Hypothetical Scenario #1

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    Hypothetical Scenario #1

    OK folks, I am still trying to get my head around lease forfeiture, so I have created a hypothetical scenario as a test.

    Imagine a situation where:-

    1) a COMMERCIAL lease is granted to Company X.
    2) Company X restructures itself into Company Y.
    3) Company Y is taken over by Company Z.
    4) the lease-granting landlord decides to sell the freehold and informs the incoming landlord that he has never collected any ground rent for that lease, even though it was granted several years ago.
    5) the Land Registry's records still show long defunct Company X's name on the lease.
    6) the lease is a standard commercial lease with a clause to the effect that if the rent remains unpaid for 21 days, whether it is demanded or not, the LL can re-enter the premises.

    Question: If the new landlord wants to forfeit that lease, what is the easiest option for him?

    Does he have to go through the palaver of peaceable re-entry, or can he just ask the Land Registry to remove the lease as the company in question no longer exists?

    Additionally, since Company X no longer exists, is the new LL still bound to notify anyone of his purchase of the freehold?


    #2
    In case I didn't make it clear - the new LL's aim is to sell Company Z a new lease.

    Comment


      #3
      What exactly do you mean by restructures it self in the context of company !!!!!

      Comment


        #4
        You need to consult a commercial property solicitor about this situation.

        Comment


          #5
          Originally posted by Gordon999 View Post
          You need to consult a commercial property solicitor about this situation.
          This is a hypothetical scenario, remember?

          Comment


            #6
            Restructuring into company y is likely an assignment.

            If its hypothetical ,given the other posts, & despite you being around for some time, are you a student looking for answers?
            Or someone in business looking for free advice?

            I don't necessarily have an objection, it's just nice to have a bit of honesty.
            Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

            Comment


              #7
              I'm a bit of both, really. I'm a BTL landlord who is thinking about buying some ground rent investments and wondering whether it's worth it or not. As you will appreciate, it's a totally different ball game and in some respects it's quite scary, so I am trying to learn as much as I can before taking the plunge. In fact, I may even decide not to do it at all, but either way I want to make an informed decision. Is that honest enough for you?

              Back to my original enquiry. If restructuring into a company is an assignment and the lease still bears the pre-incorporation entity's name (also bearing in mind that nobody's paid any rent for donkey's years as well) then wouldn't the new LL be allowed to get the Land Registry to remove the lease and offer a new one to the corporation that is using the property?

              At the end of the day, an unincorporated entity is not the same as corporation it may subsequently create. When I sold my flat to my company my company had to pay stamp duty, just as any other buyer would have done. So why should it be any different for these guys?

              Comment


                #8
                Assignment of Lease - Definition

                Transfer by the original tenant (the assignor) of his or her rights to a sub-tenant (the assignee) to use the leased property. However, the assignor remains liable under the original lease contract unless expressly released by the landlord.

                http://www.businessdictionary.com/de...-of-lease.html
                It cannot be an assignment then. Otherwise the corporation would be the sub-tenant of a defunct legal entity.

                Comment


                  #9
                  Originally posted by Perplexed View Post
                  It cannot be an assignment then. Otherwise the corporation would be the sub-tenant of a defunct legal entity.
                  So you trust a dictionary rather than a qualified practitioner of some 28 years post degree experience.....ok.
                  Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                  Comment


                    #10
                    Originally posted by Perplexed View Post
                    Is that honest enough for you?

                    ?
                    Thank you its better to understand where a person is coming from, and when you spend time thinking about an issue that its not someone abusing us members to answer exam questions

                    If a company simply recapitalises and changes it name, and does not truly becomes a new company then the original lease and liability stands.

                    Don't forget that even if they created a new company Y, that the orignal lease is assigned from x to y they are simply the successors in title to x. Even though x is still named in the lease, Y is recognised, though the parties should have a licence to do so, and HMLR should have been notified.

                    I suspect company y is still company x, check its history at CH. If it is new company then its a matter of as landlord registering the assignment at HMLR, and bill rent for 6 years or if they say not us then tell the to get the F out- they cant have it both ways. LOL
                    Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                    Comment


                      #11
                      Originally posted by leaseholdanswers View Post
                      Don't forget that even if they created a new company Y, that the orignal lease is assigned from x to y they are simply the successors in title to x. Even though x is still named in the lease, Y is recognised, though the parties should have a licence to do so, and HMLR should have been notified.

                      I suspect company y is still company x, check its history at CH. If it is new company then its a matter of as landlord registering the assignment at HMLR, and bill rent for 6 years or if they say not us then tell the to get the F out- they cant have it both ways. LOL
                      Yes, at the very least the new LL should be able to recover some rent arrears, and if lucky even the property itself.

                      Thank you for your answer.

                      Comment

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