Obtaining absolute titles when leases were granted before TLATA 1996

My client purchased a ground floor Tyneside flat in 2006. The leasehold was registered with good leasehold only. Now we have been instructed to act in the property sale, which has raised the questions of why there is only a good title when the freehold reversion is registered with the absolute leasehold title and whether
it can be upgraded.

We carried out investigations with the client and the Land Registry as to the reason. It turned out that the original
lease was granted in 1993 by
personal representatives.

Prior to the Trusts of Land and Appointment of Trustees Act 1996 (TLATA), a personal representative usually did not have the power to grant a lease for more than 50 years. The
lease we are dealing with is
for 999 years.

The Land Registry explained that they requested evidence
of the personal representatives’ necessary extended powers
but nothing was lodged in response. Consequently, the lease was registered with
good leasehold only.

Providing evidence

Therefore, to upgrade the class
of title, it would be our job to show that the lease was validly granted, which means providing evidence that the personal representatives had the necessary powers. As the lease is dated 1993, this would be a tall order to track down the parties and hope that they still have such evidence, if any.

Some colleagues took the view that, as the landlord is the owner of the other flat, there isn’t a probable reason why the lease
could be challenged. As a result, indemnity insurance was suggested as a solution.

However, my counterpart believed that he and his buyer client would rather the situation was corrected.

We contacted the owner
of the other flat to discuss granting a new lease to our client. Fortunately, they have been quite helpful and agreed
to assist.

As such, we have been in discussions with the other flat owner’s solicitor regarding a possible solution. Through our discussions we were able to establish that this matter could not be resolved by a simple surrender and re-grant of our client’s lease.

The new issue is that the new lease will not be able to grant rights over the other flat as required in relation to the repair and maintenance clauses. As
the owner of the other flat is the freeholder of my client’s flat, while they can grant a lease
out of their own freehold, they have no power to grant rights over their own leasehold of
the kind required.

Surrendering leases

The only answer is to surrender both leases and transfer both freehold interests into common ownership. We will apply to
the Land Registry to merge
and extinguish the leasehold interests and further apply
to merge the two existing freehold titles.

After the surrender and merger, provided all goes to plan, we will be left with one freehold of the whole in common ownership. From there, we can then grant new leases of both flats and transfer the freehold reversionary interests in both, creating
new titles, leases and resolving the initial problem.

The good leasehold will
have merged into the reversionary freehold title,
which is registered with
absolute leasehold title. So,
the impending future grants
will not be affected.

Following TLATA, this problem should not happen again, but it highlights the importance of knowing
who your clients are and the
extent of their powers. Also,
it’s a reminder to follow
up correspondence.

If the initial requisitions from the Land Registry in 1993 had been dealt with, we would not have this situation today. I am pleased to say it was not my firm acting at that time.

However, that one small
act has resulted in significant additional costs for my client, delays to her sale transaction and the possibility of losing
her buyer. SJ

John Coulter is a solicitor at Hadaway & Hadaway

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