Giving a tenant notice on buying a property
It is not uncommon to buy property with a tenant already in place. Sometimes this is part of the package and the certainty of income each month is part of what the new landlord is buying. On other occasions the intention is to ask that tenant to leave so that the land can be used by the new owner themselves or for works carried out at the site. This situation leads the new owner to ask when they can give notice. Is it once offers have been exchanged, the sale has completed, or some other point?
This issue came up in the last fortnight in the case of Stodday Land v Pye. While this case concerns agricultural land it makes points which are of general importance in this question. Stodday owned land of which Pye was an agricultural tenant. It sold most of the land to a new owner on 19 June 2013 but it was not formally registered by the Land Registry until 16 July 2013. During that period Stodday and the new owners sent Mr Pye notices to quit in respect of the plots they now saw themselves as owning.
These notices to quit were found to be invalid both at first instance and on appeal by the High Court. The normal position at common law is that a beneficial ownership is not a sufficient right in land to give notice to a tenant, you must be a legal owner. You cannot be a legal owner until the full legal formalities, including registration with the Land Registry have been complied with. Therefore until full registration of the land occurs the new owner cannot serve notices.
Despite efforts to argue around this position and an assertion that the classic common law position did not fit well with the current concerns the High Court stuck to the classical position firmly. Therefore the registration gap, as it is known, will continue.
Purchasers should be considering their needs when buying property which is tenanted. If they are going to want access to the site more rapidly it would be better to agree that the vendor serves notices if possible or they will need to allow for the delays caused by registration in their planning.