• Leasehold Restriction

    By Guest on 08th Jul 2016

    I am buying a leasehold flat. The lease requires the freeholder to issue a certificate of compliance before the assignment cannot be registered. The seller's Solicitor thinks that the buyer should pay for this. Under the Standard Conditions, it is the seller's responsibility to pay for any permissions to assign. However, this is not a permission to assign, but a restriction on registering the assignment. By analogy, is it reasonable to insist that the seller pays for the Certificate? Or does this normally fall to the buyer?

  • 1 Answers

    By Guest on 08/07/2016

    There is no rule of law in this respect but it is generally accepted conveyancing practice that the buyer will pay for a certificate of compliance. There are a number of possible "assignment requirements" when a leasehold property is sold which involve paying fees to the landlord and the following rationale might help clear this up:

    Licence/consent to assign - where the lease requires the landlord's consent to be obtained before the lease is assigned then the seller should expect to pay because it is he who needs the consent to sell (if consent is sought after the assignment then the covenant has already been breached)

    Buyer to enter into a deed of covenant - the deed is between the buyer and the landlord and the obligation to enter into it is on the buyer, so the buyer should expect to pay

    Obligation to serve notice of the assignment on the landlord - the obligation here is to give the landlord notification that the property has been sold within a reasonable period AFTER completion (usually one month). The obligation is on the tenant for the time being, so in other words the buyer, so the buyer should expect to pay the fee

    Certificate of compliance with a restriction on the title - the restriction does not prevent an assignment but rather the registration of the assignment, without the appropriate certificate. It is the buyer who wants to be registered and so the buyer who would pay the fee

    Fee for issuing a share/membership certificate - the certificate is in the name of the buyer so the buyer should pay

    Remember though though that whilst the above is normal practice it is not binding in any way and buyers and sellers are entitled to negotiate

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