assignment of unregistered lease

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Housing, local and community
Housing and communities
Leases: when to register (PG25)

Practice guide 25: leases - when to register

Updated 7 March 2024

Applies to England and Wales

This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected] .

Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

This publication is available at https://www.gov.uk/government/publications/leases-when-to-register/practice-guide-25-leases-when-to-register

Please note that HM Land Registry’s practice guides are aimed primarily at solicitors and other conveyancers. They often deal with complex matters and use legal terms.

1. Introduction

The Land Registration Act 2002, together with the Land Registration Rules 2003, changes the categories of leases that are now either compulsorily or voluntarily registrable, and also the leases that we can note.

Not every leasehold estate is capable of being registered with its own title, but the Land Registration Act 2002 substantially extends the scope of title registration, for example, many more business leases will be subject to compulsory registration.

The information within this guide applies to:

leases dated on or after 13 October 2003
leases existing before 13 October 2003
assignments, transfers (on sale, by way of gift or by order of court) or assents, including vesting assents, dated on or after 13 October 2003, of existing leasehold estates having more than seven years of the term left to run
first legal mortgages dated on or after 13 October 2003
giving effect to a partition of land subject to a trust of land
by a deed that appoints, or by virtue of section 334 of the Charities Act 2011 has effect as if it appointed, a new trustee or is made in consequence of the appointment of a new trustee
by a vesting order under section 44 of the Trustee Act 1925 that is consequential on the appointment of a new trustee.

See also practice guide 62: easements for details of the registration requirements in respect of easements granted in leases.

2. How to apply the Land Registration Act 2002 and Land Registration Rules 2003: compulsory registration

Section 4 of the Land Registration Act 2002 specifically sets out the circumstances when an application for first registration must be made.

The estate owner, or their successor in title, must apply for first registration – see section 6(1) of the Land Registration Act 2002.

The period for registration is two months from the date of the deed inducing registration – see section 6(4) of the Land Registration Act 2002. However, an order can be made to extend the period of registration – see section 6(5) of the Land Registration Act 2002.

Section 27(2)(b) of the Land Registration Act 2002 specifically sets out the circumstances when leases out of a registered title must be registered.

Section 4(5A) of the Land Registration Act 2002 exempts relevant social housing tenancies from compulsory registration, regardless of term.

2.1 New leases granted for a term of more than seven years out of unregistered land

See section 4(1)(c) of the Land Registration Act 2002.

Leases granted for a term of more than seven years from the date of the grant, out of either an unregistered freehold or leasehold estates, will be compulsorily registrable provided they are either:

for valuable or other consideration – that under section 4(6) of the Land Registration Act 2002 includes estates that have a negative value
grants for the purpose of setting up a trust, where the person setting up the trust, ‘the settlor’, does not retain the whole of the beneficial interest
transfers of the legal title to the beneficial owners, where the settlor did not retain the whole of the beneficial interest when the trust was set up
pursuant to an order of any court

2.2 New leases for a term of more than seven years out of a registered title

See section 27(2)(b)(i) of the Land Registration Act 2002.

Leases granted out of existing registered titles, that are for a term of more than seven years from the date of the grant are compulsorily registrable.

2.3 Transfers or assignments of unregistered leases having more than seven years of the term unexpired

See sections 4(1)(a), 4(1)(aa) (as introduced by the Land Registration Act 2002 (Amendment) Order 2008) and 4(2)(b) of the Land Registration Act 2002.

Transfers or assignments of unregistered leases, that at the time of the transfers (or assignments) have more than seven years to run, are compulsorily registrable if they are made either:

transfers for the purpose of setting up a trust, where the person setting up the trust, ‘the settlor’, does not retain the whole of the beneficial interest
by means of an assent – including a vesting assent
to give effect to a partition of land subject to a trust of land
by a deed that appoints, or by virtue of section 334 of the Charities Act 2011 has effect as if it appointed, a new trustee or that is made in consequence of the appointment of a new trustee
by a vesting order under section 44 of the Trustee Act 1925 that is consequential on the appointment of a new trustee

Note: Not all transfers or assignments attract compulsory registration.

The following are specific types of transfer or assignment that are not subject to compulsory registration

however, a transfer by operation of law that is within section 4(1)(aa) of the Land Registration Act 2002, such as, when property vests in a new trustee by an express vesting declaration, or one that is implied, under section 40 of the Trustee Act 1925 in a deed appointing a new trustee, is subject to compulsory registration
an assignment of a mortgage term, ie mortgage by demise – see section 4(4)(a) of the Land Registration Act 2002
an assignment or surrender of a lease to the owner of the immediate reversion where the term is to merge into that reversion – see section 4(4)(b) of the Land Registration Act 2002

2.4 Transfers or assignments of unregistered leases where section 171A of the Housing Act 1985 applies

See section 4(1)(b) of the Land Registration Act 2002.

All transfers of unregistered leases, irrespective of the length of the term of the lease, made pursuant to section 171A of the Housing Act 1985 (Preserved Right to Buy) are compulsorily registrable.

2.5 Transfers of any registered leases

See section 27(2)(a) of the Land Registration Act 2002.

Most transfers of registered leases, irrespective of the length of the term of the lease, are compulsorily registrable. However, the following transfers by operation of law are not required to be registered:

a transfer on the death or bankruptcy of an individual proprietor
a transfer on the dissolution of a corporate proprietor

2.6 Right to buy leases: Part V of the Housing Act 1985

See sections 4(1)(e) and 27(2)(b)(iv) of the Land Registration Act 2002.

All leases, irrespective of the length of the term of the lease, made pursuant to Part V of the Housing Act 1985 are compulsorily registrable.

2.7 Leases where section 171A of the Housing Act 1985 applies

See sections 4(1)(f) and 27(2)(b)(v) of the Land Registration Act 2002.

All leases, irrespective of the length of the term of the lease, made pursuant to section 171A of the Housing Act 1985 (Preserved Right to Buy) are compulsorily registrable.

2.8 Reversionary leases taking effect more than three months from the date of the grant

See sections 4(1)(d) and 27(2)(b)(ii) of the Land Registration Act 2002.

A ‘reversionary’ lease gives the lessee a right to possession of the leased property in the future, ie the lessee does not have an immediate right to possession of the land in the lease, at the date of the lease.

A lease granted out of either an:

unregistered leasehold estate, that at the date of grant has more than seven years left to run
unregistered freehold estate
existing registered title

that is granted for any term to take effect more than three months from the date of the grant is compulsorily registrable.

2.9 Discontinuous leases out of registered titles or granted for a term of more than seven years out of unregistered land

See section 27(2)(b)(iii) of the Land Registration Act 2002.

These are leases where the lessee’s ‘right to possession’ of the land demised is discontinuous. The lease may be of a property, such as, a flat, apartment or market stall, that is for either:

a specified number of days in a week, for example, every Monday to Friday (inclusive)
a specific week(s) in a calendar year

All discontinuous leases granted out of a registered title must be registered, regardless of the term.

Discontinuous leases granted for a term of more than seven years out of unregistered freehold or leasehold estates will be compulsory registrable.

See sections 4(1)(c) and 4(2)(b) of the Land Registration Act 2002 and see New leases granted for a term of more than seven years out of unregistered land .

To calculate the length of the term on such a lease, multiply the number of complete weeks each year the property is demised by the number of years granted.

If the total is more than seven years (ie more than 364 complete weeks), the lease and/or transfer will be compulsorily registrable.

2.10 Protected first legal mortgage

See sections 4(1)(g) and 4(2)(b) of the Land Registration Act 2002 and rules 21 and 22 of the Land Registration Rules 2003.

A protected first legal mortgage of an unregistered leasehold estate, that has more than seven years of its term unexpired, is subject to compulsory first registration. In order for such a mortgage to be registered, the leasehold estate will also need to be registered. Rule 21 of the Land Registration Rules 2003 allows a mortgagee of a protected first legal mortgage to apply to have the leasehold estate registered, whether or not the mortgagor consents to the application.

Note 1: A ‘protected mortgage’ is a mortgage that is protected by the deposit of documents relating to the mortgaged estate – see section 4(8)(a) of the Land Registration Act 2002.

Note 2: A ‘first legal mortgage’ is a legal mortgage that ranks in priority over all other mortgages affecting the mortgaged estate – see s.4(8)(b) of the Land Registration Act 2002.

3. How to apply the Land Registration Act 2002 and Land Registration Rules 2003: voluntary registration

Section 3 of the Land Registration Act 2002 gives details of when an application can be made to voluntarily register an unregistered leasehold estate.

Section 3(4A) of the Land Registration Act 2002 specifically excludes relevant social tenancies from being eligible for voluntary registration.

The following sections mainly apply to leases that are made before 13 October 2003 and when no events requiring registration have occurred. However, some of the sections will also apply to some leases that are granted on or after 13 October 2003, that can be registered but may not be subject to compulsory registration. For example, see Discontinuous leases out of unregistered land .

The following sections give details of the leasehold estates in land that can be lodged voluntarily for first registration.

3.1 Leases having more than seven years of their term unexpired

See section 3(3) of the Land Registration Act 2002.

Most leases will be accepted for registration, provided there is more than seven years of the original term left unexpired at the time of first registration. If the lease is granted on or after 13 October 2003 it will be subject to compulsory registration – see New leases granted for a term of more than seven years out of unregistered land .

Where a lessee holds a lease in possession but is granted another lease of the same land, to take effect in possession on or within one month of the expiry of the first lease, the two terms can be treated as creating one continuous term – see section 3(7) of the Land Registration Act 2002. Therefore, if the two terms total more than seven years, we will accept a voluntary application for registration of both leases, that will be registered together on the same title.

Note: Section 3(7) of the Land Registration Act 2002 only provides that such leases can be treated as creating one continuous term for the purposes of voluntary registration. There is no provision that such leases are to be treated as one continuous term for the purposes of compulsory registration.

3.2 Discontinuous leases out of unregistered land

See section 3(4) of the Land Registration Act 2002. This provision is new under the Land Registration Act 2002.

See Discontinuous leases out of registered titles or granted for a term of more than seven years out of unregistered land as to what constitutes a ‘discontinuous’ lease, and how to calculate the length of the term of the lease.

A voluntary application will be accepted, regardless of the length of the term, ie the lease does not have to be for more than seven years (364 weeks). However, if a discontinuous lease is granted on or after 13 October 2003, or a transfer of a discontinuous lease is made on or after 13 October 2003, it must be registered if it falls within sections 4(1)(c) and 4(1)(a) of the Land Registration Act 2002 – see New leases granted for a term of more than seven years out of unregistered land and Transfers or assignments of unregistered leases having more than seven years of the term unexpired .

If the total is more than seven years (ie more than 364 complete weeks) the lease and/or transfer will be compulsorily registrable.

4. How to apply the Land Registration Act 2002 and Land Registration Rules 2003: leases that cannot be registered

Section 3(5) of the Land Registration Act 2002 specifically details when we cannot accept an application to register a leasehold estate, ie if the estate owner (the applicant) has the leasehold estate vested in them as a mortgagee, where there is a subsisting right of redemption.

The following sections give details of the leasehold estates in land that cannot be lodged for registration.

4.1 Leases granted for a term of seven years or less or where the unexpired term is for seven years or less

Unless they fall into one of the exceptions below, which are registrable regardless of their term, the following leases are not registrable (Sections 3(3), 4(1)(c) and 27(2)(b)(i) of the Land Registration Act 2002).

(i) Leases out of registered or unregistered land, where the term unexpired at the date of the grant is 7 years or less.

(ii) Unregistered leasehold estates subject to transfer or assignment which have 7 years or less of the term unexpired at the date of the disposition.

(iii) Applications for voluntary first registration of a leasehold estate where the unexpired portion of the term is 7 years or less at the date of the application.

Note: The following are exceptions to this and these leases can be registered irrespective of their term.

right to buy leases, pursuant to Part V of the Housing Act 1985
preserved right to buy leases pursuant to section 171A of the Housing Act 1985
discontinuous leases
an unregistered freehold estate
an unregistered leasehold estate in land for a term that at the time of the grant of the lease has more than seven years left to run
a registered title.

Note: Some of these leases are compulsorily registrable. See How to apply the Land Registration Act 2002 and Land Registration Rules 2003: compulsory registration for further details.

4.2 Lease term starts more than 21 years from date of lease

Usually a lease for which a rent or premium is payable where the term starts more than 21 years from the date of the lease is void – see section 149(3) of the Law of Property Act 1925. Therefore, such leases cannot be registered.

4.3 Leases with no certain start date

If the lease is silent as to the commencement date, we will normally assume (in the absence of other evidence) the term commences on the date of the lease.

4.4 Lessor and lessee are the same

The House of Lords decided that neither one person, nor a company, can create a lease in favour of the same person or company. Any attempt to do so is without legal effect (Rye v Rye [1962] A C 496). Therefore, we cannot give any kind of registered title to such a lease.

4.5 Public-Private Partnership ( PPP ) leases

A PPP lease is a lease that constitutes a ‘public-private partnership’ agreement – see sections 210 and 211 of the Greater London Authority Act 1999.

The lease will usually be between London Regional Transport, Transport for London or one of its subsidiaries and a private company, for the purpose of maintaining or providing a railway, such as, an underground railway.

PPP leases are not registrable - see sections 90(1), (2) and (3) of the Land Registration Act 2002.

They are classed as an interest that overrides both first registration and registered dispositions – see section 90(5) of the Land Registration Act 2002.

4.6 Leases vested in a person as a mortgagee: subsisting right of redemption

See section 3(5) of the Land Registration Act 2002.

A lease vested in a person as mortgagee where there is a subsisting right of redemption cannot be registered.

4.7 Relevant social housing tenancies

See sections 3(4A), 4(5A) and 27(5A) of the Land Registration Act 2002.

A relevant social housing tenancy (as defined in section 132(1) of the Land Registration Act 2002) cannot be registered.

5. How to apply the Land Registration Act 2002 and Land Registration Rules 2003: noting of leases

See sections 32, 33, 34, 37 and 38 of the Land Registration Act 2002.

Section 32 of the Land Registration Act 2002 allows us to note certain leases against the registered estate affected, ie lessor’s title.

5.1 Noting of leases granted out of registered titles on or after 13 October 2003

When an application is lodged for registration of a lease granted out of registered land that is required to be registered (see How to apply the Land Registration Act 2002 and Land Registration Rules 2003: compulsory registration for further details) no application is required to note the lease on the lessor’s registered title. Notice will automatically be entered in the lessor’s title by HM Land Registry, pursuant to section 38 of the Land Registration Act 2002.

5.2 Noting of leases on lessors’ registered superior titles following first registration

See rule 37 of the Land Registration Rules 2003.

An application to register a lease that was either:

not granted out of a registered estate
granted before the commencement of Land Registration Act 2002
and was not previously compulsorily registrable (such as, a lease of more than seven years but for 21 years or less)

will be treated as an application for first registration.

Provided the lease can be noted – see Leases that we cannot note – HM Land Registry will automatically note the lease in the lessor’s registered superior title (if it is not already noted), subject to serving notice on the lessor – see rule 37(3) of the Land Registration Rules 2003. If the lessor’s consent is lodged with the application we will not need to serve notice on the lessor.

5.3 Noting of leases for more than three years

If a notice is not automatically made in the lessor’s title under section 38 of the Land Registration Act 2002 or rule 37(3) of the Land Registration Rules 2003 an application may be made for a notice to be entered if the lease:

is granted for a term of more than three years from the date of the grant
does not relate to a trust of land or a settlement under the Settled Land Act 1925

See sections 32, 33 and 34 of the Land Registration Act 2002.

See How to apply the Land Registration Act 2002 and Land Registration Rules 2003: compulsory registration , for details of leases that must be registered.

See Noting of leases for details on how an application is made.

Section 37 of the Land Registration Act 2002 also allows HM Land Registry to note leases of more than three years but not exceeding seven years in a registered superior title, even though the lease itself will be incapable of substantive registration.

5.4 Leases that we cannot note

See section 33 of the Land Registration Act 2002.

We cannot note the following in the register. Leases that are:

See How to apply the Land Registration Act 2002 and Land Registration Rules 2003: compulsory registration , for details of leases that must be registered
Note: This applies to any discontinuous leases that are not compulsorily registrable, where the total period is three years or less.
Public–Private Partnership leases – see section 90(4) of the Land Registration Act 2002
relevant social housing tenancies – see section 33(ba) of the Land Registration Act 2002

6. How to apply the Land Registration Act 2002 and Land Registration Rules 2003 and make applications to HM Land Registry

Original documents are normally required only if your application is a first registration.

A conveyancer may, however, make an application for first registration on the basis of certified copy deeds and documents only. For information about this, see practice guide 1: first registrations – Applications lodged by conveyancers – acceptance of certified copy deeds .

If your application is not a first registration, then we will need only certified copies of deeds or documents you send to us with HM Land Registry applications. Once we have made a scanned copy of the documents you send to us, they will be destroyed. This applies to both originals and certified copies.

However, any original copies of death certificates or grants of probate will continue to be returned.

6.1 First registration

The estate owner or their successor in title should apply for first registration – see section 6(1) of the Land Registration Act 2002.

The period for registration is two months from the date of the deed inducing registration – see sections 6(4) and (5) of the Land Registration Act 2002.

Applications must be lodged in form FR1 – see rule 23(1) of the Land Registration Rules 2003.

Rule 24, of the Land Registration Rules 2003 gives details of what must accompany an application for first registration, that is:

sufficient details, by plan or otherwise, so that the land can be identified clearly on the Ordnance Survey map
Note 1: If the plan, or sufficient details to identify the land, are included in the lease, a further plan will not be required
Note 2: If the lease is a discontinuous lease, a copy of any ‘timeshare’ calendar defining the weeks referred to will be required, if it is not included in the lease

evidence that Stamp Duty Land Tax certificate (SDLT) or Land Transaction Tax (LTT) requirements have been met

all deeds and documents relating to the title that are in the control of the applicant

Note: If absolute leasehold is requested in form FR1 and the evidence of the superior title(s) is not lodged, we will only register the applicant with good leasehold title. We will not raise a requisition for this evidence.

a list in duplicate in form DL of all the documents delivered.

For more general information on lodging an application for first registration see practice guide 1: first registrations .

Advice on whether a particular transaction:

requires to be notified to HM Revenue & Customs (HMRC) or the Welsh Revenue Authority (WRA) is exempt from SDLT or LTT (such as a legal charge)
falls outside the scope of SDLT or LTT

can be obtained from:

for SDLT, the HMRC stamp taxes helpline on 0300 200 3510, open 8.30am to 5pm Monday to Friday except public holidays or HMRC’s stamp taxes website
for LTT: the WRA customer service centre on 03000 254 000, open 9.30am to 5.30pm Monday to Friday except public holidays or the WRA’s website

If the lease is granted to two or more persons and it either does not contain details, or contains conflicting information, as to whether a Form A restriction (see Schedule 4 to the Land Registration Rules 2003) is required, we will enter a restriction in Form A by default. If the lease is granted on or after 19 June 2006 and contains the prescribed clauses, a declaration of trust is contained in clause LR14. For further information see practice guide 24: private trusts of land .

Any restrictions, other than a Form A restriction, must be applied for in form RX1 – rule 92 of the Land Registration Rules 2003. For further information see practice guide 19: notices, restrictions and protection of third party interests . A restriction cannot be applied for in a lease however, from 9 January 2006, a lease containing clauses LR1 to LR14 of Schedule 1A, to the Land Registration Rules 2003 may be used, at clause LR13, to apply for entry of a standard form restriction. This will include prescribed clauses leases granted on or after 19 June 2006. An application for a non-standard restriction must always be made in form RX1. For further information see practice guide 64: prescribed clauses leases – section 5.13 LR13.

A leasehold register will include sufficient details of the lease being registered to enable it to be identified – see rule 6 of the Land Registration Rules 2003. Such details will no longer include any reference to the rent payable under a lease.

6.2 New leases out of a registered title

These applications must be lodged in form AP1 – rule 13 of the Land Registration Rules 2003.

A certified copy of the lease and the appropriate fee under the current Land Registration Fee Order must accompany the application (see HM Land Registry: Registration Services fees ).

The lease, if granted on or after 19 June 2006, must be a prescribed clauses lease. For further information, see practice guide 64: prescribed clauses leases .

The lease must be accompanied by evidence that SDLT or LTT requirements have been met.

If the lease is lodged for registration by a conveyancer who only represents the lender, we will require written confirmation from the conveyancer representing the tenant stating:

the address for service to be entered on the register; and

that, if the application was lodged by them on behalf of the tenant, they would be sufficiently satisfied they can provide the necessary confirmation of identity required by panels 12 and 13 of form AP1

If there is a mortgage registered on the landlord’s title you will need to enclose the consent of the mortgagee. Consent is always required where there is also a restriction in favour of the lender on the landlord’s title which ‘catches’ the lease application. Otherwise where the consent is not lodged, we will make the following entry in the property register of the new title:

“The title to the lease is, during the subsistence of the charge dated ….. in favour of ….. affecting the landlord’s title (and to the extent permitted by law, any charge replacing or varying this charge or any further charge in respect of all or part of the sum secured by this charge), subject to any rights that may have arisen by reason of the absence of chargee’s consent, unless the lease is authorised by section 99 of the Law of Property Act 1925.”

If the landlord’s title is leasehold enclose the consent of any superior landlord, if the superior lease requires such consent to be obtained. Where the consent of the superior landlord is not lodged we will make the following entry in the property register of the new title unless a conveyancer certifies that the new lease falls in a permitted category and is not caught by the terms of the alienation clause in the superior lease:

“The registrar has not seen any consent to the grant of this sub-lease that the superior lease out of which it was granted may have required.”

If the lease is granted to two or more persons and it either does not contain details, or contains conflicting information, as to whether a Form A restriction (see Schedule 4 to the Land Registration Rules 2003) is required, we will enter a restriction in Form A by default. If the lease is a prescribed clauses lease a declaration of trust is contained in clause LR14. For further information see practice guide 24: private trusts of land .

Any restrictions, other than a Form A restriction, must be applied for in form RX1 – rule 92 of the Land Registration Rules 2003. For further information see practice guide 19: notices, restrictions and protection of third party interests . A standard restriction cannot be applied for in a lease. However, from 9 January 2006, a lease containing clauses LR1 to LR14 of Schedule 1A to the Land Registration Rules 2003 may be used, at clause LR13, to apply for entry of a standard form restriction. This will include prescribed clauses leases granted on or after 19 June 2006. Form RX1 must continue to be used to apply for entry of a restriction contained in any other lease, or for entry of a non-standard form restriction. For further information see practice guide 64: prescribed clauses leases – section 5.13 LR13.

6.3 Noting of leases

See sections 33, 34 and 35 of the Land Registration Act 2002.

Note: Application to note a lease as an agreed or unilateral notice will not fulfil the registration requirements for legal easements. If the lease contains easements you should apply as directed in practice guide 62: easements – 4.2 Easements in unregistered leases.

6.3.1 Agreed notices

If a lease is not automatically noted under section 38 of the Land Registration Act 2002 or rule 37 of the Land Registration Rules 2003, and is not prevented from being noted (see Leases that we cannot note ), an application may be made for an agreed notice to be entered in the register affected by the interest by either:

the person entitled to the benefit of the interest
the registered proprietor of the land in which the notice is to be entered
a person entitled to be registered as such proprietor, such as the personal representative of a sole registered proprietor

Such an application should be accompanied by:

evidence that SDLT or LTT requirements have been met

Note: Before we can note any land transaction as an agreed or unilateral notice, HM Land Registry is obliged to ensure that the appropriate SDLT or LTT certificate accompanies the application where this is required. This is a statutory requirement under section 79(1) of the Finance Act 2003 and s.65(1) of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017. See First registration for details.

if the application is by a person entitled to be registered as proprietor, sufficient evidence to satisfy us of their interest
if the application is not made by the registered proprietor or a person entitled to be registered as such proprietor, either the consent of such person, or sufficient evidence to satisfy the registrar as to the validity of the claim
any appropriate consents of restrictioners

For further details see practice guide 19: notices, restrictions and protection of third party interests .

6.3.2 Unilateral notices

It may be possible to make an application for a unilateral notice to be entered on the lessor’s title when an agreed notice cannot be entered. For further details see practice guide 19: notices, restrictions and protection of third party interests .

6.3.3 Leases with less than one year to run

We will not note leases with less than one year to run. This is because, in the registrar’s view, entering notice of such a lease in the register is likely to cause inconvenience to HM Land Registry and our customers as application would have to be made within a year for its removal.

6.4 Deeds of variation

6.4.1 variation of a registered lease.

If lodging an application to register the variation of a lease when the lessee’s title is registered, it will usually be appropriate to make the application under rule 129 of the Land Registration Rules 2003, and, therefore, the application should be lodged in form AP1 – rule 13 of the Land Registration Rules 2003.

Under rule 129 of the Land Registration Rules 2003 you must provide sufficient evidence to show that the variation has effect at law. You must, therefore, lodge:

the deed of variation, and
consent(s) of any chargee or restrictioner if required, or
where the lessor’s title is unregistered – evidence of the lessor’s title, and
any other evidence to show that the variation has effect at law, such as, evidence of change of name of one of the parties if the name is not the same as that shown on the register

If we are satisfied that the variation has effect at law we will make an entry relating to the deed in the property register of the lessee’s title. We will also enter a notice in the lessor’s title, without a specific application being made in form AN1 in respect of the lessor’s title.

Note: If the chargee’s consent is not lodged when required, the following will be added to the register entry of the relevant titles:

“NOTE: The proprietor of the registered charge dated […] [of the landlord’s/tenant’s title number …] was not a party to the deed nor was evidence of its consent to the deed produced to the registrar.”

6.4.2 Variation of an unregistered lease

If notice of an unregistered lease is entered in a lessor’s title, an application may be made to enter a notice in respect of a variation of the lease. Such an application should usually be made for an agreed notice in form AN1 , if the deed of variation can be provided and the lease is already protected as an agreed notice. However, it may be appropriate in some circumstances to make an application in form UN1 , for example if the lease is already protected by way of unilateral notice and the lease or/and the deed of variation cannot be provided. For further details see practice guide 19: notices, restrictions and protection of third party interests .

Please note that where an application is being made for an agreed or unilateral notice following a deed of variation, the application can be made in respect of the lessor’s title only. This is because, under section 32(1) of the Land Registration Act 2002, a notice is an entry in the register “in respect of the burden of an interest affecting a registered estate”. The lease is clearly an interest burdening the lessor’s registered estate and so can be the subject of a notice in the lessor’s title; it can be argued that any deed of variation can also be noted as the entry is then “in respect of” this burden. But the lease is not an interest affecting the lessee’s estate: it is their estate. So the lease cannot be the subject of a notice in the lessee’s title; and nor, as a result, can the deed of variation be the subject of such a notice.

6.4.3 Application to note variation where it is not clear that the variation takes effect at law

It may be appropriate in some cases to apply for a notice in either:

in respect of a deed of variation even when the lease is substantively registered, as sufficient evidence may not be able to be provided to satisfy the registrar that the variation takes effect at law. For further details see practice guide 19: notices, restrictions and protection of third party interests .

Note: If the deed of variation contains easements, these will not operate at law until entries relating to the burden and benefit of the easement are entered in both registered titles – see section 27(1) and paragraph 7 of Schedule 2 to the Land Registration Act 2002.

6.4.4 Variation of term or extent

Although it is clear in law that the term of a lease cannot be extended by deed, deeds of variation are frequently encountered that purport to either

extend the length of a lease
increase the land demised

You should avoid using a deed of variation in such circumstances.

However, if these deeds are lodged for registration, we will treat them as an immediate surrender of the old lease and the grant of the new lease. A deed varying a lease that takes effect as a surrender and re-grant of the leasehold estate does not have to be a prescribed clauses lease. This exception applies whether or not the original lease was a prescribed clauses lease. For further details see practice guide 28: extension of leases .

For guidance on how to correct the extent demised by the lease or the length of the term, see practice guide 68: amending deeds that effect dispositions of registered land – section 4.4 Leases: Incorrect extent to term demised.

7. Preliminary service applications

7.1 first registration.

For further details see:

practice guide 1: first registrations
practice guide 10: official search of the index map

Note: If you do not require indemnity provisions in respect of an index map search you could consider using MapSearch . This service is available free of charge for Business e-services customers who have portal access and provides immediate search results.

7.2 Lease out of a registered title

practice guide 11: inspection and applications for official copies
practice guide 12: official searches

Note: If you are lodging an official search of part affecting a discontinuous lease, ensure you include details of any particular time period as well as the property details, such as, ‘Apartment 6 for Week 27’.

8. Things to remember

Always check that you have:

form FR1 for a first registration
form AP1 for a lease out of a registered title
first registration – where the reversionary title is registered and absolute leasehold title has been requested
lease out of a registered title – consents in respect of any restrictions in the proprietorship register or charges in the charges register of the lessor’s title. If the landlord’s title is leasehold - consider, do they need to get the consent of their landlord under the terms of the lease?
discontinuous or timeshare lease – is there a copy of the timeshare calendar in the lease, or do you need to lodge one separately
lodged a certified copy of the lease
lodged a form RX1 if applying for any restrictions
lodged the correct fee (see HM Land Registry: Registration Services fees )
checked clerical details in all forms and deeds (especially charges and mortgages) and paid particular attention to all dates, property descriptions, title numbers, and full names of parties, especially where they appear in more than one deed.

We only provide factual information and impartial advice about our procedures. Read more about the advice we give .

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Assignment of Lease

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What is an assignment of lease.

The assignment of lease is a title document that transfers all rights possessed by a lessee or tenant to a property to another party. The assignee takes the assignor’s place in the landlord-tenant relationship.

You can view an example of a lease assignment here .

How Lease Assignment Works

In cases where a tenant wants to or needs to get out of their lease before it expires, lease assignment provides a legal option to assign or transfer rights of the lease to someone else. For instance, if in a commercial lease a business leases a place for 12 months but the business moves or shuts down after 10 months, the person can transfer the lease to someone else through an assignment of the lease. In this case, they will not have to pay rent for the last two months as the new assigned tenant will be responsible for that.

However, before the original tenant can be released of any responsibilities associated with the lease, other requirements need to be satisfied. The landlord needs to consent to the lease transfer through a “License to Assign” document. It is crucial to complete this document before moving on to the assignment of lease as the landlord may refuse to approve the assignment.

Difference Between Assignment of Lease and Subletting

A transfer of the remaining interest in a lease, also known as assignment, is possible when implied rights to assign exist. Some leases do not allow assignment or sharing of possessions or property under a lease. An assignment ensures the complete transfer of the rights to the property from one tenant to another.

The assignor is no longer responsible for rent or utilities and other costs that they might have had under the lease. Here, the assignee becomes the tenant and takes over all responsibilities such as rent. However, unless the assignee is released of all liabilities by the landlord, they remain responsible if the new tenant defaults.

A sublease is a new lease agreement between the tenant (or the sublessor) and a third-party (or the sublessee) for a portion of the lease. The original lease agreement between the landlord and the sublessor (or original tenant) still remains in place. The original tenant still remains responsible for all duties set under the lease.

Here are some key differences between subletting and assigning a lease:

Under a sublease, the original lease agreement still remains in place.
The original tenant retains all responsibilities under a sublease agreement.
A sublease can be for less than all of the property, such as for a room, general area, portion of the leased premises, etc.
Subleasing can be for a portion of the lease term. For instance, a tenant can sublease the property for a month and then retain it after the third-party completes their month-long sublet.
Since the sublease agreement is between the tenant and the third-party, rent is often negotiable, based on the term of the sublease and other circumstances.
The third-party in a sublease agreement does not have a direct relationship with the landlord.
The subtenant will need to seek consent of both the tenant and the landlord to make any repairs or changes to the property during their sublease.

Here is more on an assignment of lease here .

Benjamin W.

Parties Involved in Lease Assignment

There are three parties involved in a lease assignment – the landlord or owner of the property, the assignor and the assignee. The original lease agreement is between the landlord and the tenant, or the assignor. The lease agreement outlines the duties and responsibilities of both parties when it comes to renting the property. Now, when the tenant decides to assign the lease to a third-party, the third-party is known as the assignee. The assignee takes on the responsibilities laid under the original lease agreement between the assignor and the landlord. The landlord must consent to the assignment of the lease prior to the assignment.

For example, Jake is renting a commercial property for his business from Paul for two years beginning January 2013 up until January 2015. In January 2014, Jake suffers a financial crisis and has to close down his business to move to a different city. Jake doesn’t want to continue paying rent on the property as he will not be using it for a year left of the lease. Jake’s friend, John would soon be turning his digital business into a brick-and-mortar store. John has been looking for a space to kick start his venture. Jake can assign his space for the rest of the lease term to John through an assignment of lease. Jake will need to seek the approval of his landlord and then begin the assignment process. Here, Jake will be the assignor who transfers all his lease related duties and responsibilities to John, who will be the assignee.

You can read more on lease agreements here .

ContractsCounsel Assignment of Lease Image

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Assignment of Lease From Seller to Buyer

In case of a residential property, a landlord can assign his leases to the new buyer of the building. The landlord will assign the right to collect rent to the buyer. This will allow the buyer to collect any and all rent from existing tenants in that property. This assignment can also include the assignment of security deposits, if the parties agree to it. This type of assignment provides protection to the buyer so they can collect rent on the property.

The assignment of a lease from the seller to a buyer also requires that all tenants are made aware of the sale of the property. The buyer-seller should give proper notice to the tenants along with a notice of assignment of lease signed by both the buyer and the seller. Tenants should also be informed about the contact information of the new landlord and the payment methods to be used to pay rent to the new landlord.

You can read more on buyer-seller lease assignments here .

Get Help with an Assignment of Lease

Do you have any questions about a lease assignment and want to speak to an expert? Post a project today on ContractsCounsel and receive bids from real estate lawyers who specialize in lease assignment.

Meet some of our Assignment of Lease Lawyers

I specialize in contract law and focus on making sure your contract is clear, protects your interests and meets your needs. You can expect fast, straightforward communication from me, making sure you understand every step. With my experience, you'll get a detailed review of your contract at a fair, fixed price, without any surprises. I have over 30 years of business and legal experience that I bring to your project. I graduated from The University of Texas School of Law with High Honors in 1993 and practiced at Texas' largest law firm. I have founded companies and so understand how to be helpful as both a lawyer and business owner.

Experienced Commercial & Contracts Counsel.

I am an experienced Intellectual Property attorney registered with the USPTO and have managed my solo practice for over a decade. As part of my practice, I handle trademark and patent concerns for my clients. I’ve performed extensive prior art searches, drafted patent applications, and prosecuted patents across a broad range of technologies. I've helped my clients secure protection for both standard character and special form marks across a a variety of classes from candles to dog collars. I believe, as an IP attorney, that I can facilitate the development of new technologies by protecting your rights from infringement or helping you enter the market by establishing those rights from the ground up. More importantly, I believe it should be an open and affordable process that’s accessible to anyone pushing the bounds of innovation.

I am LaKesha B. Shahid, managing partner of Shahid & Hosea LLC. We focus primarily in domestic relations. We strive to make our clients our top priority.

Mrs. Rivera graduated from Palmetto High School in 2009 and went on to attend Florida State University in Tallahassee, FL. After graduating from Florida State University with a B.S. degree in Criminology and a minor in Philosophy in April 2012, she went on to attend the University of Central Florida where she earned a M.S. Degree in Criminal Justice in August 2013. That same month, She started law school at Stetson University College of Law. While in Law school, Mrs. Rivera participated on Stetsons #1 Trial team. In May 2016, Mrs. Rivera graduated with her law degree and in December 2016, Mrs. Rivera obtained her Masters in Law from Stetson University through its Joint J.D./LL.M degree in Advocacy program. Mrs. Rivera was a part of the first graduating class for this joint program at Stetson University. As a Law student, Mrs. Rivera was a law clerk at a well-known plaintiffs employment law firm in Tampa, FL and also interned for the Honorable Judge Edward Larose of the Second District Court of Appeal where she was able to draft PCA opinions draft legal opinions that were ultimately published. Mrs. Rivera also went on to participate as a Certified Legal Intern (CLI) with the 6th Judicial Circuit Office of the Public Defender in Pinellas County, FL and an Intern for LegalAid of Manasota in Sarasota, FL. After Law School, Mrs. Rivera began her legal career working as a Public Defender with the Ninth Judicial Circuit Office of the Public Defender in Orlando, FL. During her time as a Public Defender, Mrs. Rivera litigated more than 20 trials, representing both adults and juveniles accused of Misdemeanor and Felony offenses. After engaging in extensive civil, criminal and family law litigation, Mrs. Rivera decided it was time to finally open Allstarr Legal, P.A. in order to provide both affordable and quality legal representation to the people of the State of Florida. Mrs. Rivera practices throughout the entire state of Florida.

Francine L.

I am a multi-degreed attorney with more than 17 years of criminal trial experience and more than 15 as a general legal consultant. I'm licensed to practice in New York State.

Prior to becoming an attorney, Mr. Dimitry Alexander Kaplun had been involved with many industries and professions, and helped manage, create, and advise a wide range of businesses around the world. While at Drexel University as a computer science major, he became an NASD licensed representative and was employed by Fortune 100 insurance companies, including Prudential, AIG, and NY Life, first specializing in financial investments for life and annuity products, and then expanding his expertise to mutual finds, stocks, environmental insurance, and real property. Due to his technical expertise and a clear understanding of business rules, he was soon brought on board to help assist those companies with coding their interface for the Y2K switch. Soon after switching his major to business, Mr. Kaplun worked for a telecommunication service company first in quality assurance and then as a database programmer and developer, with sole and exclusive responsibilities for a multitude of warehouses located around the continental United States. Working on-site and from the company headquarters, he was responsible for streamlining processes for internal departments while fulfilling the quickly changing needs to the company clients, most notably Verizon Wireless. Mr. Kaplun opened his practice in 2008. Prior to starting his practice, he worked as a paralegal instructor for Prism Career Institute, creating the lesson plans for the whole program and focusing his instruction on substantive and procedural laws for general practitioners. Mr. Kaplun also worked as an associate for The Law Office of Keith Owen Campbell PC, focusing on Family and Matrimonial Law, and assisted the law firm of Jeffrey Neu and Associates in securities research as well as various contact and sales agreements, mainly online reseller agreements. He currently focuses his energy on representing individuals and companies in liability insulation, contracts and business agreements, and other legal concerns that crop up in the regular operation of doing business.

Find the best lawyer for your project

Contract to lease land from a church.

I’m planning on leasing land from a church. Putting a gym on the property. And leasing it back to the school.

Ok; first step is that you will need a leasing contract with the church. Ask them to prepare one for you so you would just need an attorney to review the agreement and that should cost less than if you had to be the party to pay a lawyer to draft it from scratch. You need to ensure that the purpose of the lease is clearly stated - that you plan to put a gym on the land so that there are no issues if the church leadership changes. Step 2 - you will need a lease agreement with the school that your leasing it do (hopefully one that is similar to the original one your received from the church). Again, please ensure that all the terms that you discuss and agree to are in the document; including length of time, price and how to resolve disputes if you have one. I hope this is helpful. If you would like me to assist you further, you can contact me on Contracts Counsel and we can discuss a fee for my services. Regards, Donya Ramsay (Gordon)

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What happens if a tenant fails to register a lease at the Land Registry?

What are your obligations when registering a lease?

There are certain circumstances where it is necessary to register a lease at the Land Registry; this includes the following situations:-

The lease has a term of more than seven years
The assignment of an existing lease with more than seven years to run
The grant of a lease that takes effect more than three months after the grant

The obligation to register the lease usually falls on the tenant and such an application for registration must be made within two months of the date of the lease. The lease is there to help protect all parties and if the tenant fails to register a lease, it can leave both in a vulnerable position.

What are the consequences of non-registration of leases?

There are various consequences if a tenant fails to register a lease at HM Land Registry. These consequences include:

The lease will have no effect in law. However, there is an argument that there is an equitable lease. An equitable lease does not have the same security as a registered lease. As a result, any Landlord or Tenant will find it difficult to dispose of their interests in the property, given the insecure position.
There is also a risk that a landlord may be unable to recover any unpaid rent from the guarantor in the event that the tenant fails to pay.
If the landlord wants to sell the property, delays are inevitable if the buyer wants the position to be regularised before they complete.
The landlord may not be able to gain finance on the property as there is no evidence of a steady income stream.

What should a tenant/landlord do to avoid this?

Following completion of the lease, the tenant should ensure that they promptly submit their application to the Land Registry to register the lease.

Any landlord should ensure that the lease puts the tenant under an obligation to register the lease and forward a copy of the title document following registration. It is important for all landlords to make enquiries with tenants to ensure that the lease has been registered accordingly.

We’re here to help with commercial property matters

If you would like advice about tenants who fail to register a lease at the Land Registry or about any commercial property matter, call Beswicks Legal on 01782 205000 or email [email protected] .

Apr 26, 2020

Effects of an Unregistered Lease Deed: a Settled Position in Law

Updated: Jun 2, 2020

Utkarsha Nikam, Government Law College, Mumbai (presently working with the Real Estate Team of Kanga & Company, Mumbai)

Definition: Lease under Transfer of Property Act, 1882

Section 105 of the Transfer of Property Act, 1882 states the definition of a lease which states that it is a transfer of immovable property for a particular time period for a consideration of which the transferee has accepted the terms surrounding the agreement. A transfer of a right to enjoy a property in consideration of a price paid or promised to be rendered periodically or on specified occasions is the basic fabric for a valid lease. The provision says that such a transfer can be made expressly or by implication. Once there is such a transfer of right to enjoy the property a lease stands created.

According to section 107 of the transfer of property act, a lease for the period of more than one year or of year to year or reserving of yearly rent must be registered. An unregistered lease may cause a severe effect on the enforcement of the right. Such deed shall not be admitted in evidence. You cannot ask for specific performance of the contract from unregistered lease deed. An unregistered lease deed renders the lease into a month to month.

Requirement for Compulsory Registration

Expanding the scope of the requirement for compulsory registration, the Apex Court in Raghunath v. Kedarnath[ AIR 1969 SC 1316 ], held-

“by the enactment of Act 21 of 1922 which by inserting in Section 49 of the Registration Act the words “or by any provision of the Transfer of Property Act, 1882” has made it clear that the documents in the supplemental list i.e. the documents of which registration is necessary under the Transfer of Property Act but not under the Registration Act fall within the scope of Section 49 of the Registration Act and if not registered are not admissible as evidence of any transaction affecting any Immovable property comprised therein, and do not affect any such immovable property.”

Accordingly, it was held that the document in question was not admissible as evidence of any transaction affecting the immovable property.

Obligation for payment of Stamp Duty

If it has not been specifically agreed to in the lease agreement between the parties executing it, it is the responsibility of the lessee to pay the applicable stamp duty.

Implications on payment of insufficient stamp duty

If proper stamp duty is not paid on lease instruments, any government authority competent to take evidence on oath can impound it and send it to the jurisdictional Collector of Stamps for adjudication and payment of proper stamp duty, along with a penalty which may extend up to ten times of the deficient stamp duty amount. Further, if in court proceedings, the court comes to the conclusion that the instrument is not properly stamped with applicable duty, it would not be admissible as evidence until the stamp duty (with penalties) as adjudicated by the Collector of Stamps is fully paid.

Effect of an unregistered lease agreement for a year or term exceeding one year

If a lease agreement which requires mandatory registration is not registered by the parties, it cannot be received as evidence of any of the agreed terms and conditions affecting the leased property contained therein, whatsoever, except for certain limited purposes including, inter alia in suits for specific performance or merely as evidence of a collateral or correlated transaction.

The provisions of the Registration Act, 1908 (“Registration Act”) and the Transfer of Property Act, 1882 (“TOPA”) set out the law governing registration of lease deeds. Section 17 of the Registration Act states that leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent must be registered compulsorily. Further, section 107 of the TOPA states that a lease of immoveable property from year to year or for any term exceeding one year or reserving a yearly rent can only be made by a registered instrument. All other leases of immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Case Analysis

The position of law with respect to registration as provided in the Registration Act and the TOPA has been reiterated by the Supreme Court of India (“Supreme Court”) in various cases. In Anthony v. KC Ittoop and Sons and Others ((2000) 6 SCC 394; AIR 2000 SC 3523), the Supreme Court had considered whether an unregistered lease deed can create a lease. The Court held that an unregistered instrument cannot create a contractual lease due to the three-pronged statutory restrictions under law but that the existence of a lease can be presumed from the conduct of the parties. The Supreme Court held:

“A transfer of right in the building for enjoyment, of which the consideration of payment of monthly rent has been fixed, can reasonably be presumed.”

In Burmah Shell Oil Distributing now known as Bharat Petroleum Corporation Ltd. v. Khaja Midhat Noor & Ors (AIR 1988 SC 1470), the Supreme Court held that a lease for a period exceeding one year can only be created by a registered instrument. In the absence of a registered instrument, the lease shall be a month to month lease. The Supreme Court held:

“…since the lease was for a period exceeding one year, it could only have been extended by a registered instrument executed by both the lessor and the lessee. In the absence of registered instrument, the lease shall be deemed to be “lease from month to month”.

It is clear from the very language of section 107 of the Act which postulates that a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. In the absence of registered instrument, it must be a monthly lease.

This has also been reiterated in the more recent case of Park Street Properties (Pvt.) Ltd. v. Dipak Kumar Singh and Ors. (AIR 2016 SC 4038) where it was held that in the absence of registration, a month-to-month lease is created which is governed by section 106 of TOPA.

Validity of an Arbitration Clause in an unregistered Lease Deed

M/s Dharmaratnakara Rai Bahadur v. M/s Bhaskar Raju & Brothers [Judgment dated February 14, 2020 in Civil Appeal No. 1599/2020]

This case involved two parties who disputed whether a document executed between them was a lease deed or an “agreement to lease”, and whether arbitration could be invoked under the said document. The Court held that when a lease deed or any other instrument is relied upon as containing the arbitration agreement, the Court is required to consider at the outset, whether the document is properly stamped or not.

The contractual terms stated in an unregistered lease deed for a term exceeding one year cannot be relied on by the parties as the lease deed will be void. However, there is one exception – an arbitration clause. In SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited ((2011) 14 SCC 66), the Supreme Court had held that

An arbitration agreement does not require registration under the Registration Act. Even if it is found as one of the clauses in a contract or instrument, it is an independent agreement to refer the disputes to arbitration, which is independent of the main contract or instrument. Therefore having regard to the proviso to Section 49 of Registration Act read with Section 16(1)(a) of the Act, an arbitration agreement in an unregistered but compulsorily registrable document can be acted upon and enforced for the purpose of dispute resolution by arbitration .

An arbitration agreement in the lease deed is a collateral term relating to the resolution of disputes and independent of the other terms of the contract. It further held that the arbitration clause is unrelated to the transaction affecting the immovable property contained therein and therefore even if the deed is challenged as not valid or unenforceable, the arbitration agreement would remain unaffected for the purposes of resolution of disputes arising with reference to the deed.

Taking into account this non-payment of stamp duty, and relying on its landmark judgment in SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited, (2011) 14 SCC 66, the Supreme Court reiterated that when an arbitration agreement was contained in a document which was not duly stamped, it should be impounded and the court could not act upon such a document nor the arbitration clause therein.

The parties usually in order to avoid payment of stamp duty and registration costs, decide not to register the lease deeds. However, if a dispute arises the parties do not have any legal recourse from the court of law as the unregistered lease deeds are void. However, in the case wherein there is a delivery of property and rent is received (referred to as monthly lease) can be terminated by giving 15 (fifteen) days notice. However, it is in the best interest of the parties that they should register the Lease Deeds if the arrangement for the lease is for a year or exceeding a year.

Published Papers

The “Boomerang Lease” - Registration of Lease Assignments and why it is important

Call 0345 872 6666

During these Covid times, businesses across all sectors continue to look to reassess and reconfigure their real estate requirements. In some cases, space has been found surplus to requirements for occupiers of offices, for example (where a workforce proves able to work from home effectively and without a significant drop off in productivity or quality) or leisure or retail occupiers, where (for the foreseeable future) there will always be a real threat of not being able to occupy and enjoy their premises.

Consequently, tenants in such circumstances with leases with long terms left to run, and with break clauses not yet exercisable, may by choice or necessity consider assigning the lease, effectively transferring their ownership of the premises to a new tenant. However, it is important for assignors (i.e. the outgoing tenant) to be aware of how to legally rid itself of its obligations under the lease; in certain circumstances, the assignment may become void, and ownership of the property (including those onerous lease obligations) could revert back to the assignor.

The recent matter relating to the Sports Direct group company, Gilesports Limited, has highlighted the importance of registration. Gilesports Limited held a lease of a shop and they later decided to sell that company to JJB Sports, assigning the lease of the shop accordingly.

In doing so, they believed to have rid themselves of any of the obligations contained within the lease, given that upon effective assignment of the legal title to a lease created after 1st January 1996 (i.e. completion of the registration of the assignment at the Land Registry), a tenant is automatically released from the burden attached to the agreement, provided they are not required to enter into a separate agreement with the landlord.

However, despite having completed the assignment, Sports Direct was later still held liable for large rent arrears as the lease was never registered.

Whilst it does appear harsh for a previous tenant to ultimately be held liable for the new tenant’s failure to pay rent and perform any other tenant’s covenants, this will be the case if the assignment is one which needs to be properly registered at Land Registry (i.e. any assignment of a registered lease or an assignment of an unregistered lease which has more than seven years left to run) and isn’t properly registered. The new interest, without being registered/until it is registered, only takes effect as an ‘equitable’ interest in land (as opposed to a legal one), leaving the assignor as the legal owner.

Outgoing tenants/assignors should also be warned that once an assignment has been completed (notwithstanding that registration may be outstanding), the assignor will ordinarily not have any right to apply for registration at the Land Registry itself unless specific provision is made, meaning that there is very little they can do to remedy the situation.

Whilst the pandemic has exposed the potential for business expenditure savings on real estate, failure to understand your legal position and protect yourself accordingly can have frustrating and costly consequences. The Real Estate Commercial team at JMW are experts in all landlord and tenant related matters (including lease assignment) and will ensure that you are properly advised at the outset of any key considerations and potential pitfalls.

If you are considering assigning your lease or taking an assignment of a lease, please contact us.

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