MIND THE (Registration) GAP

MIND THE (Registration) GAP

Stodday Land Limited and Ripway Properties v. W M Pye – this is a Court decision this month on the “registration gap” issue.  A buyer completed the purchase of a property, applied to the Land Registry to register the Transfer and then served a notice to quit on the tenant.  The Court held that the notice was invalid as the buyer was not yet registered at the Land Registry as the proprietor of the property.

This is therefore a further reminder as to how the law operates on this issue and reinforces the importance of applications being submitted to the Land Registry promptly after completion of a purchase.  The case also follows the 2001 Court of Appeal decision in Brown & Root v. Sun Alliance where an original tenant assigned the Lease to a group company.  There was a break clause in the Lease that was personal to the original tenant.  Some time after the assignment, it was decided that the tenant no longer wanted to continue with the Lease and the original tenant served the break notice.  The landlord argued that the notice was ineffective as the Lease had been assigned to the group company.  The Court held that the original tenant was entitled to serve the break notice since the assignment to the group company was never registered at the Land Registry.

If that particular decision was to be litigated again today, S.28 of the Landlord and Tenant (Covenants) Act 1995 may well assist the landlord.  The section states that an “assignment” includes an equitable assignment.  There are a few possible ways around this issue where a property is being purchased and it is known that notices may need to be served shortly after completion of that purchase.  When the contract is being negotiated, a clause could be inserted whereby the buyer acts as the seller’s agent in serving notices or otherwise the seller agrees to act in accordance with the reasonable requirements of the buyer (at the buyer’s cost) during the “registration gap”.

This information is published for general information and should not be relied upon without legal or other professional advice.

This post was written by

Julian is head of the Commercial Property Department. He was educated at University of Leeds and had many years professional experience at one of the largest Central London law firms before joining PCB in 1995. His specialisations include: the acquisition and disposal of investment property, portfolio purchases and sales, landlord and tenant transactions, secured lending and development work. Julian also acts on corporate and business transactions, mainly on share sales or acquisitions involving real estate.