The Leasehold Reform (Amendment) Act 2014 (the “2014 Act”) will come into force on 13 May 2014.
The 2014 Act amends Section 99 (5) (a) of the Leasehold Reform (Housing and Urban Development) Act 1993 (the “1993 Act”) for properties in England by removing the requirement for a notice under section 13 or 42 of that Act to be signed by the tenant(s) personally.
One of the main impetuses behind this legislation was the fact that overseas tenants or tenants suffering an incapacity or physically unable to sign on their own behalf were denied the right to extend their lease or participate in a collective enfranchisement claim. This was seen as an inherent fault in the legislation and could potentially be a breach of their basic human rights.
The 2014 Act allows notices under the 1993 Act to be signed on behalf of the tenant(s). However, implications flow from this and solicitors should exercise care when signing notices on behalf of tenants in the same way that they would exercise care when signing contracts for sale or purchase of land i.e. by making sure that they have specific authority to sign on behalf of each client.
As soon as a notice is served the tenants are bound to pay the landlord’s reasonable costs for investigating the claim and preparing a valuation. Where the market takes a plunge after an initial notice has been served the tenants might decide to withdraw the notice thus incurring liability for the landlord’s costs. In such a case the solicitor would want to be able to show that he had clear authority to sign and serve the notice in the first place.
In relation to collective enfranchisement claims, the signatures of the tenants on the section 13 notice was a useful record of the tenants’ commitment to acquire the freehold. If tenants are not signing the initial notice, then even more importance will be placed on the participation agreement, the contractual agreement binding them together throughout the claim.
What are the potential consequences when assigning the benefit of a claim? If a notice does not have to be signed personally by the tenant(s), can an assignment of the benefit of claim be signed by a third party?
The 2014 Act is certainly a step in the right direction however, it does create consequential difficulties.