This article is a bit technical for the content that usually appears on this site – but gives an overview of the issues concerning the signature of notices under the 1993 Act and discusses the possible benefits of the above Act to practitioners on the basis that notices under Section 13 and Section 42 now no longer need to be signed personally. The key points appear in the conclusions at the end of the article.
The Problem:
Prior to the introduction of the Leasehold Reform (Amendment) Act 2014 (‘the 2014 Act’) notices claiming the freehold or an extended lease under the Leasehold Reform Housing and Urban Development Act 1993 (as amended by the Commonhold and Leasehold Reform Act 2002) (‘the 1993 Act’) needed to be signed personally by the tenant.
This was a slightly anomalous position and one that created no small amount of hardship. Consider in particular the case of a flat owner under a disability and unable to physically sign a document. They were effectively ‘disbarred’ from exercising their rights under the 1993 Act. An attorney or agent could not sign the notice on the tenant’s behalf. The case of St Ermin’s Property v Tingay Limited [2002] EWHC 1673 (Ch) made the position clear that someone holding a power of attorney could not sign. We also had the case of Viscount Chelsea v Hirshorn [1998] 2 EGLR 90 CC which confirmed that Section 99(5) of the 1993 Act (before amendment) required personal signature.
In a collective claim to the freehold where multiple parties often in different parts of the world needed to sign a single notice. Whilst the signature pages could be collated evidence needs to be kept to show that the participating tenants had signed a single notice and whilst this point still applies as it relates to client authority and evidence that the clients have seen the notice, the fact that multiple original signed pages needed to be signed and returned has the capacity to cause significant delay. As the case of Cascades & Quayside Ltd v Cascades Freehold Ltd [2007] EWCA Civ 1555 shows, if the process has not been dealt with correctly or if there is any debate about what the tenants had in fact signed, then the notice will be invalid.
The Cascades case has made the position clear. This is still good law as regards the collation and creation of a valid notice as clearly, it cannot be a valid notice if on enquiry it can be shown that the tenants do not know what they have signed.
The need to obtain valid corporate signatures to notices often proved difficult because of the formalities under which a company could be said to execute a document. A company can only ‘sign’ by way of a deed and therefore notices needed to be executed as a deed in order to be signed ‘personally’ by the tenant. There were various cases which dealt with this point. However, under the 1993 Act as now amended the position is a lot easier as an officer (or indeed a solicitor or other agent) can sign on behalf of the company.
A bit of background
ALEP (the Association of Leasehold Enfranchisement Practitioners) has for some time had a working party looking at areas of the leasehold reform legislation that could be amended. Ever since its inception ALEP has sought to engage government in debate on areas of the legislation that could be amended and which caused hardship in practice or show signs of anomaly.
I have been pleased to chair the ALEP working party on legislative reform. In mid to late 2013 we held a further consultation on a number of amendments that had been drafted in outline by some of our working party members. This led to the private members’ bill that has (perhaps against all odds?) made it onto the statute books.
The Bill received the Royal Assent on 13th March 2014 and became law on 14th May 2014 as is reported elsewhere on this site and on the internet and in the media generally.
The Leasehold Reform (Amendment) Act 2014 (‘the 2014 Act’)
If you would like to see a copy of the 2014 Act, it can be found by following the links: http://www.legislation.gov.uk/ukpga/2014/10/pdfs/ukpga_20140010_en.pdf
http://www.legislation.gov.uk/ukpga/2014/10/section/1
The 2014 Act removes the requirement that notices under Section 13 or Section 42 be signed personally and instead provides that such notices may now be signed by or on behalf of the tenant.
This means that provided the person signing has authority to do so, or is the agent for the tenant, that Section 13 and 42 notices may be signed by someone other than the tenant. When enacted the 2014 Act did not apply to Wales although the Welsh Assembly has now taken steps to bring these provisions into force in Wales.
The Future – ‘What does all this mean for someone looking to buy their freehold or extend their lease?’
As the discussion above shows, the fact that a company or individual can authorise another to sign on their behalf should speed up the enfranchisement process considerably. Although solicitors should presumably have an express written authority from their client to serve any such a notice on their behalf given the cost consequences that flow from serving a Section 13 or Section 42 notice and also given the potential financial commitment that comes with the service of a notice.
Cases where no notice could be served before (such as sales by a receiver or mortgagee) presumably can now proceed with the service of a notice by the seller where this could not happen before. The claim can be subsequently assigned in the usual way, saving time and the new owner having to wait for the qualifying two year period in order to be able to serve notice. In the case of a sale by a mortgagee or receiver, provided that they are appointed by the borrower to act as the bank’s agent in relation to the realisation and perfection of any security then they should be able to sign on behalf of the borrower. Similarly, persons who have an appointed an attorney under a lasting power of attorney, or a general power of attorney can now exercise enfranchisement rights without difficulty.
Collective claims should also now be easier as well as the signature of the notice by each individual qualifying tenant can be made by a signature on their behalf by their duly appointed agent (usually the solicitor).
This makes it all the more important to ensure that those advising you are sufficiently expert in this area, as there is the still the risk that claims can go wrong with the potential cost consequences that flow from this. I anticipate that as time progresses there will be a number of claims against advisors who have (or may have) outstepped their authority.
However, the pathway to buying your freehold or extending your lease, has now been made a little easier and certainly (as far as collectives are concerned) the process should now move more quickly.