Commonhold and Leasehold Reform Act 2002 (c. 15)

(The document as of February, 2008)

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(b) the circumstances in which the term is granted;

(3) Subject to subsection (4), an instrument or agreement shall be of no effect to the extent that it purports to create a term of years in contravention of subsection (1).

(4) Where an instrument or agreement purports to create a term of years in contravention of subsection (1) a party to the instrument or agreement may apply to the court for an order--

(a) providing for the instrument or agreement to have effect as if it provided for the creation of a term of years of a specified kind;

(b) providing for the return or payment of money;

(5) A commonhold unit is residential if provision made in the commonhold community statement by virtue of section 14(1) requires it to be used only--

(a) for residential purposes, or

(b) for residential and other incidental purposes.

18 Leasing: non-residential

An instrument or agreement which creates a term of years absolute in a commonhold unit which is not residential (within the meaning of section 17) shall have effect subject to any provision of the commonhold community statement.

19 Leasing: supplementary

(1) Regulations may--

(a) impose obligations on a tenant of a commonhold unit;

(b) enable a commonhold community statement to impose obligations on a tenant of a commonhold unit.

(2) Regulations under subsection (1) may, in particular, require a tenant of a commonhold unit to make payments to the commonhold association or a unit-holder in discharge of payments which--

(a) are due in accordance with the commonhold community statement to be made by the unit-holder, or

(b) are due in accordance with the commonhold community statement to be made by another tenant of the unit.

(3) Regulations under subsection (1) may, in particular, provide--

(a) for the amount of payments under subsection (2) to be set against sums owed by the tenant (whether to the person by whom the payments were due to be made or to some other person);

(b) for the amount of payments under subsection (2) to be recovered from the unit-holder or another tenant of the unit.

(4) Regulations may modify a rule of law about leasehold estates (whether deriving from the common law or from an enactment) in its application to a term of years in a commonhold unit.

(5) Regulations under this section--

(a) may make provision generally or in relation to specified circumstances, and

(b) may make different provision for different descriptions of commonhold land or commonhold unit.

20 Other transactions

(1) A commonhold community statement may not prevent or restrict the creation, grant or transfer by a unit-holder of--

(a) an interest in the whole or part of his unit, or

(b) a charge over his unit.

(2) Subsection (1) is subject to sections 17 to 19 (which impose restrictions about leases).

(3) It shall not be possible to create an interest of a prescribed kind in a commonhold unit unless the commonhold association--

(a) is a party to the creation of the interest, or

(b) consents in writing to the creation of the interest.

(4) A commonhold association may act as described in subsection (3)(a) or (b) only if--

(a) the association passes a resolution to take the action, and

(b) at least 75 per cent. of those who vote on the resolution vote in favour.

(5) An instrument or agreement shall be of no effect to the extent that it purports to create an interest in contravention of subsection (3).

(6) In this section "interest" does not include--

(a) a charge, or

(b) an interest which arises by virtue of a charge.

21 Part-unit: interests

(1) It shall not be possible to create an interest in part only of a commonhold unit.

(2) But subsection (1) shall not prevent--

(a) the creation of a term of years absolute in part only of a residential commonhold unit where the term satisfies prescribed conditions,

(b) the creation of a term of years absolute in part only of a non-residential commonhold unit, or

(c) the transfer of the freehold estate in part only of a commonhold unit where the commonhold association consents in writing to the transfer.

(3) An instrument or agreement shall be of no effect to the extent that it purports to create an interest in contravention of subsection (1).

(4) Subsection (5) applies where--

(a) land becomes commonhold land or is added to a commonhold unit, and

(b) immediately before that event there is an interest in the land which could not be created after that event by reason of subsection (1).

(5) The interest shall be extinguished by virtue of this subsection to the extent that it could not be created by reason of subsection (1).

(6) Section 17(2) and (4) shall apply (with any necessary modifications) in relation to subsection (2)(a) and (b) above.

(7) Where part only of a unit is held under a lease, regulations may modify the application of a provision which--

(a) is made by or by virtue of this Part, and

(b) applies to a unit-holder or a tenant or both.

(8) Section 20(4) shall apply in relation to subsection (2)(c) above.

(9) Where the freehold interest in part only of a commonhold unit is transferred, the part transferred--

(a) becomes a new commonhold unit by virtue of this subsection, or

(b) in a case where the request for consent under subsection (2)(c) states that this paragraph is to apply, becomes part of a commonhold unit specified in the request.

(10) Regulations may make provision, or may require a commonhold community statement to make provision, about--

(a) registration of units created by virtue of subsection (9);

(b) the adaptation of provision made by or by virtue of this Part or by or by virtue of a commonhold community statement to a case where units are created or modified by virtue of subsection (9).

22 Part–unit: charging

(1) It shall not be possible to create a charge over part only of an interest in a commonhold unit.

(2) An instrument or agreement shall be of no effect to the extent that it purports to create a charge in contravention of subsection (1).

(3) Subsection (4) applies where--

(a) land becomes commonhold land or is added to a commonhold unit, and

(b) immediately before that event there is a charge over the land which could not be created after that event by reason of subsection (1).

(4) The charge shall be extinguished by virtue of this subsection to the extent that it could not be created by reason of subsection (1).

23 Changing size

(1) An amendment of a commonhold community statement which redefines the extent of a commonhold unit may not be made unless the unit-holder consents--

(a) in writing, and

(b) before the amendment is made.

(2) But regulations may enable a court to dispense with the requirement for consent on the application of a commonhold association in prescribed circumstances.

24 Changing size: charged unit

(1) This section applies to an amendment of a commonhold community statement which redefines the extent of a commonhold unit over which there is a registered charge.

(2) The amendment may not be made unless the registered proprietor of the charge consents--

(a) in writing, and

(b) before the amendment is made.

(3) But regulations may enable a court to dispense with the requirement for consent on the application of a commonhold association in prescribed circumstances.

(4) If the amendment removes land from the commonhold unit, the charge shall by virtue of this subsection be extinguished to the extent that it relates to the land which is removed.

(5) If the amendment adds land to the unit, the charge shall by virtue of this subsection be extended so as to relate to the land which is added.

(6) Regulations may make provision--

(a) requiring notice to be given to the Registrar in circumstances to which this section applies;

(b) requiring the Registrar to alter the register to reflect the application of subsection (4) or (5).

Common parts

25 Definition

(1) In this Part "common parts" in relation to a commonhold means every part of the commonhold which is not for the time being a commonhold unit in accordance with the commonhold community statement.

(2) A commonhold community statement may make provision in respect of a specified part of the common parts (a "limited use area") restricting--

(a) the classes of person who may use it;

(b) the kind of use to which it may be put.

(3) A commonhold community statement--

(a) may make provision which has effect only in relation to a limited use area, and

(b) may make different provision for different limited use areas.

26 Use and maintenance

A commonhold community statement must make provision--

(a) regulating the use of the common parts;

(b) requiring the commonhold association to insure the common parts;

27 Transactions

(1) Nothing in a commonhold community statement shall prevent or restrict--

(a) the transfer by the commonhold association of its freehold estate in any part of the common parts, or

(b) the creation by the commonhold association of an interest in any part of the common parts.

(2) In this section "interest" does not include--

(a) a charge, or

(b) an interest which arises by virtue of a charge.

28 Charges: general prohibition

(1) It shall not be possible to create a charge over common parts.

(2) An instrument or agreement shall be of no effect to the extent that it purports to create a charge over common parts.

(3) Where by virtue of section 7 or 9 a commonhold association is registered as the proprietor of common parts, a charge which relates wholly or partly to the common parts shall be extinguished by virtue of this subsection to the extent that it relates to the common parts.

(4) Where by virtue of section 30 land vests in a commonhold association following an amendment to a commonhold community statement which has the effect of adding land to the common parts, a charge which relates wholly or partly to the land added shall be extinguished by virtue of this subsection to the extent that it relates to that land.

(5) This section is subject to section 29 (which permits certain mortgages).

29 New legal mortgages

(1) Section 28 shall not apply in relation to a legal mortgage if the creation of the mortgage is approved by a resolution of the commonhold association.

(2) A resolution for the purposes of subsection (1) must be passed--

(a) before the mortgage is created, and

(b) unanimously.

(3) In this section "legal mortgage" has the meaning given by section 205(1)(xvi) of the Law of Property Act 1925 (c. 20) (interpretation).

30 Additions to common parts

(1) This section applies where an amendment of a commonhold community statement--

(a) specifies land which forms part of a commonhold unit, and

(b) provides for that land (the "added land") to be added to the common parts.

(2) The amendment may not be made unless the registered proprietor of any charge over the added land consents--

(a) in writing, and

(b) before the amendment is made.

(3) But regulations may enable a court to dispense with the requirement for consent on the application of a commonhold association in specified circumstances.

(4) On the filing of the amended statement under section 33--

(a) the commonhold association shall be entitled to be registered as the proprietor of the freehold estate in the added land, and

(b) the Registrar shall register the commonhold association in accordance with paragraph (a) (without an application being made).

Commonhold community statement

31 Form and content: general

(1) A commonhold community statement is a document which makes provision in relation to specified land for--

(a) the rights and duties of the commonhold association, and

(b) the rights and duties of the unit-holders.

(2) A commonhold community statement must be in the prescribed form.

(3) A commonhold community statement may--

(a) impose a duty on the commonhold association;

(b) impose a duty on a unit-holder;

(c) make provision about the taking of decisions in connection with the management of the commonhold or any other matter concerning it.

(4) Subsection (3) is subject to--

(a) any provision made by or by virtue of this Part, and

(b) any provision of the memorandum or articles of the commonhold association.

(5) In subsection (3)(a) and (b) "duty" includes, in particular, a duty--

(a) to pay money;

(b) to undertake works;

(d) to give notice;

(e) to refrain from entering into transactions of a specified kind in relation to a commonhold unit;

(f) to refrain from using the whole or part of a commonhold unit for a specified purpose or for anything other than a specified purpose;

(g) to refrain from undertaking works (including alterations) of a specified kind;

(h) to refrain from causing nuisance or annoyance;

(i) to refrain from specified behaviour;

(j) to indemnify the commonhold association or a unit-holder in respect of costs arising from the breach of a statutory requirement.

(6) Provision in a commonhold community statement imposing a duty to pay money (whether in pursuance of subsection (5)(a) or any other provision made by or by virtue of this Part) may include provision for the payment of interest in the case of late payment.

(7) A duty conferred by a commonhold community statement on a commonhold association or a unit-holder shall not require any other formality.

(8) A commonhold community statement may not provide for the transfer or loss of an interest in land on the occurrence or non-occurrence of a specified event.

(9) Provision made by a commonhold community statement shall be of no effect to the extent that--

(a) it is prohibited by virtue of section 32,

(b) it is inconsistent with any provision made by or by virtue of this Part,

(d) it is inconsistent with the memorandum or articles of association of the commonhold association.

32 Regulations

(1) Regulations shall make provision about the content of a commonhold community statement.

(2) The regulations may permit, require or prohibit the inclusion in a statement of--

(a) specified provision, or

(b) provision of a specified kind, for a specified purpose or about a specified matter.

(3) The regulations may--

(a) provide for a statement to be treated as including provision prescribed by or determined in accordance with the regulations;

(b) permit a statement to make provision in place of provision which would otherwise be treated as included by virtue of paragraph (a).

(4) The regulations may--

(a) make different provision for different descriptions of commonhold association or unit-holder;

(b) make different provision for different circumstances;

(c) make provision about the extent to which a commonhold community statement may make different provision for different descriptions of unit-holder or common parts.

(5) The matters to which regulations under this section may relate include, but are not limited to--

(a) the matters mentioned in sections 11, 14, 15, 20, 21, 25, 26, 27, 38, 39 and 58, and

(b) any matter for which regulations under section 37 may make provision.

33 Amendment

(1) Regulations under section 32 shall require a commonhold community statement to make provision about how it can be amended.

(2) The regulations shall, in particular, make provision under section 32(3)(a) (whether or not subject to provision under section 32(3)(b)).

(3) An amendment of a commonhold community statement shall have no effect unless and until the amended statement is registered in accordance with this section.

(4) If the commonhold association makes an application under this subsection the Registrar shall arrange for an amended commonhold community statement to be kept in his custody, and referred to in the register, in place of the unamended statement.

(5) An application under subsection (4) must be accompanied by a certificate given by the directors of the commonhold association that the amended commonhold community statement satisfies the requirements of this Part.

(6) Where an amendment of a commonhold community statement redefines the extent of a commonhold unit, an application under subsection (4) must be accompanied by any consent required by section 23(1) or 24(2) (or an order of a court dispensing with consent).

(7) Where an amendment of a commonhold community statement has the effect of changing the extent of the common parts, an application under subsection (4) must be accompanied by any consent required by section 30(2) (or an order of a court dispensing with consent).

(8) Where the Registrar amends the register on an application under subsection (4) he shall make any consequential amendments to the register which he thinks appropriate.

Commonhold association

34 Constitution

(1) A commonhold association is a private company limited by guarantee the memorandum of which--

(a) states that an object of the company is to exercise the functions of a commonhold association in relation to specified commonhold land, and

(b) specifies £1 as the amount required to be specified in pursuance of section 2(4) of the Companies Act 1985 (c. 6) (members' guarantee).

(2) Schedule 3 (which makes provision about the constitution of a commonhold association) shall have effect.

35 Duty to manage

(1) The directors of a commonhold association shall exercise their powers so as to permit or facilitate so far as possible--

(a) the exercise by each unit-holder of his rights, and

(b) the enjoyment by each unit-holder of the freehold estate in his unit.

(2) The directors of a commonhold association shall, in particular, use any right, power or procedure conferred or created by virtue of section 37 for the purpose of preventing, remedying or curtailing a failure on the part of a unit-holder to comply with a requirement or duty imposed on him by virtue of the commonhold community statement or a provision of this Part.

(3) But in respect of a particular failure on the part of a unit-holder (the "defaulter") the directors of a commonhold association--

(a) need not take action if they reasonably think that inaction is in the best interests of establishing or maintaining harmonious relationships between all the unit-holders, and that it will not cause any unit-holder (other than the defaulter) significant loss or significant disadvantage, and

(b) shall have regard to the desirability of using arbitration, mediation or conciliation procedures (including referral under a scheme approved under section 42) instead of legal proceedings wherever possible.

(4) A reference in this section to a unit-holder includes a reference to a tenant of a unit.

36 Voting

(1) This section applies in relation to any provision of this Part (a "voting provision") which refers to the passing of a resolution by a commonhold association.

(2) A voting provision is satisfied only if every member is given an opportunity to vote in accordance with any relevant provision of the memorandum or articles of association or the commonhold community statement.

(3) A vote is cast for the purposes of a voting provision whether it is cast in person or in accordance with a provision which--

(a) provides for voting by post, by proxy or in some other manner, and

(b) is contained in the memorandum or articles of association or the commonhold community statement.

(4) A resolution is passed unanimously if every member who casts a vote votes in favour.

Operation of commonhold

37 Enforcement and compensation

(1) Regulations may make provision (including provision conferring jurisdiction on a court) about the exercise or enforcement of a right or duty imposed or conferred by or by virtue of--

(a) a commonhold community statement;

(b) the memorandum or articles of a commonhold association;

(2) The regulations may, in particular, make provision--

(a) requiring compensation to be paid where a right is exercised in specified cases or circumstances;

(b) requiring compensation to be paid where a duty is not complied with;

(d) enabling recovery of costs where work is carried out in consequence of the failure to perform a duty;

(e) permitting a unit-holder to enforce a duty imposed on another unit-holder, on a commonhold association or on a tenant;

(f) permitting a commonhold association to enforce a duty imposed on a unit-holder or a tenant;

(g) permitting a tenant to enforce a duty imposed on another tenant, a unit-holder or a commonhold association;

(h) permitting the enforcement of terms or conditions to which a right is subject;

(i) requiring the use of a specified form of arbitration, mediation or conciliation procedure before legal proceedings may be brought.

(3) Provision about compensation made by virtue of this section shall include--

(a) provision (which may include provision conferring jurisdiction on a court) for determining the amount of compensation;

(b) provision for the payment of interest in the case of late payment.

(4) Regulations under this section shall be subject to any provision included in a commonhold community statement in accordance with regulations made by virtue of section 32(5)(b).

38 Commonhold assessment

(1) A commonhold community statement must make provision--

(a) requiring the directors of the commonhold association to make an annual estimate of the income required to be raised from unit-holders to meet the expenses of the association,

(b) enabling the directors of the commonhold association to make estimates from time to time of income required to be raised from unit-holders in addition to the annual estimate,

(d) requiring each unit-holder to make payments in respect of the percentage of any estimate which is allocated to his unit, and

(e) requiring the directors of the commonhold association to serve notices on unit-holders specifying payments required to be made by them and the date on which each payment is due.

(2) For the purpose of subsection (1)(c)--

(a) the percentages allocated by a commonhold community statement to the commonhold units must amount in aggregate to 100;

(b) a commonhold community statement may specify 0 per cent. in relation to a unit.

39 Reserve fund

(1) Regulations under section 32 may, in particular, require a commonhold community statement to make provision--

(a) requiring the directors of the commonhold association to establish and maintain one or more funds to finance the repair and maintenance of common parts;

(b) requiring the directors of the commonhold association to establish and maintain one or more funds to finance the repair and maintenance of commonhold units.

(2) Where a commonhold community statement provides for the establishment and maintenance of a fund in accordance with subsection (1) it must also make provision--

(a) requiring or enabling the directors of the commonhold association to set a levy from time to time,

(b) specifying the percentage of any levy set under paragraph (a) which is to be allocated to each unit,

(c) requiring each unit-holder to make payments in respect of the percentage of any levy set under paragraph (a) which is allocated to his unit, and

(d) requiring the directors of the commonhold association to serve notices on unit-holders specifying payments required to be made by them and the date on which each payment is due.

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