Registration of Leases – Part II – The detail

The Land Registration Act 2002 (“LRA 2002”), together with the Land Registration Rules 2003 (“LRA 2003”), changes the categories of leases that are now either compulsorily or voluntarily registrable, and also the leases that we can note on the Land Register.

Not every leasehold estate is capable of being registered with its own title, but the LRA 2002 substantially extends the scope of title registration, eg many more business leases are now subject to compulsory registration.

Section 4, LRA 2002 specifically sets out the circumstances when an application for first registration of a lease must be made. The following is a detailed look at the triggers for lease registration:

1. New leases granted for a term of more than seven years out of unregistered land (s.4(1)(c), LRA 2002)

Leases granted for a term of more than seven years from the date of the grant, out of either an unregistered freehold or leasehold estates, will be compulsorily registrable provided they are either:

– for valuable or other consideration – that under s.4(6), LRA 2002 includes estates that have a negative value, or

– by way of a gift – s.4(7), LRA 2002 provides for:

(a) grants for the purpose of setting up a trust, where the person setting up the trust, ‘the settlor’, does not retain the whole of the beneficial interest, or

(b) transfers of the legal title to the beneficial owners, where the settler did not retain the whole of the beneficial interest when the trust was set up

– pursuant to an order of any court.

Most leases will be accepted for registration, provided there is more than seven years of the original term left unexpired at the time of first registration. If the lease is granted on or after 13 October 2003 it will be subject to compulsory registration.

2. New leases for a term of more than seven years out of a registered title (s.27(2)(b)(i), LRA 2002)

Leases granted out of existing registered titles, that are for a term of more than seven years from the date of the grant are compulsorily registrable.

3. Transfers or assignments of unregistered leases having more than seven years of the term unexpired (ss.4(1)(a), 4(1)(aa) – as introduced by the LRAAO 2008 – and 4(2)(b), LRA 2002)

Transfers or assignments of unregistered leases, that at the time of the transfers (or assignments) have more than seven years to run, are compulsorily registrable if they are made either:

– for valuable or other consideration – that under s.4(6), LRA 2002 includes estates that have a negative value

– by way of gift – s.4(7), LRA 2002 provides for:

(a) transfers for the purpose of setting up a trust, where the person setting up the trust, ‘the settlor’, does not retain the whole of the beneficial interest, or

(b) transfers of the legal title to the beneficial owners, where the settler did not retain the whole of the beneficial interest when the trust was set up

– pursuant to an order of any court

– by means of an assent – including a vesting assent, or

– if dated on or after 6 April 2009:

(a) to give effect to a partition of land subject to a trust of land

(b) by a deed that appoints, or by virtue of s.83, Charities Act 1993 has effect as if it appointed, a new trustee or that is made in consequence of the appointment of a new trustee, or

(c) by a vesting order under s.44, Trustee Act 1925 that is consequential on the appointment of a new trustee.

Not all transfers or assignments attract compulsory registration.

The following are specific types of transfer or assignment that are not subject to compulsory registration:

– Transfer by operation of law, eg when a deceased’s property vests in their executors – see s.4(3), LRA 2002. However, a transfer by operation of law that is within s.4(1)(aa), LRA 2002, eg when property vests in a new trustee by an express vesting declaration, or one that is implied, under s.40, Trustee Act 1925 in a deed appointing a new trustee, is subject to compulsory registration.

– An assignment of a mortgage term, ie mortgage by demise – see s.4(4)(a), LRA 2002.

– An assignment or surrender of a lease to the owner of the immediate reversion where the term is to merge into that reversion – see s.4(4)(b), LRA 2002.

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