The sanctity of the title register prevails – the court refuses to allow the register to be rectified despite the serious financial consequences that result.
The sanctity of the title register prevails – the court refuses to allow the register to be rectified despite the serious financial consequences that result.
The tenant (R) bought a flat in 2011 with the benefit of a notice claiming a lease extension under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 (the 1993 Act). As there was an ongoing collective enfranchisement claim for the building, R’s claim was suspended (as provided for by section 54 of the 1993 Act).
A right to a lease extension arising from a notice served under the 1993 Act cannot be an overriding interest and must be registered as a notice on the freehold title to bind buyers of the freehold. However, the Land Registry incorrectly refused R’s application to register a unilateral notice against the freehold title.
Following completion of the collective enfranchisement process in 2017, a nominee buyer (PPF) became registered as proprietor of the freehold. PPF then granted an overriding lease of R’s flat to a new head lessee (PPI). PPF and PPI argued that they were not bound by R’s claim for a new lease on the basis of section 29 of the Land Registration Act 2002 (the 2002 Act) (which, broadly speaking, provides that a buyer for valuable consideration takes a property subject to all interests on the register and all overriding interests, but free of everything else).
R served a second notice of claim for a new lease on PPF and PPI, without prejudice to her contention that the first notice was valid and enforceable. The difference in the premium payable under the two claims was substantial (about £1.8m). R therefore sought an order rectifying the title registers of PPF and PPI to correct the Land Registry's failure to register her original unilateral notice.
Was it unjust for an order for rectification of the register not to be made?
[Under Schedule 4 of the 2002 Act, where the registered proprietor is in possession of land (and, for these purposes, a landlord is treated as being in possession), no order for rectification may be made without the consent of the registered proprietor unless the registered proprietor has, by fraud or lack of proper care, caused or substantially contributed to the mistake or it would for any other reason be unjust for the alteration not to be made.]
Neither the seriousness of the Land Registry’s error, PPF’s knowledge that no unilateral notice had been registered against the freehold title, the substantial detriment to R because of the likely increase in the premium payable for a new lease nor the corresponding windfall benefit that would accrue to PPI made it unjust not to rectify the register.
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