By Naomi Raymond-George, Legal Adviser
December 2018
Villarosa v Ryan [2018] EWHC 1914 is a High Court case which was heard on appeal from the county court on 28 and 29th June 2018.
The case considered to what extent personal representatives of a deceased leaseholder may make a claim for a lease extension and, exactly how long they have from grant of probate to serve notice for the claim.
The facts
Mr Vambeck had a lease dated 6 June 1991 for a term of 99 years from that date.
On 4 December 2007 he passed away and on 27 April 2010 his executors obtained a grant of probate of his will.
Under section 27 (5) (a) of the Land Registration Act 2002, the probate gave legal ownership of the flat to the executors, even though they had not applied to become registered owners of the lease at the Land Registry.
On 6 April 2016 the executors transferred the lease of the flat to Ms Villarosa (the appellant) who was buying the flat. The transfer was completed but at that point it was not registered at the Land Registry.
Shortly after, the solicitors for the executors served on the landlord (Mr Ryan – the respondent) a claim notice for a lease extension under section 42 of the Leasehold Reform Housing and Development Act 1993 (the Act).
The notice was served on the basis that the executors had been qualifying tenants of the flat for more than two years before the service of the notice. (it is a requirement under the Act that leaseholders have owned their lease for more than 2 years before they can qualify to claim a lease extension).
On 7 or 8 June 2016, the executors transferred the benefit of the Section 42 claim notice to Ms Villarosa who was buying the flat.
On 27 June 2016, a few months after the transfer deed was executed, Ms Villarosa applied to the Land Registry to register her ownership of the flat and its leasehold title.
What was the issue?
The landlord challenged the validity of the claim arguing that the Act gives the executors up to two years from the grant of probate to serve a claim notice and, since the executors served notice long after this period had expired, their claim was invalidated under section 42(4A).
Section 42(4A) requires a personal representative of a deceased leaseholder to serve a claim notice for a lease extension within a period of two years from the grant of probate or letters of administration.
Ms Villarosa countered that the claim was valid by relying on section 39 (2). This section allowed the executors to claim a new lease as leaseholders in their own right, thus benefitting from ownership of more than two years.
The law
Section 132 of the Commonhold and Leasehold Reform Act 2002 introduced the relevant sections 39(3A) and 42(4a) of the Act.
Originally, the law imposed a much shorter residence test as the qualification requirement for claiming a new lease.
Section 132 removed the residence requirement and extended the qualification period to two years to allow a personal representative more time to apply for a new lease.
As for the assignment of the claim, section 43 (3) of the Act required the lease to be assigned with the benefit of the notice.
The appellant only acquired legal ownership on the registration date of 27 June 2016.
The formal transfer of the lease was made on 6 April 2016. This period between the execution of the transfer and registration is known as ‘the registration gap’ and during this period the executors as the sellers remained legal owners.
What was the High Court asked to do?
Two issues were examined:
- Whether personal representatives are restricted to serving a claim notice within a period of two years from the grant of probate or letters of administration. Or whether they, in fact, benefit from an additional right to serve notice after a two year period of qualification – as leaseholders;
- The relevance of the period within which legal title to the lease is transferred and the claim notice assigned.
What was the High Court’s interpretation of the law?
The High Court overturned the county court’s judgment and allowed the appeal.
It considered section 39 (3A) was a special provision designed to act as an additional right for personal representatives and was not to take away the general qualification right of two years ownership which remained available.
The executors had served the notice correctly in their other capacity as leaseholder’s, therefore, satisfying the 2-year ownership requirement.
It follows therefore that the executors retained legal entitlement to serve the claim notice during this registration gap, which they did, therefore the lease was in fact transferred with the benefit of the claim notice.
What does this mean for you?
It is now clear that a personal representative has the benefit of serving a claim notice within a two year period from grant of probate and also claiming a new lease in their own right as owners of the lease after two years. This is so long as the deceased leaseholder was a qualifying tenant.
Secondly, it is necessary to remember that the claim notice cannot be validly assigned without the benefit of the legal title first. The lease and the claim notice must go together.
Timing is crucial.
Further information:
