Commonhold and Leasehold Reform Act 2002 (c. 15)

(The document as of February, 2008)

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(2) Sections 22(2) and 23 of that Act (members: new members and holding company) shall not apply to a commonhold association.

Part 3 Miscellaneous

Name

16 Regulations may provide--

(a) that the name by which a commonhold association is registered under the Companies Act 1985 must satisfy specified requirements;

(b) that the name by which a company other than a commonhold association is registered may not include a specified word or expression.

Statutory declaration

17 For the purposes of section 12 of the Companies Act 1985 (registration: compliance with Act) as it applies to a commonhold association, a reference to the requirements of that Act shall be treated as including a reference to a provision of or made under this Schedule.

Section 58

SCHEDULE 4 Development rights

Introductory

1 This Schedule sets out the matters which are development business for the purposes of section 58.

Works

2 The completion or execution of works on--

(a) a commonhold,

(b) land which is or may be added to a commonhold, or

Marketing

3 (1) Transactions in commonhold units.

(2) Advertising and other activities designed to promote transactions in commonhold units.

Variation

4 The addition of land to a commonhold.

5 The removal of land from a commonhold.

6 Amendment of a commonhold community statement (including amendment to redefine the extent of a commonhold unit).

Commonhold association

7 Appointment and removal of directors of a commonhold association.

Section 68

SCHEDULE 5 Commonhold: consequential amendments

Law of Property Act 1922 (c. 16)

1 At the end of paragraph 5 of Schedule 15 to the Law of Property Act 1922 (perpetually renewable leases) (which becomes sub-paragraph (1)) there shall be added--

" (2) Sub-paragraph (3) applies where a grant--

(a) relates to commonhold land, and

(b) would take effect by virtue of sub-paragraph (1) as a demise for a term of two thousand years or a subdemise for a fixed term.

(3) The grant shall be treated as if it purported to be a grant of the term referred to in sub-paragraph (2)(b) (and sections 17 and 18 of the Commonhold and Leasehold Reform Act 2002 (residential and non-residential leases) shall apply accordingly). "

Law of Property Act 1925 (c. 20)

2 After section 101(1) of the Law of Property Act 1925 (mortgagee's powers) there shall be added--

" (1A) Subsection (1)(i) is subject to section 21 of the Commonhold and Leasehold Reform Act 2002 (no disposition of part-units) " .

3 At the end of section 149 of that Act (90-year term in place of certain determinable terms) there shall be added--

" (7) Subsection (8) applies where a lease, underlease or contract--

(a) relates to commonhold land, and

(b) would take effect by virtue of subsection (6) as a lease, underlease or contract of the kind mentioned in that subsection.

(8) The lease, underlease or contract shall be treated as if it purported to be a lease, underlease or contract of the kind referred to in subsection (7)(b) (and sections 17 and 18 of the Commonhold and Leasehold Reform Act 2002 (residential and non-residential leases) shall apply accordingly). "

Limitation Act 1980 (c. 58)

4 After section 19 of the Limitation Act 1980 (actions for rent) there shall be inserted--

" Commonhold

19A Actions for breach of commonhold duty

An action in respect of a right or duty of a kind referred to in section 37(1) of the Commonhold and Leasehold Reform Act 2002 (enforcement) shall not be brought after the expiration of six years from the date on which the cause of action accrued. "

Housing Act 1985 (c. 68)

5 At the end of section 118 of the Housing Act 1985 (the right to buy) there shall be added--

" (3) For the purposes of this Part, a dwelling-house which is a commonhold unit (within the meaning of the Commonhold and Leasehold Reform Act 2002) shall be treated as a house and not as a flat. "

Insolvency Act 1986 (c. 45)

6 At the end of section 84 of the Insolvency Act 1986 (voluntary winding-up) there shall be added--

" (4) This section has effect subject to section 43 of the Commonhold and Leasehold Reform Act 2002. "

Law of Property (Miscellaneous Provisions) Act 1994 (c. 36)

7 (1) Section 5 of the Law of Property (Miscellaneous Provisions) Act 1994 (discharge of obligations) shall be amended as follows.

(2) In subsection (1) for the words "or of leasehold land" substitute "of leasehold land or of a commonhold unit".

(3) After subsection (3) insert--

" (3A) If the property is a commonhold unit, there shall be implied a covenant that the mortgagor will fully and promptly observe and perform all the obligations under the commonhold community statement that are for the time being imposed on him in his capacity as a unit-holder or as a joint unit-holder. "

(4) For subsection (4) substitute--

" (4) In this section--

(a) "commonhold community statement", "commonhold unit", "joint unit-holder" and "unit-holder" have the same meanings as in the Commonhold and Leasehold Reform Act 2002, and

(b) "mortgage" includes charge, and "mortgagor" shall be construed accordingly. "

Trusts of Land and Appointment of Trustees Act 1996 (c. 47)

8 At the end of section 7 of the Trusts of Land and Appointment of Trustees Act 1996 (partition by trustees) there shall be added--

" (6) Subsection (1) is subject to sections 21 (part-unit: interests) and 22 (part-unit: charging) of the Commonhold and Leasehold Reform Act 2002. "

Section 72

SCHEDULE 6 Premises excluded from right to manage

Buildings with substantial non-residential parts

1 (1) This Chapter does not apply to premises falling within section 72(1) if the internal floor area--

(a) of any non-residential part, or

(b) (where there is more than one such part) of those parts (taken together),

exceeds 25 per cent. of the internal floor area of the premises (taken as a whole).

(2) A part of premises is a non-residential part if it is neither--

(a) occupied, or intended to be occupied, for residential purposes, nor

(b) comprised in any common parts of the premises.

(3) Where in the case of any such premises any part of the premises (such as, for example, a garage, parking space or storage area) is used, or intended for use, in conjunction with a particular dwelling contained in the premises (and accordingly is not comprised in any common parts of the premises), it shall be taken to be occupied, or intended to be occupied, for residential purposes.

(4) For the purpose of determining the internal floor area of a building or of any part of a building, the floor or floors of the building or part shall be taken to extend (without interruption) throughout the whole of the interior of the building or part, except that the area of any common parts of the building or part shall be disregarded.

Buildings with self-contained parts in different ownership

2 Where different persons own the freehold of different parts of premises falling within section 72(1), this Chapter does not apply to the premises if any of those parts is a self-contained part of a building.

Premises with resident landlord and no more than four units

3 (1) This Chapter does not apply to premises falling within section 72(1) if the premises--

(a) have a resident landlord, and

(b) do not contain more than four units.

(2) Premises have a resident landlord if--

(a) the premises are not, and do not form part of, a purpose-built block of flats (that is, a building which, as constructed, contained two or more flats),

(b) a relevant freeholder, or an adult member of a relevant freeholder's family, occupies a qualifying flat as his only or principal home, and

(3) A person is a relevant freeholder, in relation to any premises, if he owns the freehold of the whole or any part of the premises.

(4) This sub-paragraph is satisfied if--

(a) the relevant freeholder, or

(b) the adult member of his family,

has throughout the last twelve months occupied the flat as his only or principal home.

(5) This sub-paragraph is satisfied if--

(a) immediately before the date when the relevant freeholder acquired his interest in the premises, the premises were premises with a resident landlord, and

(b) he, or an adult member of his family, entered into occupation of the flat during the period of 28 days beginning with that date and has occupied the flat as his only or principal home ever since.

(6) "Qualifying flat", in relation to any premises and a relevant freeholder or an adult member of his family, means a flat or other unit used as a dwelling--

(a) which is contained in the premises, and

(b) the freehold of the whole of which is owned by the relevant freeholder.

(7) Where the interest of a relevant freeholder in any premises is held on trust, the references in sub-paragraphs (2), (4) and (5)(b) to a relevant freeholder are to a person having an interest under the trust (whether or not also a trustee).

(8) A person is an adult member of another's family if he is--

(a) the other's spouse,

(b) a son, daughter, son-in-law or daughter-in-law of the other, or of the other's spouse, who has attained the age of 18, or

and "son" and "daughter" include stepson and stepdaughter ("son-in-law" and "daughter-in-law" being construed accordingly).

Premises owned by local housing authority

4 (1) This Chapter does not apply to premises falling within section 72(1) if a local housing authority is the immediate landlord of any of the qualifying tenants of flats contained in the premises.

(2) "Local housing authority" has the meaning given by section 1 of the Housing Act 1985 (c. 68).

Premises in relation to which rights previously exercised

5 (1) This Chapter does not apply to premises falling within section 72(1) at any time if--

(a) the right to manage the premises is at that time exercisable by a RTM company, or

(b) that right has been so exercisable but has ceased to be so exercisable less than four years before that time.

(2) Sub-paragraph (1)(b) does not apply where the right to manage the premises ceased to be exercisable by virtue of section 73(5).

(3) A leasehold valuation tribunal may, on an application made by a RTM company, determine that sub-paragraph (1)(b) is not to apply in any case if it considers that it would be unreasonable for it to apply in the circumstances of the case.

Section 102

SCHEDULE 7 Right to manage: statutory provisions

Covenants not to assign etc.

1 (1) Section 19 of the Landlord and Tenant Act 1927 (c. 36) (covenants not to assign without approval etc.) has effect with the modifications provided by this paragraph.

(2) Subsection (1) applies as if--

(a) the reference to the landlord, and

(b) the final reference to the lessor,

were to the RTM company.

(3) Subsection (2) applies as if the reference to the payment of a reasonable sum in respect of any damage to or diminution in the value of the premises or neighbouring premises belonging to the landlord were omitted.

(4) Subsection (3) applies as if--

(a) the first and final references to the landlord were to the RTM company, and

(b) the reference to the right of the landlord to require payment of a reasonable sum in respect of any damage to or diminution in the value of the premises or neighbouring premises belonging to him were omitted.

Defective premises

2 (1) Section 4 of the Defective Premises Act 1972 (c. 35) (landlord's duty of care by virtue of obligation or right to repair demised premises) has effect with the modifications provided by this paragraph.

(2) References to the landlord (apart from the first reference in subsections (1) and (4)) are to the RTM company.

(3) The reference to the material time is to the acquisition date.

Repairing obligations

3 (1) The obligations imposed on a lessor by virtue of section 11 (repairing obligations in short leases) of the Landlord and Tenant Act 1985 (c. 70) (referred to in this Part as "the 1985 Act") are, so far as relating to any lease of any flat or other unit contained in the premises, instead obligations of the RTM company.

(2) The RTM company owes to any person who is in occupation of a flat or other unit contained in the premises otherwise than under a lease the same obligations as would be imposed on it by virtue of section 11 if that person were a lessee under a lease of the flat or other unit.

(3) But sub-paragraphs (1) and (2) do not apply to an obligation to the extent that it relates to a matter concerning only the flat or other unit concerned.

(4) The obligations imposed on the RTM company by virtue of sub-paragraph (1) in relation to any lease are owed to the lessor (as well as to the lessee).

(5) Subsections (3A) to (5) of section 11 have effect with the modifications that are appropriate in consequence of sub-paragraphs (1) to (3).

(6) The references in subsection (6) of section 11 to the lessor include the RTM company; and a person who is in occupation of a flat or other unit contained in the premises otherwise than under a lease has, in relation to the flat or other unit, the same obligation as that imposed on a lessee by virtue of that subsection.

(7) The reference to the lessor in section 12(1)(a) of the 1985 Act (restriction on contracting out of section 11) includes the RTM company.

Service charges

4 (1) Sections 18 to 30 of the 1985 Act (service charges) have effect with the modifications provided by this paragraph.

(2) References to the landlord are to the RTM company.

(3) References to a tenant of a dwelling include a person who is landlord under a lease of the whole or any part of the premises (so that sums paid by him in pursuance of section 103 of this Act are service charges).

(4) Section 22(5) applies as if paragraph (a) were omitted and the person referred to in paragraph (b) were a person who receives service charges on behalf of the RTM company.

(5) Section 26 does not apply.

Right to request information on insurance

5 (1) Section 30A of, and the Schedule to, the 1985 Act (rights of tenants with respect to insurance) have effect with the modifications provided by this paragraph.

(2) References to the landlord are to the RTM company.

(3) References to a tenant include a person who is landlord under a lease of the whole or any part of the premises and has to make payments under section 103 of this Act.

(4) Paragraphs 2(3) and 3(3) of the Schedule apply as if paragraph (a) were omitted and the person referred to in paragraph (b) were a person who receives service charges on behalf of the RTM company.

Managing agents

6 Section 30B of the 1985 Act (recognised tenants' associations to be consulted about landlord's managing agents) has effect as if references to the landlord were to the RTM company (and as if subsection (6) were omitted).

Right of first refusal

7 Where section 5 of the 1987 Act (right of first refusal: requirement that landlord serve offer notice on tenant) requires the landlord to serve an offer notice on the qualifying tenants of the flats contained in the premises, he must serve a copy of the offer notice on the RTM company.

Appointment of manager

8 (1) Part 2 of the 1987 Act (appointment of manager by leasehold valuation tribunal) has effect with the modifications provided by this paragraph.

(2) References to the landlord are to the RTM company.

(3) References to a tenant of a flat contained in the premises include a person who is landlord under a lease of the whole or any part of the premises.

(4) Section 21(3) (exception for premises where landlord is exempt or resident or where premises are functional land of a charity) does not apply.

(5) The references in paragraph (a)(i) of subsection (2) of section 24 to any obligation owed by the RTM company to the tenant under his tenancy include any obligations of the RTM company under this Act.

(6) And the circumstances in which a leasehold valuation tribunal may make an order under paragraph (b) of that subsection include any in which the RTM company no longer wishes the right to manage the premises to be exercisable by it.

(7) The power in section 24 to make an order appointing a manager to carry out functions includes a power (in the circumstances specified in subsection (2) of that section) to make an order that the right to manage the premises is to cease to be exercisable by the RTM company.

(8) And such an order may include provision with respect to incidental and ancillary matters (including, in particular, provision about contracts to which the RTM company is a party and the prosecution of claims in respect of causes of action, whether tortious or contractual, accruing before or after the right to manage ceases to be exercisable).

Right to acquire landlord's interest

9 Part 3 of the 1987 Act (compulsory acquisition by tenants of landlord's interest) does not apply.

Variation of leases

10 Sections 35, 36, 38 and 39 of the 1987 Act (variation of long leases relating to flats) have effect as if references to a party to a long lease (apart from those in section 38(8)) included the RTM company.

Service charges to be held in trust

11 (1) Sections 42 to 42B of the 1987 Act (service charge contributions to be held in trust and in designated account) have effect with the modifications provided by this paragraph.

(2) References to the payee are to the RTM company.

(3) The definition of "tenant" in section 42(1) does not apply.

(4) References to a tenant of a dwelling include a person who is landlord under a lease of the whole or any part of the premises.

(5) The reference in section 42(2) to sums paid to the payee by the contributing tenants by way of relevant service charges includes payments made to the RTM company under section 94 or 103 of this Act.

(6) Section 42A(5) applies as if paragraph (a) were omitted and the person referred to in paragraph (b) were a person who receives service charges on behalf of the RTM company.

Information to be furnished to tenants

12 (1) Sections 46 to 48 of the 1987 Act (information to be furnished to tenants) have effect with the modifications provided by this paragraph.

(2) References to the landlord include the RTM company.

(3) References to a tenant include a person who is landlord under a lease of the whole or any part of the premises; and in relation to such a person the reference in section 47(4) to sums payable to the landlord under the terms of the tenancy are to sums paid by him under section 103 of this Act.

Statutory duties relating to certain covenants

13 (1) The Landlord and Tenant Act 1988 (c. 26) (statutory duties in connection with covenants against assigning etc.) has effect with the modifications provided by this paragraph.

(2) The reference in section 1(2)(b) to the covenant is to the covenant as it has effect subject to section 98 of this Act.

(3) References in section 3(2), (4) and (5) to the landlord are to the RTM company.

Tenants' right to management audit

14 (1) Chapter 5 of Part 1 (tenants' right to management audit by landlord) of the Leasehold Reform, Housing and Urban Development Act 1993 (c. 28) (referred to in this Part as "the 1993 Act") has effect with the modifications provided by this paragraph.

(2) References to the landlord (other than the references in section 76(1) and (2) to "the same landlord") are to the RTM company.

(3) References to a tenant include a person who is landlord under a lease of the whole or any part of the premises and has to make payments under section 103 of this Act.

(4) Section 80(5) applies as if the reference to a person who receives rent were to a person who receives service charges.

Right to appoint surveyor

15 (1) Section 84 of the Housing Act 1996 (c. 52) and Schedule 4 to that Act (apart from paragraph 7) (right of recognised tenants' association to appoint surveyor to advise on matters relating to service charges) have effect as if references to the landlord were to the RTM company.

(2) Section 84(5) and paragraph 4(5) of Schedule 4 apply as if the reference to a person who receives rent were to a person who receives service charges.

Administration charges

16 Schedule 11 to this Act has effect as if references to the landlord (or a party to a lease) included the RTM company.

Section 124

SCHEDULE 8 Enfranchisement by company: amendments

Land Compensation Act 1973 (c. 26)

1 (1) Section 12A of the Land Compensation Act 1973 (tenants participating in collective enfranchisement or entitled to individual lease extension) is amended as follows.

(2) In subsection (2)(b)--

(a) in sub-paragraph (i), for "participating tenant in relation to" substitute "participating member of a RTE company which is making", and

(b) in sub-paragraph (ii), for the words from "one" to "made" substitute "a member of a RTE company which has made an acquisition".

(3) In subsection (4), for "nominee purchaser" substitute "RTE company".

(4) In subsection (9), for paragraph (b) substitute--

" (b) "participating member" and "RTE company" have the same meanings as in Chapter 1 of Part 1 of that Act; and

(c) the reference to the making of an acquisition by a RTE company shall be construed in accordance with section 38(2) of that Act. "

Leasehold Reform, Housing and Urban Development Act 1993 (c. 28)

2 The 1993 Act has effect subject to the following amendments.

3 (1) Section 1 (right to collective enfranchisement) is amended as follows.

(2) In subsection (1), for the words from "on qualifying tenants" to the end of paragraph (b) substitute "the right to acquire the freehold of premises to which this Chapter applies on the relevant date, at a price determined in accordance with this Chapter, exercisable subject to and in accordance with this Chapter by a company (referred to in this Chapter as a RTE company) of which qualifying tenants of flats contained in the premises are members;".

(3) In subsection (2)(a), for the words from "the qualifying tenants" to "have acquired," substitute "the RTE company by which the right to collective enfranchisement is exercised is entitled, subject to and in accordance with this Chapter, to acquire,".

(4) In subsection (5)--

(a) for "qualifying tenants" substitute "a RTE company", and

(b) for "those tenants are" substitute "the RTE company is".

4 For section 2(1) (acquisition of leasehold interests) substitute--

" (1) Where the right to collective enfranchisement is exercised by a RTE company in relation to any premises to which this Chapter applies ("the relevant premises"), then, subject to and in accordance with this Chapter--

(a) there shall be acquired by the RTE company every interest to which this paragraph applies by virtue of subsection (2); and

(b) the RTE company shall be entitled to acquire any interest to which this paragraph applies by virtue of subsection (3);

and any interest which the RTE company so acquires shall be acquired in the manner mentioned in section 1(1). "

5 In section 11(4) (right of qualifying tenant to obtain information about superior interests), for "by the tenant in connection with the making" substitute "in connection with the making by a RTE company".

6 (1) Section 13 (initial notice) is amended as follows.

(2) In subsection (3)--

(a) in paragraph (e), after "premises" insert "who are participating members of the RTE company", and

(b) for paragraph (f) substitute--

" (f) state the name and registered office of the RTE company; " .

(3) After subsection (5) insert--

" (5A) A copy of a notice under this section must be given to each person who at the relevant date is the qualifying tenant of a flat contained in the premises specified under subsection (3)(a)(i). "

(4) In subsection (11), for "nominee purchaser" substitute "RTE company".

(5) In subsection (13), for "contains restrictions on participating in the exercise of the right to collective enfranchisement" substitute "specifies circumstances in which the fact that a qualifying tenant is a member of a RTE company is to be disregarded when considering whether the requirement in subsection (2)(b) is satisfied".

7 (1) Section 17 (access for valuation purposes) is amended as follows.

(2) In subsection (1), for "nominee purchaser" substitute "RTE company".

(3) In subsection (2)--

(a) for "nominee purchaser" (in both places) substitute "RTE company", and

(b) for "his" substitute "its".

8 (1) Section 18 (duty to disclose existence of agreements affecting premises etc.) is amended as follows.

(2) In subsection (1)--

(a) for "nominee purchaser", in the first and last place, substitute "RTE company", and

(b) for "tenant", in the first place, substitute "member".

(3) In subsection (2)--

(a) for "nominee purchaser" (in each place) substitute "RTE company", and

(b) for "tenants" substitute "members".

9 (1) Section 20 (right of reversioner to require evidence of tenant's right to participate) is amended as follows.

(2) In subsection (1), for "nominee purchaser a notice requiring him, in the case of any person by whom the initial notice was given, to deduce the title of that person" substitute "RTE company a notice requiring it, in the case of any qualifying tenant of a flat contained in the specified premises who was a participating member of the company at the relevant time, to deduce the title of that qualifying tenant".

(3) In subsection (2), for "nominee purchaser" substitute "RTE company".

(4) In subsection (3)--

(a) for "nominee purchaser" (in both places) substitute "RTE company",

(b) for "person" (in each place) substitute "qualifying tenant", and

10 (1) Section 21 (reversioner's counter notice) is amended as follows.

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