Commonhold and Leasehold Reform Act 2002 (c. 15)

(The document as of February, 2008)

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(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.

(3) For the purpose of subsection (2)(b)--

(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.

(4) The assets of a fund established and maintained by virtue of this section shall not be used for the purpose of enforcement of any debt except a judgment debt referable to a reserve fund activity.

(5) For the purpose of subsection (4)--

(a) "reserve fund activity" means an activity which in accordance with the commonhold community statement can or may be financed from a fund established and maintained by virtue of this section,

(b) assets are used for the purpose of enforcement of a debt if, in particular, they are taken in execution or are made the subject of a charging order under section 1 of the Charging Orders Act 1979 (c. 53), and

40 Rectification of documents

(1) A unit-holder may apply to the court for a declaration that--

(a) the memorandum or articles of association of the relevant commonhold association do not comply with regulations under paragraph 2(1) of Schedule 3;

(b) the relevant commonhold community statement does not comply with a requirement imposed by or by virtue of this Part.

(2) On granting a declaration under this section the court may make any order which appears to it to be appropriate.

(3) An order under subsection (2) may, in particular--

(a) require a director or other specified officer of a commonhold association to take steps to alter or amend a document;

(b) require a director or other specified officer of a commonhold association to take specified steps;

(c) make an award of compensation (whether or not contingent upon the occurrence or non-occurrence of a specified event) to be paid by the commonhold association to a specified person;

(d) make provision for land to cease to be commonhold land.

(4) An application under subsection (1) must be made--

(a) within the period of three months beginning with the day on which the applicant became a unit-holder,

(b) within three months of the commencement of the alleged failure to comply, or

41 Enlargement

(1) This section applies to an application under section 2 if the commonhold association for the purposes of the application already exercises functions in relation to commonhold land.

(2) In this section--

(a) the application is referred to as an "application to add land", and

(b) the land to which the application relates is referred to as the "added land".

(3) An application to add land may not be made unless it is approved by a resolution of the commonhold association.

(4) A resolution for the purposes of subsection (3) must be passed--

(a) before the application to add land is made, and

(b) unanimously.

(5) Section 2(2) shall not apply to an application to add land; but the application must be accompanied by--

(a) the documents specified in paragraph 6 of Schedule 1,

(b) an application under section 33 for the registration of an amended commonhold community statement which makes provision for the existing commonhold and the added land, and

(c) a certificate given by the directors of the commonhold association that the application to add land satisfies Schedule 2 and subsection (3).

(6) Where sections 7 and 9 have effect following an application to add land--

(a) the references to "the commonhold land" in sections 7(2)(a) and (3)(d) and 9(3)(f) shall be treated as references to the added land, and

(b) the references in sections 7(2)(b) and (3)(c) and 9(3)(e) to the rights and duties conferred and imposed by the commonhold community statement shall be treated as a reference to rights and duties only in so far as they affect the added land.

(7) In the case of an application to add land where the whole of the added land is to form part of the common parts of a commonhold--

(a) section 7 shall not apply,

(b) on registration the commonhold association shall be entitled to be registered (if it is not already) as the proprietor of the freehold estate in the added land,

(d) the rights and duties conferred and imposed by the commonhold community statement shall, in so far as they affect the added land, come into force on registration.

42 Ombudsman

(1) Regulations may provide that a commonhold association shall be a member of an approved ombudsman scheme.

(2) An "approved ombudsman scheme" is a scheme which is approved by the Lord Chancellor and which--

(a) provides for the appointment of one or more persons as ombudsman,

(b) provides for a person to be appointed as ombudsman only if the Lord Chancellor approves the appointment in advance,

(c) enables a unit-holder to refer to the ombudsman a dispute between the unit-holder and a commonhold association which is a member of the scheme,

(d) enables a commonhold association which is a member of the scheme to refer to the ombudsman a dispute between the association and a unit-holder,

(e) requires the ombudsman to investigate and determine a dispute referred to him,

(f) requires a commonhold association which is a member of the scheme to cooperate with the ombudsman in investigating or determining a dispute, and

(g) requires a commonhold association which is a member of the scheme to comply with any decision of the ombudsman (including any decision requiring the payment of money).

(3) In addition to the matters specified in subsection (2) an approved ombudsman scheme--

(a) may contain other provision, and

(b) shall contain such provision, or provision of such a kind, as may be prescribed.

(4) If a commonhold association fails to comply with regulations under subsection (1) a unit-holder may apply to the High Court for an order requiring the directors of the commonhold association to ensure that the association complies with the regulations.

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

Termination: voluntary winding-up

43 Winding-up resolution

(1) A winding-up resolution in respect of a commonhold association shall be of no effect unless--

(a) the resolution is preceded by a declaration of solvency,

(b) the commonhold association passes a termination-statement resolution before it passes the winding-up resolution, and

(2) In this Part--

"declaration of solvency" means a directors' statutory declaration made in accordance with section 89 of the Insolvency Act 1986 (c. 45),
"termination-statement resolution" means a resolution approving the terms of a termination statement (within the meaning of section 47), and
"winding-up resolution" means a resolution for voluntary winding-up within the meaning of section 84 of that Act.

44 100 per cent. agreement

(1) This section applies where a commonhold association--

(a) has passed a winding-up resolution and a termination-statement resolution with 100 per cent. of the members of the association voting in favour, and

(b) has appointed a liquidator under section 91 of the Insolvency Act 1986 (c. 45).

(2) The liquidator shall make a termination application within the period of six months beginning with the day on which the winding-up resolution is passed.

(3) If the liquidator fails to make a termination application within the period specified in subsection (2) a termination application may be made by--

(a) a unit-holder, or

(b) a person falling within a class prescribed for the purposes of this subsection.

45 80 per cent. agreement

(1) This section applies where a commonhold association--

(a) has passed a winding-up resolution and a termination-statement resolution with at least 80 per cent. of the members of the association voting in favour, and

(b) has appointed a liquidator under section 91 of the Insolvency Act 1986.

(2) The liquidator shall within the prescribed period apply to the court for an order determining--

(a) the terms and conditions on which a termination application may be made, and

(b) the terms of the termination statement to accompany a termination application.

(3) The liquidator shall make a termination application within the period of three months starting with the date on which an order under subsection (2) is made.

(4) If the liquidator fails to make an application under subsection (2) or (3) within the period specified in that subsection an application of the same kind may be made by--

(a) a unit-holder, or

(b) a person falling within a class prescribed for the purposes of this subsection.

46 Termination application

(1) A "termination application" is an application to the Registrar that all the land in relation to which a particular commonhold association exercises functions should cease to be commonhold land.

(2) A termination application must be accompanied by a termination statement.

(3) On receipt of a termination application the Registrar shall note it in the register.

47 Termination statement

(1) A termination statement must specify--

(a) the commonhold association's proposals for the transfer of the commonhold land following acquisition of the freehold estate in accordance with section 49(3), and

(b) how the assets of the commonhold association will be distributed.

(2) A commonhold community statement may make provision requiring any termination statement to make arrangements--

(a) of a specified kind, or

(b) determined in a specified manner,

about the rights of unit-holders in the event of all the land to which the statement relates ceasing to be commonhold land.

(3) A termination statement must comply with a provision made by the commonhold community statement in reliance on subsection (2).

(4) Subsection (3) may be disapplied by an order of the court--

(a) generally,

(b) in respect of specified matters, or

(5) An application for an order under subsection (4) may be made by any member of the commonhold association.

48 The liquidator

(1) This section applies where a termination application has been made in respect of particular commonhold land.

(2) The liquidator shall notify the Registrar of his appointment.

(3) In the case of a termination application made under section 44 the liquidator shall either--

(a) notify the Registrar that the liquidator is content with the termination statement submitted with the termination application, or

(b) apply to the court under section 112 of the Insolvency Act 1986 (c. 45) to determine the terms of the termination statement.

(4) The liquidator shall send to the Registrar a copy of a determination made by virtue of subsection (3)(b).

(5) Subsection (4) is in addition to any requirement under section 112(3) of the Insolvency Act 1986.

(6) A duty imposed on the liquidator by this section is to be performed as soon as possible.

(7) In this section a reference to the liquidator is a reference--

(a) to the person who is appointed as liquidator under section 91 of the Insolvency Act 1986, or

(b) in the case of a members' voluntary winding up which becomes a creditors' voluntary winding up by virtue of sections 95 and 96 of that Act, to the person acting as liquidator in accordance with section 100 of that Act.

49 Termination

(1) This section applies where a termination application is made under section 44 and--

(a) a liquidator notifies the Registrar under section 48(3)(a) that he is content with a termination statement, or

(b) a determination is made under section 112 of the Insolvency Act 1986 (c. 45) by virtue of section 48(3)(b).

(2) This section also applies where a termination application is made under section 45.

(3) The commonhold association shall by virtue of this subsection be entitled to be registered as the proprietor of the freehold estate in each commonhold unit.

(4) The Registrar shall take such action as appears to him to be appropriate for the purpose of giving effect to the termination statement.

Termination: winding-up by court

50 Introduction

(1) Section 51 applies where a petition is presented under section 124 of the Insolvency Act 1986 for the winding up of a commonhold association by the court.

(2) For the purposes of this Part--

(a) an "insolvent commonhold association" is one in relation to which a winding-up petition has been presented under section 124 of the Insolvency Act 1986,

(b) a commonhold association is the "successor commonhold association" to an insolvent commonhold association if the land specified for the purpose of section 34(1)(a) is the same for both associations, and

(c) a "winding-up order" is an order under section 125 of the Insolvency Act 1986 for the winding up of a commonhold association.

51 Succession order

(1) At the hearing of the winding-up petition an application may be made to the court for an order under this section (a "succession order") in relation to the insolvent commonhold association.

(2) An application under subsection (1) may be made only by--

(a) the insolvent commonhold association,

(b) one or more members of the insolvent commonhold association, or

(c) a provisional liquidator for the insolvent commonhold association appointed under section 135 of the Insolvency Act 1986.

(3) An application under subsection (1) must be accompanied by--

(a) prescribed evidence of the formation of a successor commonhold association, and

(b) a certificate given by the directors of the successor commonhold association that its memorandum and articles of association comply with regulations under paragraph 2(1) of Schedule 3.

(4) The court shall grant an application under subsection (1) unless it thinks that the circumstances of the insolvent commonhold association make a succession order inappropriate.

52 Assets and liabilities

(1) Where a succession order is made in relation to an insolvent commonhold association this section applies on the making of a winding-up order in respect of the association.

(2) The successor commonhold association shall be entitled to be registered as the proprietor of the freehold estate in the common parts.

(3) The insolvent commonhold association shall for all purposes cease to be treated as the proprietor of the freehold estate in the common parts.

(4) The succession order--

(a) shall make provision as to the treatment of any charge over all or any part of the common parts;

(b) may require the Registrar to take action of a specified kind;

(d) may make supplemental or incidental provision.

53 Transfer of responsibility

(1) Where a succession order is made in relation to an insolvent commonhold association this section applies on the making of a winding-up order in respect of the association.

(2) The successor commonhold association shall be treated as the commonhold association for the commonhold in respect of any matter which relates to a time after the making of the winding-up order.

(3) On the making of the winding-up order the court may make an order requiring the liquidator to make available to the successor commonhold association specified--

(a) records;

(b) copies of records;

(4) An order under subsection (3) may include terms as to--

(a) timing;

(b) payment.

54 Termination of commonhold

(1) This section applies where the court--

(a) makes a winding-up order in respect of a commonhold association, and

(b) has not made a succession order in respect of the commonhold association.

(2) The liquidator of a commonhold association shall as soon as possible notify the Registrar of--

(a) the fact that this section applies,

(b) any directions given under section 168 of the Insolvency Act 1986 (c. 45) (liquidator: supplementary powers),

(c) any notice given to the court and the registrar of companies in accordance with section 172(8) of that Act (liquidator vacating office after final meeting),

(d) any notice given to the Secretary of State under section 174(3) of that Act (completion of winding-up),

(e) any application made to the registrar of companies under section 202(2) of that Act (insufficient assets: early dissolution),

(f) any notice given to the registrar of companies under section 205(1)(b) of that Act (completion of winding-up), and

(g) any other matter which in the liquidator's opinion is relevant to the Registrar.

(3) Notification under subsection (2)(b) to (f) must be accompanied by a copy of the directions, notice or application concerned.

(4) The Registrar shall--

(a) make such arrangements as appear to him to be appropriate for ensuring that the freehold estate in land in respect of which a commonhold association exercises functions ceases to be registered as a freehold estate in commonhold land as soon as is reasonably practicable after he receives notification under subsection (2)(c) to (f), and

(b) take such action as appears to him to be appropriate for the purpose of giving effect to a determination made by the liquidator in the exercise of his functions.

Termination: miscellaneous

55 Termination by court

(1) This section applies where the court makes an order by virtue of section 6(6)(c) or 40(3)(d) for all the land in relation to which a commonhold association exercises functions to cease to be commonhold land.

(2) The court shall have the powers which it would have if it were making a winding-up order in respect of the commonhold association.

(3) A person appointed as liquidator by virtue of subsection (2) shall have the powers and duties of a liquidator following the making of a winding-up order by the court in respect of a commonhold association.

(4) But the order of the court by virtue of section 6(6)(c) or 40(3)(d) may--

(a) require the liquidator to exercise his functions in a particular way;

(b) impose additional rights or duties on the liquidator;

56 Release of reserve fund

Section 39(4) shall cease to have effect in relation to a commonhold association (in respect of debts and liabilities accruing at any time) if--

(a) the court makes a winding-up order in respect of the association,

(b) the association passes a voluntary winding-up resolution, or

(c) the court makes an order by virtue of section 6(6)(c) or 40(3)(d) for all the land in relation to which the association exercises functions to cease to be commonhold land.

Miscellaneous

57 Multiple site commonholds

(1) A commonhold may include two or more parcels of land, whether or not contiguous.

(2) But section 1(1) of this Act is not satisfied in relation to land specified in the memorandum of association of a commonhold association unless a single commonhold community statement makes provision for all the land.

(3) Regulations may make provision about an application under section 2 made jointly by two or more persons, each of whom is the registered freeholder of part of the land to which the application relates.

(4) The regulations may, in particular--

(a) modify the application of a provision made by or by virtue of this Part;

(b) disapply the application of a provision made by or by virtue of this Part;

58 Development rights

(1) In this Part--

"the developer" means a person who makes an application under section 2, and
"development business" has the meaning given by Schedule 4.

(2) A commonhold community statement may confer rights on the developer which are designed--

(a) to permit him to undertake development business, or

(b) to facilitate his undertaking of development business.

(3) Provision made by a commonhold community statement in reliance on subsection (2) may include provision--

(a) requiring the commonhold association or a unit-holder to co-operate with the developer for a specified purpose connected with development business;

(b) making the exercise of a right conferred by virtue of subsection (2) subject to terms and conditions specified in or to be determined in accordance with the commonhold community statement;

(c) making provision about the effect of breach of a requirement by virtue of paragraph (a) or a term or condition imposed by virtue of paragraph (b);

(d) disapplying section 41(2) and (3).

(4) Subsection (2) is subject--

(a) to regulations under section 32, and

(b) in the case of development business of the kind referred to in paragraph 7 of Schedule 4, to the memorandum and articles of association of the commonhold association.

(5) Regulations may make provision regulating or restricting the exercise of rights conferred by virtue of subsection (2).

(6) Where a right is conferred on a developer by virtue of subsection (2), if he sends to the Registrar a notice surrendering the right--

(a) the Registrar shall arrange for the notice to be kept in his custody and referred to in the register,

(b) the right shall cease to be exercisable from the time when the notice is registered under paragraph (a), and

59 Development rights: succession

(1) If during a transitional period the developer transfers to another person the freehold estate in the whole of the commonhold, the successor in title shall be treated as the developer in relation to any matter arising after the transfer.

(2) If during a transitional period the developer transfers to another person the freehold estate in part of the commonhold, the successor in title shall be treated as the developer for the purpose of any matter which--

(a) arises after the transfer, and

(b) affects the estate transferred.

(3) If after a transitional period or in a case where there is no transitional period--

(a) the developer transfers to another person the freehold estate in the whole or part of the commonhold (other than by the transfer of the freehold estate in a single commonhold unit), and

(b) the transfer is expressed to be inclusive of development rights,

the successor in title shall be treated as the developer for the purpose of any matter which arises after the transfer and affects the estate transferred.

(4) Other than during a transitional period, a person shall not be treated as the developer in relation to commonhold land for any purpose unless he--

(a) is, or has been at a particular time, the registered proprietor of the freehold estate in more than one of the commonhold units, and

(b) is the registered proprietor of the freehold estate in at least one of the commonhold units.

60 Compulsory purchase

(1) Where a freehold estate in commonhold land is transferred to a compulsory purchaser the land shall cease to be commonhold land.

(2) But subsection (1) does not apply to a transfer if the Registrar is satisfied that the compulsory purchaser has indicated a desire for the land transferred to continue to be commonhold land.

(3) The requirement of consent under section 21(2)(c) shall not apply to transfer to a compulsory purchaser.

(4) Regulations may make provision about the transfer of a freehold estate in commonhold land to a compulsory purchaser.

(5) The regulations may, in particular--

(a) make provision about the effect of subsections (1) and (2) (including provision about that part of the commonhold which is not transferred);

(b) require the service of notice;

(d) make provision about compensation;

(e) make provision enabling a commonhold association to require a compulsory purchaser to acquire the freehold estate in the whole, or a particular part, of the commonhold;

(f) provide for an enactment relating to compulsory purchase not to apply or to apply with modifications.

(6) Provision made by virtue of subsection (5)(a) in respect of land which is not transferred may include provision--

(a) for some or all of the land to cease to be commonhold land;

(b) for a provision of this Part to apply with specified modifications.

(7) In this section "compulsory purchaser" means--

(a) a person acquiring land in respect of which he is authorised to exercise a power of compulsory purchase by virtue of an enactment, and

(b) a person acquiring land which he is obliged to acquire by virtue of a prescribed enactment or in prescribed circumstances.

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