Q&As

A developer agrees to transfer the freehold in a leasehold development to a tenant company comprising some or all of the members and one tenant does not become a member. The developer’s solicitor serves notice under Landlord and Tenant Act 1987, s 5 on the tenant, asking if they wish to become a member. Is the section 5 notice valid/what is its effect?

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Published on LexisPSL on 25/01/2017

The following Property Q&A provides comprehensive and up to date legal information covering:

  • A developer agrees to transfer the freehold in a leasehold development to a tenant company comprising some or all of the members and one tenant does not become a member. The developer’s solicitor serves notice under Landlord and Tenant Act 1987, s 5 on the tenant, asking if they wish to become a member. Is the section 5 notice valid/what is its effect?
  • Case study

Case study

An agreement for lease provides that on the grant of the last lease in a development the developer will transfer the freehold in the development to a company owned and run by the tenants or as many of them agree to become members and/or directors of the company. The transfer took place, but one tenant was not included as a member of the company. The developer’s solicitor then serves a notice under section 5 of the Landlord and Tenant Act 1987 (LTA 1987) (section 5 notice) on the tenant, asking if they wish to become a member.

Subject to a number of exceptions not on the face of it relevant here, any such disposal will require compliance with LTA 1987 which gives residential lessees certain rights to acquire that interest rather than the third party to which the landlord might prefer to transfer it.

The right of first refusal applies where premises:

  1. consist of the whole or part of a building

  2. contain two or more flats held by qualifying tenants, and

  3. the number of flats held by qualifying tenants exceeds 50% of the total number of flats contained in the premises

A person is a qualifying tenant if he is the

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