Non-registration of leases

Non-registration of leases

Posted by Alan_Riley on Thu, 19/03/2009 - 23:53

According to the latest issue of LandNet (the Land Registry’s customer services magazine), the Land Registry states that “statistics show that a substantial number of leases processed by Her Majesty’s Revenue & Customs are not being lodged with Land Registry.” This means that a significant number of tenants are saving costs through non-registration. These tenants are therefore happy simply to rest on an equitable lease - for that will be the effect of non-registration. “Equity looks on that as done which ought to be done”. Under the doctrine of Walsh v Lonsdale (1882) 21 Ch.D. 9, it was held that the relationship of the parties under an equitable lease was the same as if the lease had been legally granted. One would expect this doctrine to apply to an imperfect legal lease under the LRA 2002, so as to make available to the landlord all usual "legal" remedies (e.g. forfeiture and distress). (Walsh v Lonsdale actually involved the lawfulness of a distress - a legal remedy, but enforceable notwithstanding the lease was merely equitable). However, if the tenant does not register its lease, it runs the risk of having its easements (which, if not registered, could only be equitable) rendered void as against a purchaser of the servient land. This, in turn, creates a risk for the landlord who, it might be argued, commits a breach of the implied covenant not to derogate from the grant (of the easements) by selling to someone who is not bound by them. Such cost savings may simply complicate other legal matters.