RTM Company change in leaseholder

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    RTM Company change in leaseholder

    One of our leaseholders in selling their flat and I have received a questionnaire from their solicitors. There are a couple of points which i am not 100% on and would be grateful if anyone could guide me here first lease sale since RTM so will log the procedure for any future sales.

    1. Notice of Assignment - My understanding is these should be served to both the landlord or management company. I was thinking to contact the freeholder and ask if they want me to deal with this and forward a copy of the notice. Or should a separate notice be served to each of us?

    2. Deed of Covenant - The block was built in 2007 so not sure if these are necessary but would I be correct in thinking this is solely the Freeholders responsibility and a RTM doesn't need to get involved here?

    3. Licence to Assign - An agreement between the landlord and tenant so would I again e correct in thinking this is solely the Freeholders responsibility and a RTM doesn't need to get involved?

    4. Certificate of Compliance - Not sure if any action would be require for this.

    Thanks in advance.

    #2
    1 It depends on the wording of the lease

    2 and 3 These are requirements of the freeholder and again it depends on the wording of the lease

    4 The RTM will need to state whether or not the leaseholder has complied with the lease and in particular you should say whether or not there are any arrears

    Comment


      #3
      The form is probably LPE1, in which case, it is probably question 4.2 that explicitly asks about arrears.

      There are options for the landlord's lawyer to provide the certificate of compliance, or the the conveyancer to draft one.

      Comment


        #4
        Thanks for your replies and yes it is LEP1. Think I will ask the conveyancer to draft one.

        I have read through the lease and found details of landlord and tenant covenants. There is no specific mention of a deed or licence being required. Where the lease is silent would that mean these are not required, could one be done anyways as a belt and braces approach?

        The details held at the land registry mentions:
        The title includes any legal easements referred to in clause LR11.1 of the registered lease but is subject to any rights that are granted or reserved by the lease and affect the registered land.There are excepted from the effect of registration all estates, rights, interests, powers and remedies arising upon, or by reason of, any dealing made in breach of the prohibition or restriction against dealings therewith inter vivos contained in the Lease.

        The land is subject to such restrictive covenants as may have been imposed on the freehold estate therein and to such rentcharges as may have been created thereon before 21 Septempter 1970 as far as enforceable.

        Would the above mean that the covenants are registered on the new leaseholder without a deed being required?

        I recall my solicitor having to do a transfer notice to the old management company so will request one to the RTM and ask the Freeholder is he is also wanting a separate one.




        Comment


          #5
          Don't rely on this, without checking, but my understanding is that there was a change in the way that leasehold covenants inherited some years ago, and older leases may need a deed to explicitly carry them forward, whereas this is implied by a new lease.

          The word "licence" may not be used explicitly, but anywhere that it says something may not be done without permission, it implies the need for a licence.

          Comment


            #6
            The functions of the RTM are covered by section 96 of the Commonhold & Leasehold Reform Act 2002 which is copied below :

            96 Management functions under leases

            (1)This section and section 97 apply in relation to management functions relating to the whole or any part of the premises.

            (2)Management functions which a person who is landlord under a lease of the whole or any part of the premises has under the lease are instead functions of the RTM company.

            (3)And where a person is party to a lease of the whole or any part of the premises otherwise than as landlord or tenant, management functions of his under the lease are also instead functions of the RTM company.

            (4)Accordingly, any provisions of the lease making provision about the relationship of—

            (a)a person who is landlord under the lease, and

            (b)a person who is party to the lease otherwise than as landlord or tenant,

            in relation to such functions do not have effect.

            (5)“Management functions” are functions with respect to services, repairs, maintenance, improvements, insurance and management.



            (6)But this section does not apply in relation to—

            (a)functions with respect to a matter concerning only a part of the premises consisting of a flat or other unit not held under a lease by a qualifying tenant, or

            (b)functions relating to re-entry or forfeiture.

            (7)An order amending subsection (5) or (6) may be made by the appropriate national authority.


            So basically the freeholder is left with ground rent collection and dealing with forfeiture proceedings.

            Comment


              #7
              Is your lease commencing in 2007 a 3 party agreement ? between Lessor , lessee and Management Company ?

              1. You need to study the wording of the lease to see what the leaseholder must do before any transfer can happen . There may be some restriction to transfer of the flat and requires the new leaseholder to apply to become member of the management company.

              2. The Notice of Assignment may be a Notice of Transfer which your RTM can accept after Registration is completed at Land Registry. . If 2 Notices are required , it means the new leaseholder has to pay the 2 x Notice fee for registration. You may have to state what the notice registration fee you want to charge if there is no figure stated in the lease .

              3. Does the wording in your 2007 lease require the leaseholder to obtain a "licence to assign" from the freeholder ? Its now the function of the RTM .

              4. In addition to the questionaire to complete, you will be requested to confirm if the flat has any arrears in service charge payment and RTM is asked to provide a copy of last 3 years service charge accounts audited by accountant. .You can charge say £100 for providing this information and its better if you should ask for money up front and paid into the service charge account ( to keep the RTM company dormant ). Then the service charge account can pay you for doing the work.

              Comment


                #8
                It is normal to respond to most of the questions in noncommittal terms eg “not as far as we are aware”, “please refer to the lease”, “n/a” which can mean not available or not applicable, “please make your own enquiries” etc

                When responding to the question of arrears, you should always refer to being unable to state whether or not there will be a deficit for unfinalised service charge years no matter how confident you are that there will not be a deficit. That is to cover yourself in case an error is identified at a later stage.

                Comment


                  #9
                  Cardill,

                  Hi,

                  I am in the same situation, now in 2021.

                  please, can you advise me on this?

                  I am desperate and could not find anyone to help me…

                  Comment


                    #10
                    HI. Complete the web link for the following...

                    1. Notice of assignment

                    This is sent in by the buyer's solicitor, innit.

                    2. Deed of covenant

                    ... legalo.co.uk/blog/deed-of-covenant-for-a-lease-your-top-questions-answered/

                    3. Licence to assign

                    If lease silent on licence to assign, seller free to assign without FH consent. This is not the same thing as the purchaser's obligation to submit a notice of assignment after purchase. If needed, I would consult a solicitor if the FH not helpful. (I believe RTMC has to give FH 30 days notice of intent to grant licence but you probably knew this).

                    .... blandy.co.uk/about/news-and-insights/insights/licence-to-assign-an-overview1

                    4. Certificate of compliance

                    ... inspiredpropertymanagement.com/tag/what-is-a-compliance-certificate-for-a-leasehold/
                    Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.

                    Comment

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