The draftsmen of the Leasehold Reform, Housing and Urban Development Act 1993 (the 1993 Act) foresaw that individual tenants of flats might seek to exercise their rights to acquire new leases under section 42 while a process of collective enfranchisement is ongoing. And they provided for this by suspending the operation of section 42 notices during the currency of the collective claim: section 54.
The issue that arose in Rees v 82 Portland Place Investments Ltd [2020] EWHC 1177 (Ch) resulted from an error by the Land Registry. It had accepted a tenant’s application to register a unilateral notice against an intermediate leasehold title (which had only 12 years left to run) to protect a section 42 notice. But it had refused – mistakenly – to register a similar notice against the freehold title because it believed that an ongoing collective enfranchisement claim prevented it from doing so.
On completion of the collective enfranchisement claim, the nominee purchaser created a new concurrent long leasehold interest in the flat and applied to merge the “fag end” of the original long leasehold interest into the freehold title. And, because section 97(1) of the 1993 Act requires tenants’ rights pursuant to section 42 notices to be registered as estate contracts, and section 29 of the Land Registration Act 2002 (the 2002 Act) provides that registered dispositions take priority over interests that are not protected on the register, the tenant’s claim for a new lease did not bind the new freeholder.
