What happens if you fail to register your new lease?

New leases for seven years or more must be registered at the Land Registry, normally by the Tenant, and within 2 months of completion.

But what happens if you don’t?

It rather depends on whether your landlord’s title is registered or not.

The Landlord’s title is unregistered

Where the Landlord’s title is unregistered, the new lease must nevertheless still be registered at the Land Registry. If it isn’t then after 2 months the lease becomes an agreement for lease.  So a bare contract, rather than a legal estate.

The Landlord’s title is registered

Where the Landlord’s title is registered, the lease doesn’t exist as a legal estate until it is registered. However in the interim it exists as an ‘equitable’ lease.  So it retains the status of a lease (rather than converting to an agreement for lease), but a lease with a much weaker status, which needs active protection, via priority searches and sometimes the registration of a notice on the Landlord’s title.

Consequences

In either of the circumstances, the key legal consequences stem from the fact that both parties have not got what they thought they’d agreed to, namely a lease with full legal status. That will notably be problematic in any dealings, such as a sale or a subletting, and in raising mortgage finance.  It also opens up the parties to the risk of other legal interests being registered first.

It may be trite, but getting on with registering your lease, or checking that its been done, should be seen as equally critical as exchange or completion.

This article was written by James Daglish, Partner, Real Estate, with assistance from Sinead O’Brien, Trainee Solicitor.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.