Latest blog from our Commercial Property department.

The Land Registry has published a new practice guide on restrictions on registered leasehold properties: Land Registry Practice Guide 19A

The new practice guide provides guidance on the following areas:

  •   restrictions on leasehold properties that require consent of the landlord or managing agent before any dealing with leasehold property can be registered; and
  •  what to do when complying with a restriction causes difficulties.

The new practice guide complements existing Practice Guide 19: notices, restrictions and the protection of third party interests in the register

The new guidance can be briefly summarised as follows:

  • where restriction requires consent of a named landlord – this could cause difficulties if the landlord’s title is transferred to a new landlord (as the new landlord will not be able to alter the restriction to substitute their name for the previous landlord). The Land Registry suggests that, in order to avoid these difficulties, a restriction should not require consent of a named landlord. The practice guide provides new standard form restrictions that can be used instead to avoid such difficulties.
  • restrictions in favour of a management company –the Land Registry advise that these type of restrictions are rarely appropriate. If the management company changes, any covenants by and in favour of the management company in the lease will not pass to the new management company.
  • restrictions entered without the tenant’s agreement – the Land Registry will accept an application for the entry of a restriction from the landlord based on the terms of the lease. The landlord must however show that the entry of the form of restriction applied for is necessary or desirable as a result of the covenants given by the tenant in the lease. Alternatively, a landlord must lodge evidence with the application to show that the tenant consents to the entry of a restriction in that form.
  • complying with the restriction – restrictions relating to covenants of the lease usually require consent from the landlord (or management company) to allow an application to proceed, however it may not always be possible to obtain the required consent. The Land Registry guidance deals with the following situations:

– Where the landlord has changed – In this circumstance, the Land Registry will accept an application to cancel the restriction on the leasehold title from the new landlord or tenant where the restriction relates to covenants in the lease. The application must be accompanied by a conveyancer’s certificate that the restriction relates to the covenants in the lease and is therefore no longer required or alternatively evidence that the restriction relates to covenants in the lease or that the restriction is otherwise no longer required. A new restriction could then be applied for.

– Where the landlord is a dissolved company – in this circumstance, the tenant may apply for cancellation or dis-application of the restriction. Evidence of dissolution of the landlord must be submitted, along with a conveyancer’s certificate that the restriction relates to covenants contained in the lease. Cancellation of the restriction may be considered preferable to dis-application, unless it is likely that the company will be restored in order to perform its obligations under the lease.

–  Where the management company has changed or been dissolved – sometimes a restriction will be in a management company’s name. Any covenants in the lease by or in favour of the management company will not pass to a new management company, so the restriction will be superfluous when the management company changes or is dissolved. In that circumstance, the tenant or landlord can apply for cancellation of the restriction.

For further information please contact a member of our Commercial Property department.

Myerson are the premier commercial property solicitors in Cheshire and South Manchester. Our expert solicitors can advise on all aspects of commercial property law.

 

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