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Land Registry Clarifies Procedure for Merging a Leasehold Title into the Reversion

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Merger occurs where both a leasehold estate in land and the reversionary estate come into the same ownership and are held in the same capacity.

The lease is absorbed by the reversionary estate and consequently determined. Merger is to be distinguished from surrender. Broadly, merger occurs where the tenant acquires the superior estate from its landlord.

The Land Registry has amended section 3 of Land Registry Practice Guide 26, to confirm its requirements for an application to determine a leasehold title by merger.

The Land Registry will only merge a leasehold title into the reversion where it is satisfied all of the following are correct:

  • Both the leasehold and reversionary estates are in the same ownership and are held in the same capacity.
  • There is a clear intention to merge the estates.
  • All incumbrances affecting the lease being determined (such as charges, restrictions or cautions) have been dealt with.

Where there is a Form A restriction on one or both titles (or evidence of a trust affecting an unregistered title), the Land Registry will require satisfactory evidence that the applicant holds both titles on the same trust.

To establish the necessary intention to merge the estates, the tenant should make one of the following express applications (as applicable) in relation to the lease being determined by the merger:

  • Cancellation of the notice of the lease from the reversionary title, on Form CN1 (where the lease is not separately registered).
  • Closure of the registered title to the lease, on Form AP1 (where both titles are registered).
  • Merger of the (unregistered) lease into the reversion, as part of an application for first registration of the reversionary estate, on Form FR1.

If the Land Registry requires further information to process the application, it will usually raise a requisition.

Where the tenant does not make an express application for merger, but the intention to merge is declared in a deed (for example, a transfer), the Land Registry will still merge the titles, but only if it is clear that all the other conditions for merger have been satisfied.

If merger is not possible without first dealing with an incumbrance on the leasehold title, for example, the Land Registry will not proceed with the merger or will raise a requisition requesting the additional evidence. It will be necessary for the tenant to make a separate application to merge the titles at a later date.

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Tom Warrender

Posted:

Tom Warrender

Partner

Tom is a Solicitor and Partner with 14 years + experience advising clients in relation to commercial property matters. A Legal 500 recognised lawyer, Tom is a member of SHLA and CRELA, sits on our Board of Management & Heads our Social Housing Team.