Manchester Conveyancing Solicitors | Ford Banks Irwin Solicitors - The Property Lawyers in Manchester on Commercial Business Leases
Please note: Not to be used or relied upon without legal advice. These notes are for illustration purposes ONLY
continued from page 11 . . .
Leases - Method of Determination
Determination - on surrender by operation of law
Examples of surrender by operation of Law might be where either:
- the Landlord grants a new Lease of the same Property to the existing tenant. If the new Lease was granted pursuant to section 14 Leasehold Reform Act 1967, Conveyancing Solicitors and Property Lawyers should disclose this fact. In a prescribed clauses Lease this should be disclosed in clause LR5.2.
NB: The extension of the term of an existing Lease by means of a deed of variation may take effect as a deemed surrender and re-grant.
- the tenant gives up possession of the premises to the Landlord and possession is then accepted by the Landlord, or
- the tenant gives up possession of the premises to the Landlord and the Landlord then grants a new Lease of the premises to a third party with the tenant's consent.
Where an application is based upon a surrender by operation of Law, the application submitted by Conveyancing Solicitors and Property Lawyers must be supported by a statutory declaration or statement of truth made by a reliable person with full knowledge of the facts. The declaration or statement must:
- specify the amount of consideration paid for the surrender (if any)
- confirm that no deed of surrender was entered into
- if the tenant was occupying the Property and has given vacant possession to the Landlord, describe when and how the premises were vacated and the keys returned to the Landlord
- if an under-Leasee was occupying the Property, contain evidence that the Landlord is receiving the rent directly from that under-lessee, e.g. by producing, as exhibits to the declaration, the counterpart under-Lease and a copy of the authority requiring the under-lessee to pay the rent directly to the Landlord.
There are occasions when Land Registry will not require a statutory declaration or statement of truth in support of the application. This will be where either:
- the leasehold estate and the reversionary estate are both registered and the application is made by or with the consent of the registered proprietors of both titles, provided the determined leasehold estate is registered with an absolute leasehold or a good leasehold class of title, or
- the Landlord grants a new Lease of the same Property to the existing tenant.
NB: Where a statutory declaration or statement of truth is not required, Land Registry will require a letter confirming that no deed of surrender was entered into. Conveyancing Solicitors and Property Lawyers from either party may be asked to submit the letter.
How to make the application
In addition to the documents required, as stated in section: Points to consider on all application, Conveyancing Solicitors and Property Lawyers must lodge:
- a statutory declaration or statement of truth (when required)
- any other evidence relating to the surrender, if available, eg a receipt for money paid for the surrender, or an instrument of release of personal liability.
Stamp duty or stamp duty land tax
By virtue of section 128 Finance Act 2000 any document evidencing the surrender, including consents, statutory declarations, statements of truth or Land Registry application forms, will represent an instrument of surrender and therefore potentially be subject to stamp duty.
By virtue of section 43(3)(b) Finance Act 2003 a surrender by operation of Law is a Land transaction for the purposes of stamp duty land tax.
Determination - by disclaimer
When a person becomes bankrupt or a company becomes insolvent, either a trustee in bankruptcy or a liquidator respectively may, by giving the prescribed notice, disclaim certain onerous Property, including Leases. This has the effect of determining the Leases.
NB: This section does not deal with a crown disclaimer of a Lease which is bona vacantia.
How to make the application
In addition to the documents required, as stated in section: Points to consider on all applications, Conveyancing Solicitors and Property Lawyers must lodge:
- evidence of either bankruptcy of liquidation
- an official copy of the notice of disclaimer, and either:
* a certificate by the trustee in bankruptcy or liquidator that they have power to make the disclaimer, have served the prescribed notices and are not aware of any application to the Court for a vesting order having been made within a period of 14 days from the day on which the last copy notice of disclaimer was served, or
* a certified copy of the Court Order directing that the disclaimer should take effect - if such an Order was made.
(All italics in this page are Crown Copyright and reproduced here for your information with permission from HM Land Registry)
. . . continued on page 13 (Manchester Conveyancing Solicitors Property Lawyers on Commercial Business Leases 13)
Please telephone Paul on 0161 866 8999 if you require any further information.
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