The High Court has held that a break notice served on behalf of the assignee of a registered lease, who had not yet been registered as the proprietor of the leasehold title, was insufficient to end the lease.
The court did not agree that the assignee was entitled to serve a valid break notice, because they had not applied to become the registered proprietor of the leasehold title (in spite of an express obligation to do so). The court also declined to find that the notice was served on behalf of the assigning tenant too, who was the person who had the right to serve the break notice at the relevant time.
While the case is based largely on its facts and does not contain new law, it is a reminder of some important practical points:
- Who is the registered proprieter? For many purposes, it is the legal tenant who has rights and powers under a lease, and until an assignee of a registered lease becomes the registered proprietor it is not strictly the tenant.
- Is the lease registered? When dealing with a lease assignment, it is important to consider if the lease is registered (and, if not, if it will be registrable following the assignment), in order to ensure that the form of the assignment is correct and that it is registered in a timely fashion.
- Have you checked the terms of the break clause? Practitioners must check the terms of any break clause carefully, and must ensure that any break notice they serve is effective. This may well require them to check the tenant's title to the lease and, if there are problems, they should consider serving more than one notice, to ensure that the break is exercised properly.
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