Q&A: Bridging the registration gap

Laura Bushaway and Sophie Gibson explore a practical issue arising from delays at the Land Registry Question I have recently purchased the freehold of a mixed-use building with a commercial unit on the ground floor and 12 residential flats above. I have been told by my solicitor that registration of the sale may not take place for up to a year owing to delays at the Land Registry. A recent inspection of the building has revealed that roof repairs are urgently needed at a cost of around £50,000. Under the terms of the leases, I can recover the costs of the repairs by way of service charges from the leaseholders and the commercial tenant, and would usually consult with the residential leaseholders under section 20 of the Landlord and Tenant Act 1985. Can I go ahead and arrange for those repairs to be carried out even though I am not yet registered as the owner of the freehold? How do I deal with the consultation process if I am not yet registered? These works are fairly urgent as when there is heavy rainfall, water is leaking into the top-floor flats. Answer You will need to make an application to the First-tier Tribunal (Property Chamber) to seek dispensation from carrying out the consultation procedure under section 20 of the 1985 Act. A recent Upper Tribunal (Lands Chamber) decision suggests that dispensation may be granted and, if so, you can carry out the works to the building during the registration gap (ie the period between your purchase of the freehold and registration of that purchase at the Land Registry). You will need to check the terms of the sale contract to ensure there are no terms which expressly cater for this situation and also confirm whether notices of assignment have been given to tenants of the building under section 3 of the 1985 Act before making an application for dispensation. Explanation The UT was asked to consider similar issues in RM Residential Ltd v Westacre Ltd and another [2024] UKUT 56; [2024] PLSCS 45. In that case, the landlord had acquired the freehold of the building in December 2020 and did not become the registered owner until January 2022. The building comprised four commercial units on the ground floor and six residential flats on the upper floors. Before the registration had completed at the Land Registry, the landlord, without carrying out the statutory consultation procedure with the leaseholders, carried out works of repair to the building. The works cost in excess of £120,000 and the landlord applied to the FTT for dispensation from complying with section 20 of the 1985 Act. The FTT initially refused dispensation on grounds that the works had not been urgent and the landlord was not the legal owner of the property during the registration gap, so had no entitlement to enter the property to carry out the works. However, on appeal, the UT reversed that decision and granted dispensation. It considered that the FTT was wrong to hold that the landlord could not enter and do works to the property during the registration gap. RM Residential is binding on the FTT. While the FTT decides each case on its own facts, your case does sound similar and it may be considered that the same answer should apply. If so, it is likely that you can enter the building to carry out the works and can apply for dispensation from compliance with the statutory consultation process. The FTT will consider whether there is any prejudice to the tenants in dispensing with the requirement to comply with section 20 of the 1985 Act. Based on what you have told us, given the urgency of the works there seems to be no obvious prejudice if dispensation were to be granted. However, this will depend on the particular circumstances of your case. It is recommended that your solicitors check the sale contract to confirm whether there were any express provisions agreed in the contract concerning a registration gap. It is becoming more common for contracts to address registration gap issues by the seller giving express authority for the buyer to take certain actions on their behalf pending registration. Assuming there are no express provisions in the contract, you may also want to check that you, your managing agents or your solicitors have served notice under section 3 of the 1985 Act on all of the tenants at your building confirming that the freehold of the building has been assigned to you. The notice will give details of your name and address, and failure to comply without a reasonable excuse could result in the committal of an offence with the penalty of a fine. The tenants who are served with the section 3 notice will also be the respondents named in your application for dispensation. If the FTT decides that RM Residential applies, and that the leaseholders will not suffer prejudice, dispensation is likely to be granted, so in principle you can recover the cost of the works by way of service charge (provided that the leases enable you to recover the cost of those repairs from the leaseholders and the commercial tenant). Laura Bushaway is a knowledge development lawyer in the real estate disputes team at Charles Russell Speechlys LLP and Sophie Gibson is a barrister at Landmark Chambers Image © MaxAce/Pixabay