Saved by entering into an overriding lease!

Happy Days! Two clients of mine have unintentionally benefited by each entering into overriding leases as opposed to extended leases under the LRHUDA 1993 on their respective garage spaces that came with but under separate leases to their occupational leases.

In both cases, my respective clients’ occupational leases were in neighbouring buildings to garage spaces where they park their cars.

In the cases of first client, the vendor served and assigned notice for an extended lease on both the flat and garage which the Grosvenor Estate rejected as invalid on the grounds that the two separate leases of flat and garage were not to be treated as a single long lease under section 7(6). As much as my clients solicitors asserted the opposite (as for a period of time in 1974 the flat and garage leases were held by the same tenant from the same landlord) and as at the time of the s 42 notice the identity of the “competent landlord” is and was the same.

However in order to avoid costly litigation, a deal was struck where Grosvenor would grant an overriding lease on the garage spaces for identically the same no of overall years as the extended lease would have been at a peppercorn rent.

The lessees of the block of flats above the garage spaces then served a s 21 notice for the collective freehold in January including in the claim the garage space owned by my other client unaware of course as to the intending enfranchisement not being a resident of the block per se. He immediately contacted me as to what he should do. I immediately contacted the nominee purchaser’s solicitor who assured me that his client together with the enfranchising lessees behind it had no intention of acquiring his space but had to claim it in the S 13 notice. Nevertheless despite this assurance and with his agreement, I alerted my other clients solicitors (as the overriding lease had not as yet been completed).

Fortunately both clients’ solicitors agreed (as did Grosvenor’s solicitors)  that the two separate overriding leases are not caught by s 19(1)(a)(ii) which captures the grant out of the freehold of any lease which had it been granted before service of the s 13 notice, the interest of the tenant under it would have been liable to acquisition on that date by virtue of ss 2(1)(a) or (b).

In neither case does it include property that would be captured being a) a flat held by a qualifying tenant, b) any common parts of those premises or c) appurtenant property demised by the lease held by a qualifying tenant or property which any such qualifying tenant is entitled under the terms of his lease of his flat to use in common with occupiers of other premises.

The solicitors for the prospective enfranchising tenants also agreed.

So in the case of my first client, the fact that Grosvenor objected to the grant of a reversionary Act lease on the garage spaces has turned out to her huge benefit as if it had not, her acquisition of the spaces would have been frozen whilst the collective claim went through and until the nominee purchaser had been joined as a co-competent landlord/ joint reversioner on the grant of the new lease of the flat and garage space to my client.

In the case of my second client – huge relief that his space is cannot be taken away.