property Conditions contain an identical provision under Condition 3.3.
These conditions are habitually excluded.
Typical easements include:

 Rights of access – on foot / vehicle / at any time / maintenance contributions to road / adoption costs.
 Right to services: Gas / Water / Electricity / Drainage
o Rights to lay new services

o Right to use existing services
o Right to inspect / replace / renew / repair
 Right to light
An express grant will not take effect as a legal easement until it is registered s. (1-2) LRA
FREEHOLD COVENANTS
The seller will normally wish to impose covenants on the buyer in order to protect the seller’s retained
land. The covenants can either be positive or restrictive i.e. negative.
The burden of a positive covenant does not run with the land, however, when the original covenantor sells
the land burdened with the positive covenant he will remain liable under the original contract for a future
breach (s.79(1)LPA 1925) and he should protect himself by obtaining an indemnity covenant from his
buyer against future breaches.
The burden of a restrictive covenant e.g. not to alter the use of the property will run with the land. The
original covenantor will still wish to obtain an indemnity covenant from his buyer against future breaches
unless the covenant provides that the liability of the original covenantor is limited to his period of
ownership (which is unusual).
Frequently seen covenants:

 Fence the common boundary
 Restrictions on building
 Restrictions on use
 Not to obstruct the retained land
 Not to cause nuisance
The Contract (Rights of third parties) act is usually excluded.
Capital Gains Tax applies to properties unless The Principal Private Residence exemption applies – this
includes grounds up to ½ hectare (2.47 acres) or a larger area if required for the reasonable enjoyment of
the property as a residence (s.222 Taxation of Chargeable Gains Act 1992).
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LGS 8 LEASES
RESIDENTIAL leases are usually long leases. Their characteristics include:

 They are granted for a term of 99, 125 or 999 years
 A large amount is paid up front for the grant of the lease
 The ground rent is a small sum paid each year (peppercorn)
 They are deemed to be a ‘capital asset’
 They have significant statutory protection.
COMMERCIAL leases are often much shorter (e.g. 5-15 years) and historically favour the landlord.
Their characteristics include:
 A ‘Rack rent’, large amount of rent payable each year.
 No capital value (because you pay a lot each year to stay in the property)
 No premium up front
 Typically owned by institutional or investor landlords

 The Full Repairing and Insuring lease (FRI) is unique to the UK and provides the landlord
with a clear income stream. The tenant either will either directly pay the running or repair
costs of the property or the landlords will re-coup these costs by way of service charge. As a
result the landlord does not have to spend any of his income on maintaining or insuring the
property.
 The concept of covenant strength is the ability of a commercial tenant to pay the rent. M&S
historically has good covenant strength.
 The value of a landlord’s reversion is calculated from the covenant strength of the tenant and
the rental yield (as well as term left to run).
 Security:
 Landlord’s may ask for a “rent deposit” or
 A guarantee either from a parent company or a personal guarantee from the
directors.
OLD LEASES: In leases granted before 1 January 1996 the landlord will be able to call upon the original
tenant (and intervening previous tenants who have given direct covenants to the landlord) to meet the
liability of the current defaulting tenant.
NEW LEASES: In new leases (since January 1996) a landlord may require an outgoing tenant to sign a
statutory form of guarantee, an AGA ‘Authorised Guarantee Agreement’ where and outgoing tenant
guarantees its immediate successor’s obligations.
A lease is “the grant of a right to the exclusive possession of land for a determinate (certain) term less
than that which the grantor has himself in the land”. Key aspects:
 Exclusive possession
 Term of years absolute
 Term must be less than that owned in the superior lease
The whole of a lease may be assigned or a new lease may be granted. A landlord may not grant more
than he has. Therefore a 100 year lease may be granted at any time out of a freehold interest, however, a
99 year lease can not be granted out of a 125 year lease with 95 years left to run.
When granting a lease out of am existing lease it is know as a sub-lease or underlease. A landlord may
also assign the reversion.
Assigns ‘Reversion’
L L
Grants
‘Lease’
T
Grants
Sub/Under
‘Lease’
Subtenant
OLD LEASES: In leases granted before 1 January 1996 the original tenant remained liable for leasehold
covenants throughout the term of the lease, whether or not the lease had been assigned. This was due to
the rule of privity of contract between the original parties. The new tenant is only liable for covenants that
touched and concerned the land as their relationship with their landlord exists by virtue of privity of
estate.
NEW LEASES: Following the Landlord and Tenant (Covenants) Act 1995, the doctrine of original tenant
liability was dismantled for new leases. Instead, on lawful assignment of the lease, tenants are
automatically released from all covenants. The landlord’s redress is to require them to enter into an AGA.
A lease of more than 7 years (or with more than 7 years to run) must be registered on assignment or grant.
Grant of a lease:
1. The seller (landlord) drafts both the contract and the lease itself.
 This is called ‘an agreement for lease’
 There are often long negotiations at this stage.
 It makes sense for the landlord to draft both these documents as he is selling the estate.
2. The buyer (tenant) raises pre-contract enquiries in the same way as in a freehold purchase.
 Note that enquiries about service charge here are raised:
 How much, how often, what included (insurance, heat, water)
3. The seller (landlord) must deduce title.
 For a lease of more than 7 years Standard Condition 8.24 or SCPC 10.2.4 which
obliges the landlord to deduce title.
 For a lease of less than 7 years, there is no obligation on the landlord to deduce title to the
tenant, so it must be a special condition of the custom written contract.
4. Obtaining consents.
 Consent from the landlord (and any superior landlord) and mortgagees may be needed to
grant a lease
5. The buyer (tenant) must carry out pre-exchange searches.
 Chancel repair search / mining search.
 Company search against Management Company. (Company searches do not have priority
period)
6. Exchange of contracts.
 An agreed draft of the lease must be attached to the back of both parts of the contract
(agreement for lease).
 Law society formula will be used at exchange. (NB that this imposes undertakings on the
solicitor)
7. Requisitions on title and apportionments.
 Requisitions, raised between exchange and completion, are enquiries dealing with the
practicalities regarding completion; the discharge of any mortgage, the amount required
on completion and the bank account details.
 Apportionments of rent, service charge and insurance premiums are also necessary.
8. Pre-completion searches.
 Same principles as freehold sale, but may also need a company search against the
management company.
9. Lease and counterpart.
 The lease is drawn up in two parts: ‘original’ and ‘counterpart’. The landlord (seller)
executes and dates the original and on completion passes it to the tenant (buyer) and the
tenant (buyer) executes and dates the counterpart and on completion passes it to the
landlord (seller). These are printed on engrossment (posh & thick) paper.
10. Completion.
 The lease is the required ‘deed’ for the purpose of the grant.
11. Stamp duty land tax.
 Charged on the length of the term of the lease and the amount of premium and rent
payable by the tenant.
12. Registration.
 A lease of more than 7 years must be registered.
Assignment of a lease: (selling a lease that already exists; alienation of an existing lease)
1. Pre-contract procedure.
 The buyer (tenant) raises pre-contract searches.
 The seller (landlord) prepares the draft contracts.
 The seller (landlord) must deduce title.
2. The Landlord’s consent.
 Standard Condition 8.3 or SCPC 10.3 contain provisions dealing with the acquisition
of the landlord’s consent and making the contract conditional upon this being obtained.
3. Pre-contract enquiries
 The buyer (tenant) raises pre-contract enquiries in the same way as in a freehold
purchase, plus specific queries regarding e.g. service charges.
 The seller (landlord) must reply to the enquiries raised by the buyer.
4. The seller (landlord) must deduce title.
 Registered Leases: Official Copy entries together with a copy of the lease and all
supplemental documentation. Licences are evidence of the landlord’s consent.
 Unregistered leases: Copy of the lease and all supplemental documentation.
 Requirement to deduce superior title: If the lease is registered with ‘title absolute’ then
the superior title does not need to be deduced. If title is registered but limited or qualified
or if it is unregistered, then a special condition should be drafted into the contract
requiring deduction of the superior title.
5. Searches.
 Same principles as for freehold sale. A company search against the management
company should also be carried out.
6. Exchange of Contracts and the need for a Contract.
 Note use of Law Society Formula
7. Pre Completion procedure – apportionments.
 Note in particular the need for completion statement dealing with apportionments of the
rent/service charge and insurance premiums.
8. Form of assignment/transfer at completion.
 Registered lease TR1.
 Un-Registered lease deed of assignment.
Indemnity Covenants:
 OLD LEASE: indemnity covenant deeded due to original tenant liability.
 NEW LEASE: indemnity covenant only needed if the outgoing tenant is giving an AGA
Title guarantee and modification for breaches of repair covenant:
 FULL/LIMITED title guarantee: needs to be amended to avoid guaranteeing the state
of the property, if not amended assignee may impliedly guarantee the state of the
property
9. Stamp duty land tax.
 Charged on amount of premium paid to seller. http://ldcalculator.inlandrevenue.gov.uk
10. Registration.
 Under s.4(1)(a) LRA 2002 an unregistered lease with more than 7 years left to run must
be registered.
11. Notice of Assignment. (served on landlord)
 The landlord must be notified that an assignment has taken place
Acting for the mortgagee is usual for a residential lease, it is however, necessary to comply with the
requirements of the CML lender’s handbook & in particular, check that the residual lease does not contain
a provision for forfeiture on bankruptcy.
COMMONHOLD:
Commonhold offers an alternative to leasehold/freehold of owning and managing multi occupied

properties such as flats, shops, offices, shopping centres and business parks.
The essence of Commonhold is that owners of units in interdependent buildings enjoy the ‘freehold’ of
their individual units. They also own and run a Commonhold Association, which is a company, which
will own and manage any common parts and shared facilities. The detailed rights and obligations of the
unit holders will be laid down in a Commonhold Community Statement, and there will no longer be a
landlord in the Commonhold system.
Under the leasehold system, the only way to enforce mutually beneficial (positive) obligations between
adjoining landowners is to require the landlord to covenant to enforce another tenant’s compliance
through the terms of the lease itself.
A leaseholder owns a wasting asset and runs the risk of forfeiture. As no two leases are the same,
Commonhold creates consistency in multi-let developments.
As there is no lease, the risk of forfeiture is no longer an issue in a Commonhold development. Each
separate property is called a unit and each owner is called a unit holder.
Commonhold can only be created out of a registered freehold title; this means that only the existing
freeholder can convert land into Commonhold land.
The Commonhold association will be a private company limited by guarantee. It will accordingly have a
memorandum and articles of association. It will own the freehold title to the common parts of the
development.
The Commonhold Community Statement will be binding on the Commonhold association and all present
and future unit-holders. There is a strong emphasis on ADR, and even an Ombudsman, but unit holders
will have the right to enforce the rules.
LGS 9 CONTENTS OF A LEASE
The landlord’s objectives are to retain control of the property, to obtain a return on investment and to
ensure that the property is insured and repaired at all times. In addition the landlord will also want to
ensure that the property is only used for permitted purposes.
The tenant’s objectives are to ensure that he is only subject to reasonable obligations. As such he shall
want to ensure that there are; no restrictions preventing the property being used for the required purpose
(i.e. a prohibition on the sale of alcohol, should the required purpose be a wine bar), no unduly onerous
provisions, the rent cannot rise excessively, and that he can sell/assign or otherwise alienate the lease if
the property is no longer required.
Structure of a lease:
No two leases are the same, however a rough anatomy of a lease is as follows:
1. Parties, date, definitions, interpretation provisions.
2. Demise and Rents (“habendum” – demise and term and “reddendum” – rent and amount payable)
3. Tenant’s covenants
4. Landlord’s covenants
5. Guarantor’s covenants (Rare)
6. Proviso’s, agreements and declarations
a. Forfeiture – The right for the landlord to bring a tenancy to and end. In residential leases,
this area is up for review under the HRA but in commercial properties, peaceable re-entry
can occur without a court order, overnight i.e. landlord’s can simply change the locks.
b. Damage and destruction – what will happen should the building be destroyed by fire.
7. Rights granted in favour of the tenant, equivalent to easements
8. Rights excepted and reserved in favour of the landlord.
9. Other provisions.
a. Rent review
b. Service charges
c. Form of future documentation (AGA, rent deposits)
10. Attestation – the way the lease is signed as a deed.

DEMISE: A property may be leased as a whole. This is similar to the description for freehold land.
Alternatively, a lease may be of part. Internal envelope, this requires careful drafting. It tends to include
the plaster in the walls, but not the brickwork. The common parts of a building will be the responsibility
of the landlord, and it will maintain these, recovering the costs by way of a service charge. A tenant is
usually responsible for keeping their demise in repair. Various rights will be granted in favour of the lease
such as to use common parts and reserved in favour of the landlord and other tenants such as access to run
services.
TERM: “From” is non inclusive – therefore a term “from 25 th December” starts on the 26th December,
whereas from and including starts on the 25th. If the term is for ten years and is granted “from and
including 25th Dec 1995” then it will expire on 24th Dec 2005. Following the Landlord and Tenant Act
1954, a tenant may be granted security of tenure should certain conditions apply, therefore after the term
expires, if the tenant stays in occupation, the lease is deemed to continue.
Break clause: Rights to end the lease early: can be for landlord or tenant, must be expressly included in
the lease.
RENT: Residential leases tend to have minimal ‘peppercorn’ rents. In comparison commercial leases
have ‘rack-rents’ which are high annual premiums. Residential rents are usually paid annually by
cheque, whereas commercial rents are usually paid on the quarter days by standing order or direct debit.
If the lease is silent on the matter, rent is payable in arrears, however, a term may be included to specify
that rent is payable in advance. If a landlord has breached his covenants to the tenant (such as a repair
covenant) there is a reasonable legal counter claim against the rent payment that the tenant must make.
The landlord will usually avoid this by stating that rent is payable ‘without set off or deduction’.
VAT: Basic rule is that Commercial property rent is exempt of VAT; the landlord can elect to waive this
should he wish to be able to recover his input tax. The effect is often neutral as businesses can usually
recover VAT by offsetting output VAT vs input VAT.
RENT REVIEW:
Commercial leases with a term of more than 5 years will usually contain a rent review clause. A 5 year
pattern is usual for a 15 year lease. Rent reviews are almost always ‘upward only’, providing that rent
cannot go down at review. A simple form of rent review is to link it an ‘index’ of values e.g. the retail
prices index. Another form increasing in popularity is ‘turnover rents’ that link rent to a company’s
increase in turnover.
The landlord will always be keen to ensure that he achieves the heist yield possible. To this end, the
landlord may want to insert the word ‘best’ before the word rent. Any potential tenant with a special
interest (e.g. the tenant next door wanting to expand) may be prepared to beat the market rent and hence
this could have the effect of inflating the rental valuation.
The most popular type of rent review is an ‘open market rent review’. This is a periodic rent review at
which a ‘market rent’ is determined considering a hypothetical lease, based on the actual lease but with
certain assumptions and disregards.
A hypothetical lease is a method of avoiding contingent facts that would cause the market to artificially
favour either the Landlord or Tenant. An example of an assumption is:
 The lease may include an assumption that “the tenant has performed all its obligations under the
lease”. Had the tenant not complied with, for example, his repair covenants the property would be
less attractive to a hypothetical tenant, thus reducing the properties market rent. The less the
hypothetical tenant is prepared to pay in rent for the property, the lower the rent is likely to be
following review.
 The lease may also include an assumption that “the Landlord has performed all its obligations under
the lease”. If the common parts of the building are maintained poorly this would therefore be
disregarded and the hypothetical rental value would be artificially high.
 The lease may include an assumption that “the premises are fully fitted out and ready for immediate
occupation and use”. This resists the tenants argument that the landlord may have to offer a rent
free period to an incoming tenant should the premises require refitting.

 The lease may disregard “the tenant’s occupation of the premises” as a tenant may be prepared to
pay a premium to avoid having to move. The same applies to “goodwill”.
 “the rent review provisions to be disregarded” a tenant in the open market will be prepared to pay a
higher rent for a long lease with no rent review provisions.
 The lease may disregard “any improvements carried out with the landlord’s consent by the tenant”;
otherwise the tenant will have to pay a premium for his own voluntary improvements to the
property.
 The lease may disregard “any rent free period”; this has the effect of increasing the average rent due
to the shortening of the time period to which it really relates. It is known as headline rent.
There will usually be a clause requiring the parties to resolve disputes by arbitration or expert.
REPAIR COVENANT: These must be explicit in the lease. A covenant that simply states “to keep the
premises in repair” is actually a greater burden than it seems. The requirement to ‘repair’ impliedly
obliges the tenant to ‘put and keep the property in reasonable repair, even in the property was taken on in
disrepair at the beginning of the lease.
 The phrase “Repair, renew and replace” only requires a tenant to repair/renewal parts of the
premises that are in need of repair. This covenant does not require that the tenant provides the
landlord with substantially new premises.
 Latent defects are faults in the way the property has been designed or constructed. If the latent
defect causes disrepair, the tenant must remedy this.
 A tenant will wish to exclude responsibility for disrepair caused by risks against which insurance
has been affected.
 Decorations are deemed beyond repair and require their own clause. It is usual to require
redecoration every three years.
 Any covenant to yield up in repair to the landlord’s satisfaction should be altered (at the request of
the tenant) to include reasonableness.
SERVICE CHARGE: This is the means by which the landlord re-coups the costs he incurs in repairing
the common parts, heating and lighting, security, car parking and gardening as well as insuring the
building. The service charge is usually reserved as rent. This provides the landlord with better remedies
against a tenant behind in his payments. Notably a landlord can exercise:
 Distress, enabling the landlord to seize goods to the value of the unpaid rent
 Forfeiture for the non payment of rent and avoids the formalities of an s.146 notice.
There will be a service charge provision in the lease which specifies the method of calculating the
proportion. This must be a fair payment. A sinking fund may be maintained, the purpose of which is to
meet irregular but costly expenditure.
A landlord must be consistent for all leases in a development/building. A management company may be
used to provide services.
INSURANCE: It is usual for the landlord to insure the property. In a business development the landlord
will usually insure the development and recover the cost of insuring each property from each tenant. The
cost of this may be passed on as rent, providing the landlord with the remedies of distress and forfeiture.
Tenants should require the insurance policy to be in joint names, however often insurance companies
don’t like this.
The tenant will want the insurer to waive its common law right of subrogation, i.e. the right to stand in the
shoes of the landlord and sue the tenant directly for any loss.
The level of insurance is linked to the re-instatement costs of the premises. Typical insurance risks
include Fire, Flood and Storms. Terrorism now requires separate cover.
The lease usually covers the situation where the premises are destroyed. The lease will usually suspend
rents should the building be destroyed, however, if the lease is silent, all rents remain payable.
 The landlord will usually explicitly covenant to re-instate/remedy damage caused by the insured
event. There should be a break clause to enable the tenant to walk away should the remedial works
be expected to last beyond the lease.
 The landlord will usually covenant to produce evidence of the insurance having been paid. This is
usually to be recovered as rent.
 The tenant will also usually covenant not to ‘vitiate’ (invalidate) the policy. (e.g. storing explosives)
 Strangely, there is no common law duty on the landlord to use insurance monies to re-instate the
premises.
LGS 10 CONTENTS OF A LEASE II
ALIENATION: Refers to all forms of disposal of the leasehold interest by the tenant and includes
Assigning, subletting, parting with possession and charging.
 The landlord will want to retain some control over who is in occupation and may require the tenant
to apply for consent prior to disposing of its leasehold interest.
 If the lease does not expressly restrict assigning, the tenant is free to do so at will.
LANDLORDS CONSENT: Covenants are phrased in three different ways. They will either be absolute,
qualified or fully qualified.
1. Absolute: “The tenant shall not…”

2. Qualified: “The tenant shall not … without the landlord’s consent”
3. Fully Qualified: “The tenant shall not … without the landlord’s consent not to be
unreasonably withheld”
Section 19(1)(a) of The Landlord and Tenant Act (LTA) 1927 converts a qualified covenant into a fully
qualified covenant. Hence the landlord may not unreasonably withhold consent to assign or otherwise
alienate unless the covenant is expressed in absolute terms.
 The landlord may charge expenses, but may not charge a ‘fine’ (e.g. an increase in rent) as a
condition of giving its consent.
The landlord may reasonably withhold consent if the proposed assignee is likely to be unable to pay the
rent, if the proposed assignee is a company registered abroad, if the landlord can anticipate a breach
by assignee or if the proposed assignee intends to change the use of he premises.
 Section 19(1A) LTA 1927 protects the landlord. It allows the landlord of ‘new’ commercial leases
to specify, by way of lists, ‘circumstances’ and ‘conditions’ where a landlord will not be
unreasonable in withholding consent to assign.
s.1 LTA of The Landlord and Tenant Act (LTA) 1988 provides a further layer of protection to the tenant.
Where a tenant applies to the landlord in writing for consent to assign or sublet. The landlord must give
consent unless reasonable to refuse.
 Either way, the landlord must respond by notice in writing, giving reasons for refusal, within a
reasonable time, 28 days (Dong Bang).
The Landlord and Tenant (Covenants) Act 1995 introduced some core changes after 1st January 1996
original tenant liability was abolished for all ‘new’ leases. As a result a new tenant is automatically
released on assignment.
L s.16 Landlord and Tenant (Covenants) Act

1995
 AGA given by tenant to immediate assignee
 Personal guarantee of covenants in the lease
 In example, when A1 Assigns, T is released.
(AGA)
T A1 A1
Privity of Privity of
AGA AGA
Estate & Estate
Contract

A landlord may only recover outstanding liabilities from former tenants (under both old and new leases)
if he serves a s.17 notice (under the Landlord and Tenant (Covenants) Act 1995) within 6 months of
the charge becoming due.
 As a result of the default by the current tenant the previous tenant may require the landlord to grant
it an ‘overriding lease’ within 12 months of the payment. s.19
USER COVENENTS: These must be expressed to be enforceable. There are no implied restrictions of
use. A very strict user clause will reduce the value of the hypothetical lease on rent review.
A user covenant is likely to reference the use classes in Town and Country Planning (Use Classes) Order
1987.
ALTERATIONS: Unless there are specific restrictions in the lease, the tenant will be free to make
internal, non-structural alterations to the premises as he wishes.
1. Absolute: Tenants can apply to court for authorisation to carry-out improvements

2. Qualified: Consent may not be unreasonably withheld s.19(2) LTA 1927
What amounts to an ‘improvement’ is widely construed. The courts allow tenants fairly free reign. s.19(2)
LTA 1927 allows the landlord to claim compensation for loss in value to his reversion.
FORFEITURE: (By peaceable re-entry or court order) Forfeiture is not automatic and only exists if the
lease expressly includes such a right. The lease may allow forfeiture when:
1. the tenant is 14/21 days in arrears of rent,
2. in breach of any covenant, agreement or condition in the lease*,
3. upon bankruptcy or insolvency of the tenant.
A tenant may apply to the court for relief against forfeiture.
A s.146 notice must be served by the landlord on the tenant to explain grounds for forfeiture in all cases
except non payment of rent.
*For breach of a tenant’s repairing covenant the landlord must bring an action in damages. These
damages are limited by s.18 LTA 1927 to the amount by which the reversion is reduced in value. The
landlord is entitled to enter the premises and carry out necessary repairs himself if the lease so allows.
DISTRESS: To distrain for rent is to take action in Distress and seize chattels.
A ‘licence to assign, alter or underlet’ usually takes the form of a deed and is entered into by the
landlord, tenant, assignee and/or under-tenant. The licence also usually contains various covenants.
 A tenant will usually covenant to pay the landlords costs and expenses in dealing with the tenants’
application for licence to assign/alter/underlet. He will also covenant not to allow the assignee to
take up possession until the assignment has completed.
 A licence to underlet constitutes the landlord’s formal consent to a tenant to grant an under-lease.
The under-tenant will usually be required to covenant to observe and perform the covenants in the
head lease. Without a direct covenant, there will be neither privity of contract nor privity of estate.
LGS 11 CODE OF PRACTICE FOR COMMERCIAL LEASES

AND
PROPERTY ASPECTS OF CORPORATE TRANSACTIONS
The Code of Practice for Commercial Leases provides a number of examples of good practice in
landlord and tenant negotiations over a lease. The code is currently voluntary. Its aim is to ensure fairer
terms of leases and good conduct between parties.
The code is divided into 23 areas of common debate between landlord and tenant. The first 10 cover
initial negotiations of the lease.

1. Renting premises: Both landlords and tenants should negotiate the terms of a lease openly,
constructively and considering each other’s views.
2. Obtaining Professional Advice: Parties intending to enter into leases should seek early advice of
property professionals or lawyers.
3. Financial Matters: Landlords should provide estimates of any service charge and other
outgoings. Parties should be open about their financial standing to each other and the terms of
any cash deposit should be agreed and documented.
4. Duration of lease: Landlords should consider offering appropriate break clauses. NB that unless
excluded, the Landlord and Tenant Act 1954 gives the tenant of business premises an
automatic right to renew the lease following the expiry of the contractual term.
5. Rents: Where different lease terms are offered, each set of terms should be individually priced.
The landlord should disclose the VAT status of the property.
6. Rent Review: Landlords should, wherever possible, offer alternatives to upward only rent
review. Those funding the property should make every effort to avoid imposing restrictions on the
type of rent review on offer.
7. Repair: Any repair costs should be appropriate to the length of the term of the lease. Landlords
should consider alternatives to the ‘Full Repairing and Insurance’ lease such as applying a cap to
the service charges.
8. Insurance: The tenant should be allowed to terminate the lease following destruction of the
property unless the landlord agrees to rebuild the premises. The tenant should also be given the
opportunity to influence the choice of insurer.
9. Alienation: The only restriction on alienation of the whole should be obtaining the landlord’s
consent, which should not be unreasonably withheld. [AGA’s should only be imposed where the
assignee is of lower financial standing than the assignor at the date of assignment.]
10. Alterations: The landlord should not restrict alterations unless it is necessary to protect the value
of the reversion or the value of neighbouring premises. The tenant should only be required to
make good permitted alterations if reasonable to do so.
Due to general increasing levels of transparency Tenants are becoming more informed, leading to
improved negotiation skills and better terms in their leases.
The Code provides a useful negotiation tool for uninformed tenants, but it has not been widely supported.
In Corporate Property Transactions involving numerous properties, the seller will often make
statements of fact that are supported by warranties. It is important to be aware that such warranties may
be capped; both in relation to amount (de minimis and de maximus totals/aggregate) and by time. These
may be drafted elsewhere in the agreement, so it is important to read the whole agreement, not just the
‘property bits’. Be aware specifically of the disclosure letter that may place the risk of identifying
problems with the buyer. Due Diligence will be carried out on some/all of the properties. Note that
environmental issues have increasing importance for buyers and lenders.
LGS 12 COMMERCIAL SECURITY OF TENURE
Following the Landlord and Tenant Act 1954, if a business tenant wishes to remain in occupation of its
rented premises, it can do so as long as it complies with specified procedures.
 Tenants who do remain beyond the contractual expiry date (“the CED”) of their lease are said to be
“holding over”.
 Landlords are now only able to end leases if they can prove one or more of the grounds specified by
the 1954 Act.
Any lease or licence may expressly exclude the Act S.43 LTA
Section 23(1) of the LTA 1954 defines what is required for the act to apply:
a) Any tenancy (including periodic, oral, and written tenancies)

b) Occupied (a tenant that sublets will therefore not be protected)
c) For the purpose of a business(Widely defined as trade, profession or employment)
Section 24(1) of the LTA 1954 sets out the two principle layers of protection afforded o business
tenancies.
a) That the tenancy will continue after the Contractual Expiry Date (CED) until terminated in
accordance with the 1954 Act.
b) The tenant has a right to apply for a new tenancy.
Certain tenancies are excluded (Section 43) from the protection this act provides:
 Tenancies at will (which are informal and can be terminated at any time),
 Tenancies of agricultural holdings, s.43(1)
 Mining leases s.43(2)
 Service Tenancies s.43(2) (Caretaker’s flat)
 Fixed term tenancies of less than 6 months s.43(2)
 ‘Contracted Out’ tenancies s.38A Parties can agree to exclude the Act prior to the grant of the
lease. The Standard Procedure is set out in the Reform Order which amends the 1954 Act:
 Warning Notice from Landlord to Tenant at least 14 days before the lease is granted
 Simple declaration by Tenant that he understands the effect of the warning notice
 The lease must then contain reference to both the Notice and Declaration and a clause
stating that security of tenure is excluded.
[If time is short, the 14 day notice period can be replaced by a statutory declaration by the tenant that he
accepts the consequences]
Whenever the LTA requires notices between the parties it is important that the notice is served on
the Competent Landlord, this may not be the tenant’s immediate Landlord.
COMPETENT LANDLORD:
Section 44 of the LTA 1954 sets out the need for the
L landlord to be a competent landlord: a competent
landlord must either own the freehold or be a person
who has a superior tenancy which will not come to
an end within 14 months.
If ’T’ has less
than 14
months of his
lease ‘L’ is
T
Competent
Landlord
Sub-T
The tenancy relates to a ‘Holding’ which is defined as the property excluding any part which is not
occupied by the tenant for the purposes of the tenants business s.23(3).
TERMINATION OF A TENANCY: Section 24 of the LTA 1954 provides that a protected tenancy can
only be terminated by the landlord by service of a Section 25 notice. But:
 The tenant may serve notice under s.26 requesting a new tenancy
 The tenant may terminate tenancy without renewal s.27
These notices are mutually exclusive and service of one precludes service of another.
Termination of a tenancy by Section 25 notice:

STEP 1: If a landlord wishes to end the tenancy without granting a new lease he must serve a s.25 notice.
 This can be served before or after the Contractual Expiry Date (CED), however, the termination
date specified in the notice must not precede the Contractual Expiry Date.
 The termination date specified in the notice must be at least 6 months after the s.25 notice is served,
but must not be more than 12 months after the date the s.25 notice is served.
STEP 2: The Landlord must (NOTIONALLY) apply to court for termination of the tenancy s.29(2). This
must be done before the termination date in the notice.
 If the tenant does not wish to accept the termination date specified in the notice (the ‘notice expiry
date’), the tenant may apply to court to determine whether the grounds for termination cited by the
landlord in the notice are sufficient s.24(1)
 If the tenant does not apply to court he loses his right to renew.
If the landlord is happy to allow the tenant to remain in the property, he may nevertheless wish to
terminate the existing tenancy and grant a new lease. This may be either to increase the rent or to tie-in
the tenant to a new 10 year term.
Tenant’s Section 26 request notice:

This notice is served by a tenant to terminate an existing tenancy & request a new lease commencing on
a specified date. Again there is a six month window to serve this notice. It must be served at lease six
months before the proposed commencement date of the new lease. The new lease must not start before
the old lease ends (The new lease’s commencement date must not precede the old lease’s CED).
 If the landlord intends to oppose the tenant’s request of a new lease he has 2 months from the date
of the notice to serve a counter-notice. The landlord must state the statutory grounds on which he
intends to rely.
 The tenant or the Landlord must (NOTIONALLY) apply to court.
 The landlord, following service of the counter notice, will apply to court for an order that
no new lease be granted.
 The tenant will apply to court for a new lease. The tenant may not do this until either the
Landlord has served a counter notice, or 2 months have passed and must have made the
application before the proposed commencement date of his s.26 notice which acts as a
deadline.
The s.26 notice must be served on the competent landlord and in the prescribed form. The tenant’s
reasons for serving a s.26 notice may be so as to secure the certainty of a new lease, either so that he may
carry out renovations or to assign the lease. It can also be used as a form of rental negotiation, if market
rent is lower than the terms in his lease he will want to terminate his current lease and acquire a new one.
SERVICE OF NOTICES:
Notices must be validly served to be effective. This includes the requirement that notices are served on
the competent landlord. s.40 of the Act enables parties to require information as to who owns any superior
leases and the lengths of term of the immediate landlord during the last two years of their lease.
A six month notice served on 1 January 2006 will expire on 1 July 2006; this is known as the
corresponding date rule. This is applicable to the service of notices.
FROM AND INCLUDING: A lease for a term of ten years from and including 24 March 1999 will
commence on 24 March 1999 and will expire on 23 March 2009.
FROM: A lease for ten years from 25 March 2006 will actually commence on the 26 March 2006 and
expire on 25 March 2016.
GROUNDS OF OPPOSITION: Section 30 LTA 1954 If the landlord wishes to oppose the tenant’s
right to renew its lease (as set forth in either a s.25 notice or the counter notice to the s.26 notice) then the
landlord must make out a ground of opposition. Seven permitted grounds are set out in s.30 of the 1954
Act.

1. A serious (still continuing at the date the matter is heard) breach of a repairing obligation under the
lease s.30(1)(a) – at the courts discretion
2. A serious and persistent delay by the tenant in paying rent s.30(1)(b) (discretionary)
3. “Other” substantial breaches of obligation, a catch all s.30(1)(c) (discretionary)
4. Availability of other suitable accommodation – this accommodation must be reasonable in all the
circumstances s.30(1)(d) – Mandatory, if proved, the court must evict the tenant
5. If the landlord wishes to dispose of the whole property and the tenant has a sub-tenancy of only part
of the property s.30(1)(e) (discretionary)
6. Landlord intends to demolish / substantially reconstruct the premises s.30(1)(f) – Mandatory
a. doing so requires full possession of the tenants property
b. the landlord must demonstrate a settled intention – usually demonstrated by having
acquired planning permission
7. The landlord intends to occupy the premises himself. s.30(1)(g) – Mandatory For the landlord to
rely on this he must have owned the premises for at lease 5 years, so he can’t acquire the superior
lease so as to vacate the property immediately.
The second stage of a notice under either s.25 or s.26 is an application to court. This should be made by
either the Landlord, s.24(1) or the tenant, s.29A. Usually, this stage is not reached, however, in the event
that the parties cannot agree, the court may decide whether the lease should be renewed and under what
terms or terminated. It is therefore in the tenant’s interest to lodge this application as it provides him with
a fallback position should any dispute be unresolved.
Until the new lease is granted the tenant will continue to pay the old rent, payable under the old lease. As
negotiations can take a considerable amount of time, s.24 allows either party to apply to the court to
determine an ‘interim’ rent. This will be payable from the earliest termination / commencement date
which could have been specified in the relevant notice s.24B. (6 months from serving the notice or the
CED, whichever is later). Interim rent is set at the market level (s.24(c)) however, landlord often
incorporate a final rent review clause so that rent is reviewed on the last day of the lease.
If the landlord cites a ground under s.30 where the tenant is not at fault (i.e. he wants to dispose, demolish
or occupy the premises), the landlord must compensate the tenant for the disturbance to his business. The
compensation is a figure set by the local authority known as the rateable value – if the tenant has leased
the property for in excess of 14 years the rateable value is doubled.
If the parties can not agree the terms of the lease the court has the power to decide the following terms:
Premises: the holding at the date the court order is made
Duration: Up to 15 years
Rent: See s.34
Term commencement date: 4 weeks + 3 months after the date of the order. The 4 weeks are to allow for
any appeal.
 The existing tenancy is the starting point for the court to determine the new lease
 All variations must be reasonable
If the tenant simply wishes to leave the property, he may serve a s.27 notice stating his desire to quit.
There is no requirement for a prescribed form, so he can simply advise his immediate landlord that
following the CED he does not wish to renew his lease. After serving a s.27 notice the tenant loses his
right to request a new lease under s.26
The only time that a s.27 notice is necessary is when the tenant has remained in the property beyond the
CED, but has not renegotiated the lease. So that the landlord is not suddenly left without a tenant, the
tenant must serve a s.27 notice which gives three months notice of his intention to end the lease.


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LGS 1 INTRODUCTION & OVERVIEW

5. Carries out pre-completion searches.

Considerations in a property transaction:

LGS 2 DEDUCING (Seller), INVESTIGATION (Buyer) & REPORTING ON TITLE

In Registered Land the following documents constitute deducing title:

The Register comprises three separate registers:

If the sellers are personal representatives (PR’s)

If the sellers are acting under a Power of Attorney

If the sellers are lenders exercising their power of sale

Jamie Hornby | mail@jamiehornby.com | Mobile: +44 (0) 7973 738 829 | www.jamiehornby.com

NB Professional Conduct Rule 2 – Solicitors must keep their client informed.

Official Copies must not be more than 12 months old.

LGS 3 DEDUCING (Seller), INVESTIGATION (Buyer) & REPORTING ON TITLE II

NOTE: Interests of a person in actual occupation are overriding unless:

Legal easements can be created in 4 ways:

Squatter’s Rights: Schedule 6 LRA 2002

Transactions at Undervalue: s. 341-2 Insolvency Act 1986

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LGS 4 DRAFTING THE CONTRACT AND EXCHANGE OF CONTRACTS

DRAFTING THE CONTRACT

The following sections of the contract should be considered:

Date – This remains blank until exchange of contracts.

Jamie Hornby | mail@jamiehornby.com | Mobile: +44 (0) 7973 738 829 | www.jamiehornby.com

Full/Limited title Guarantee

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Jamie Hornby | mail@jamiehornby.com | Mobile: +44 (0) 7973 738 829 | www.jamiehornby.com

LGS 5 COMPLETION AND POST COMPLETION

Buyer’s solicitor: Finance

Buyer’s solicitor: Pre-Completion Searches

Seller’s solicitor: Replies to standard ‘requisitions’

Seller’s solicitor: Finance

The Seller’s solicitor will hand over the following on completion:

The Buyer’s solicitor will then:

A buyer’s has the following aims in investigating unregistered title:

 the conveyance to current seller;

VALID STAMP DUTY STAMP & PARTICULARS DELIVERED STAMP

When buying from co-owners, all must sign the conveyance.

Jamie Hornby | mail@jamiehornby.com | Mobile: +44 (0) 7973 738 829 | www.jamiehornby.com

When buying from a company the buyer should check:

It is necessary to carry out all relevant searches and inspections.

The list of interests overriding first registration includes:

Third party rights: Covenants These might be either positive or restrictive.

Third party rights: Easements - these may be legal or equitable.

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LGS 7 SALES OF PART

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 Searches: The searches in respect of the registered title will comprise:

These conditions are habitually excluded.

Typical easements include:

o Rights to lay new services

Frequently seen covenants:

The Contract (Rights of third parties) act is usually excluded.

RESIDENTIAL leases are usually long leases. Their characteristics include:

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Commonhold offers an alternative to leasehold/freehold of owning and managing multi occupied

LGS 9 CONTENTS OF A LEASE

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