Determination of Leases

Transcription

1 Determination of Leases John Murphy Examiner of Titles Property Registration Authority Solicitors CPD Study Group 26 th March 2015 Copyright Property Registration Authority

2 1 Introduction This paper deals with a number of methods whereby leases may be determined, for example, by surrender, forfeiture, disclaimer by liquidator, repudiation by examiner, merger and expiry and Land Registry practice in relation to same. This paper relates to cases where the lease is registered as a burden on a folio (and a leasehold folio may be in existence) and application is made to have the lease burden cancelled (and the leasehold folio closed if in existence). It can be adapted as appropriate to cases where a determination of a lease is involved in a first registration application. This paper is not intended to be a definitive setting out of the relevant legislation but rather the focus will be on the Land Registry requirements so as to enable applicants to comply with same in the first instance, which in turn should facilitate these cases being dealt with in an efficient and effective manner when lodged for registration. See Registration of Deeds and Title in Ireland, 2014, John Deeney, Bloomsbury, paragraphs Determination of Leases - General While determination of leases is not specifically provided for in either the Registration of Deeds and Title Act 1964 and 2006 or the Land Registration Rules, [LR Rules], s 69(3) and (4) of the Registration of Title Act, 1964 and Rule 101 of the LR Rules can be adapted as appropriate. Rule 101(2) of the LR Rules states that applications may be in Form 57A or 57B suitably adapted. Form 57A deals with applications to discharge a burden by the registered owner of the burden while Form 57B (which is on affidavit) is used where the registered owner of the burden does not concur (see paragraph of the Law Society Conveyancing, 7 th Edition, Oxford University Press). Even where there is a valid determination of a lease the issue of burdens on the leasehold folio (or incumbrances on the lease) will have to be addressed including the position of chargee's, judgement mortgagees and sub-lessees. The Land Registry would in all cases require evidence as to whether the burden has determined and if same is lodged serve notice on the owner of the burden. In general failure to provide such evidence will mean that the burden will have to be registered on the freehold folio on closing of the leasehold folio. There are certain statutory right of sub-lessees e.g. right of sub-lessees to apply for relief from forfeiture (which may include mortgages by sub-demise) (s 4 of the Conveyancing Act, 1892; see also s 75 of the Landlord and Tenant Bill 200- LRC and head 75 of the Draft General Scheme of the Landlord and Tenant Bill 2011); rights of sub-tenants in occupation (s 78 of the Landlord and Tenant (Amendment) Act 1980; see also ss 101 and 57(2) of the Landlord and Tenant Bill 200- LRC and head 101 and 57(2) of the Draft General Scheme of the Landlord and Tenant Bill 2011 ) and rights of sub-tenants where the head-lease is surrendered or merges (s 9 of the Real Property 2

3 Act, 1845; see also ss 57 and 58 of the Landlord and Tenant Bill 200- LRC and head 57 and 58 of the Draft General Scheme of the Landlord and Tenant Bill 2011). Sub-leases do not automatically determine where a head-lease is terminated see s 78 of the Landlord and Tenant Act 1980 and Stone v Reid Valley Ltd. & Ors, [2011] IEHC 322, Hedigan J, July 29th Each case of a determination of a lease will depend on its own particular facts and in addition to Form 57A or 57B it may be necessary for an affidavit to be lodged setting out the facts on which the application is based, exhibiting any relevant proofs, present occupation and possession of the premises and dealing with any incumbrances. The necessary evidence in each case will depend on the basis of the application and whether the matter is for decision by the courts or the Land Registry. It should be noted that in relation to registered land a Form 57 A on its own is not sufficient to enable the Land Registry to close the leasehold folio and cancel the lease burden on the landlord ss folio. Evidence of now the lease has determined should be lodged e.g. deed of surrender [a Form 57A is not a deed]. In all applications to cancel a lease burden (and to close a leasehold folio) on the basis of the lease being determined the original lease should be lodged if available. In cases where the owner of the lease burden does not consent to the application the Land Registry will serve notice and notice will also be served on the owners of incumbrances. If there is an objection registration may not proceed as the matter may have to be dealt with by the court. In relation to lease burdens registered as burdens on a freehold folio or where the title of the lease is registered on a leasehold folio the Land Registry shall obey an order of a court addressed to it (s 21 of the Registration of Title Act, 1964) and will make any registration ordered on foot of production of a court office copy of the order (Rule 118 of the LR Rules). Where application is made to close a leasehold folio on the grounds of merger, surrender, forfeiture, disclaimer or repudiation the freehold or superior leasehold being unregistered, Land Registry policy is that it is undesirable that a title should be examined without making any registration or record of same. Accordingly first registration of the freehold or superior leasehold is to be preferred; requirements to include Forms 1 or 2 of the LR Rules (as appropriate), and all other documents prescribed by Rules 15 or 16 (as appropriate). If this is not possible the office maps are cleaned and the leasehold folio closed, the Property Registration Authority [PRA] having satisfied itself as to the freehold title or superior leasehold title and the manner of extinguishment of the leasehold interest. 3 Surrender of Leases 3

4 Surrender is the yielding up of an interest in land. In the case of surrender of a lease, the lease reverts back to the Landlord, who retakes possession. In surrenders the lessee does not have a right to relief. (See Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph and Consultation Paper of the General Law of Landlord and Tenant, Law Reform Commission, LRC CP , paragraph and paragraph 12.06). Land Registry practice in relation to the surrender of leases in various circumstances is set out below (see Land Registry Practice, Second Edition, Brendan Fitzgerald, Paragraph 16.11). The issue of burdens on the leasehold folio again has to be addressed. It would appear that a surrender by a tenant does not prejudice the rights of any incumbrancer's on the property (see Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph 25.16). In the case of a surrender of a lease for the purpose of obtaining a renewal of the tenancy, sub-tenancies are preserved (s 8 of Deasy s Act; see also s 56 of the Landlord and Tenant Bill 200- LRC and head 56 of the Draft General Scheme of the Landlord and Tenant Bill 2011) and where a headlease is surrendered the head-landlord becomes the landlord of the sub-tenants (s 9 of the Real Property Act, 1845; see also ss 57 and 58 of the Landlord and Tenant Bill 200- LRC and head 57 and 58 of the Draft General Scheme of the Landlord and Tenant Bill 2011), (see Consultation Paper of the General Law of Landlord and Tenant, Law Reform Commission, LRC CP , paragraph 2.25). If evidence that the burden has determined is lodged notice will be served on the owner of the burden. If there is a valid objection or if evidence is not produced that the burden has determined then the Land Registry would propose to register the burden on the freehold interest on closing the leasehold folio. If no agreement to such registration is lodged registration of the surrender would not proceed. 3.1 Surrender by Deed of Transfer The usual Land Registry requirements in relation to transfers apply where surrender by Deed of Transfer and surrender where the leasehold and freehold titles are registered and where the registered owner's of both execute same. The original lease for the leasehold folio should be lodged. Burdens on the leasehold folio should be dealt with and the Land Registry will serve notice. If the Surrender does not operate as a sale or a gift it need not be presented to the Revenue Commissioners for stamping. An instrument which contains a statement certifying that the instrument is a surrender of property, or of a right or interest in property, not being a surrender on a sale is exempt from stamp duty see Schedule 1 of Stamp Duty Consolidation Act Confirmation by the lodging solicitor that the instrument is a surrender of property, or a right or interest in property, not being a surrender on sale will be required if the deed does not contain the above certificate. However surrenders on sale are subject to stamp duty and should therefore be accompanied by a Revenue Stamping Certificate. 3.2 Surrender by Assignment Surrender by assignment and surrender where the freehold title is registered and the lease is registered as a burden thereon and the registered owner of the Freehold folio and the owner of the leasehold interest execute same then the title to the leasehold interest will have to be proved (See Land Registry Practice Direction First Registration and other Examiners Cases and Chapter 13 4

5 of the Law Society Conveyancing, 7 th Edition, Oxford University Press). Incumbrances on the leasehold interest should be dealt with and the Land Registry will serve notice on the owners of incumbrances. See 3.1 above re stamp duty. 3.3 Surrender where the lease contains a provision for surrender In cases where surrender by the person entitled to the lessee's interest where the lease contains a provision for surrender the application should be made in Form 57A of the LR Rules suitably adapted to meet the facts of the particular case. The original lease for the leasehold folio (if any) must be lodged. A short supporting affidavit or declaration should also be lodged, identifying the person making same as the person entitled to the lessees interest, exhibiting the original lease and any other original documents of title, referring to the proviso for surrender contained in the lease, identifying the landlord and setting out fully the facts and circumstances of the surrender. Although the consent of or a corroborative declaration from the landlord or his or her solicitor in such cases is not strictly necessary same should be lodged if possible, being the best evidence available. It is also to be noted that the terms of a proviso for surrender in a lease must be strictly complied with. See 3.1 above re stamp duty. 3.4 Surrender where the lease does not provide for surrender In cases whereby there is a surrender where the lease does not provide for surrender but where the lessor consents to such surrender then such surrender is evidenced as set out in the Landlord and Tenant Law Amendment Act Ireland, 1860 (Deasy's Act). Section 7 of Deasy's Act provides that: the estate or interest of any tenant under any lease or other contract of tenancy shall not be surrendered otherwise than by a deed executed, or note in writing signed by the tenant or by his agent thereto lawfully authorised in writing or by act and operation of law. If the surrender occurs by deed executed or there is a note in writing signed by the tenant or by his agent thereto lawfully authorised in writing, the proofs set out in 3.3 above must be lodged. In such cases it is essential that the consent or corroborative affidavit of the landlord or his/her solicitor be lodged. The Law Reforms recommended s 53 of the Landlord and Tenant Bill 200- (LRC 85 of 2007) and head 53 of the Draft General Scheme of the Landlord and Tenant Bill 2011 contains the substance of s 7 of Deasy s Act (the exception for act or operation of law is contained in s 54 and head 54 respectively see paragraph 3.6 below) except that there is no requirement for the tenants agent to be authorised in writing. 3.5 Surrender by act and operation by law Wylie in Irish Landlord and Tenant Law, Second Edition, Chapter states that act and operation of law " is the court s construction on the parties acts which is important, i.e., what they amount to as a matter of substance, not necessarily what the parties thought they had achieved by their acts". Fitzgerald in "Land Registry Practice", Second edition page 269 states that surrender by act or operation of law may be inferred from the acts or conduct of the parties. Such acts of either party may be regarded as surrender of the lease by estoppel. These matters and situations 5

6 are for decision by the courts and the Land Registry would require that a court order be furnished as evidence before the lease would be cancelled on these grounds. (Further see Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph and Consultation Paper of the General Law of Landlord and Tenant, Law Reform Commission, LRC CP , paragraph and paragraph12.06). Generally, therefore, the necessary court order must be lodged. However it is to be noted that in such cases each one depends to a marked degree on its own particular facts and will be considered as such by the Land Registry. Such applications are to be made in Form 57A or Form 57B of the LR Rules as appropriate adapted to suit the needs of the particular case with a supporting affidavit which should include such issues as delivery and acceptance of possession (for precedent affidavit see page 273 of Fitzgerald in " Land Registry Practice", Second edition) and the authority of the party who actually surrendered. An example would be the surrender by a Managing Director of a company without evidence of his/her authority to so do. The original lease is to be lodged. The PRA may consider it appropriate, in the circumstances of the particular case, to proceed by way of notices, and/or advertisement and/or indemnity, without a court order. If the lessee was a company and the company has been dissolved the circumstances of the dissolution must be ascertained. If it was for non-filing of returns, the company could be restored to the register at any time within twenty years, in which case registration should not proceed without a court order. If the company was dissolved by a liquidator he/she should have surrendered or disclaimed before s/he dissolved. A Companies Office search might clarify this and indicate if there was an equitable charge on the property. 3.6 Acceptance by tenant of new lease This operates as a surrender by operation of law of the lease previously subsisting, under s 7 of Deasy s Act 1860 (see sub-paragraph (b) of paragraph below). No court order is necessary. The first lease should be cancelled as a burden, if so registered, and the leasehold folio closed. (Cherry s Irish Land Law and Land Purchase Acts ). A charge or judgment mortgage on the first leasehold interest would prevent surrender and merger. The Law Reforms s 54 of the Landlord and Tenant Bill 200- (LRC 85 of 2007) and head 54 of the Draft General Scheme of the Landlord and Tenant Bill 2011 deals with the part of s 7 of Deasy s Act in relation to act or operation of law which is termed implied surrender. The section/head gives guidance as recommended in paragraph 2.22 of the LRC CP It provides that implied surrender takes effect in law where: (a) the tenant surrenders the keys and vacates the premises or otherwise signifies yielding up possession to the landlord with the acceptance or agreement of the landlord; (b) the landlord grants a new tenancy to the tenant or, with the agreement of the tenant, to a third party with the intention of displacing the existing tenancy; (c) there is continued occupation or use of the premises by the tenant as a caretaker or licensee or in some other capacity inconsistent with that of a tenant; or (d) other circumstances arise or the relationship between the landlord and tenant alters 6

7 Paragraphs (a) to (c) refer to the sort of circumstances where the extensive case law establishes that such a surrender takes place. Paragraph (d) is a 'catch-all' provision to cover cases not falling exactly within (a) to (c). 3.7 Where Surrender is provided for in legislation Section 40 of Deasy's Act 1860 provides that: " if any dwellinghouse or other building constituting the substantial matter of the demise, and held by any tenant under any lease or contract of tenancy not containing an express covenant or agreement binding on the tenant to repair the same, shall be destroyed, become ruinous and uninhabitable or become incapable of beneficial occupation or enjoyment by accidental fire or other inevitable accident and without the default or neglect of the said tenant, it shall be lawful for such tenant to surrender the said premises etc." (See Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph and Consultation Paper of the General Law of Landlord and Tenant, Law Reform Commission, LRC CP , paragraph 2.27 and ). The Law Reforms recommended s 60 of the Landlord and Tenant Bill 200- (LRC 85 of 2007) and head 60 of the Draft General Scheme of the Landlord and Tenant Bill 2011 replaces s 40 of Deasy s Act. The section/head provides For the avoidance of doubt it is hereby provided that the doctrine of frustration of contract applies and always has applied to a tenancy. The view has been taken that s 40 of Deasy's Act has outlived its usefulness and should be regarded as replaced by the general doctrine of frustration of contract as developed by the courts. The section/head does not attempt to specify the circumstances where the doctrine would apply because it is considered that this is best left to the courts to apply to the circumstances of particular cases. Section 10 of the Housing (Private Rented Dwellings) Act of 1982 provides that a tenant of a dwelling protected by the Act may surrender it by giving the landlord not less than one month's notice in writing of his/her intention to surrender. Such a surrender is a conveyance of an interest for the purpose of the Family Home Protection Act, 1976 and the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (in relation to civil partners). (See Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph 25.07). Section 271 of the Bankruptcy (Ireland) Amendment Act 1872 enables the official assignee to surrender by way of disclaimer as can a liquidator of a company under the Companies Acts (s 290 of the Companies Act 1963, see paragraph 5 below). Other statutory provisions conferring a power to surrender on tenants are contained in the settled Land Acts, and Section 3 of the Conveyancing Act, 1911 (See Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph ). Such applications are to be made in Form 57A or Form 57B of the LR Rules as appropriate together with a supporting affidavit setting out fully the facts establishing the statutory basis of the claim and exhibiting the appropriate proofs (which may include a court order). The original lease is to be lodged. The consent of the lessor (if available) will be sought, as it would constitute the best 7

8 evidence in the circumstances. If same is not available, notice will be served by the Land Registry on the landlord of the claim and in default of objection the lease burden will be cancelled, the leasehold folio (if opened) closed. Incumbrances on the leasehold interest or burdens on the leasehold folio will have to be dealt with and the Land Registry will serve notice. 4 Forfeiture of Leases Forfeiture means the deprivation of a person of her/his property (in this case a leasehold interest) as a penalty for some act or omission (see Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Chapter 24, Land Registry Practice, Second Edition, Brendan Fitzgerald, Paragraph and Consultation Paper of the General Law of Landlord and Tenant, Law Reform Commission, LRC CP , Chapter14). Forfeiture may arise by agreement or by act of the parties. Usually a forfeiture clause is provided for in a lease i.e. a re-entry clause enabling the landlord to re-enter the demised premises or any part thereof in the name of the whole in the event of a breach of covenant (procedures set down in s 14 of the Conveyancing Act, 1881 whereas if for non-payment of rent there are few formalities). If for example property is in a bad state of repair and is held under lease containing a full repairing covenant, and the lease contains a re-entry clause in the event of breach of covenant, the landlord may forfeit the lease by peaceful re-entry. It should be noted in the context of forfeiture by peaceable re-entry, that where a person is entitled to purchase the fee simple in his/her dwellinghouse under the Landlord and Tenant (Ground Rents) (No 2) Act of 1978 and the lease contains a re-entry clause, s 27 (1) of that Act protects such tenant from forfeiture, but that this will not affect any other civil remedy the lessor may otherwise have against the tenant for breach of covenant etc. A wider restriction of forfeiture in the case of tenancies of dwellings was introduced in s 58(1) of the Residential Tenancies Act, In the case of a forfeiture and re-entry the most useful possible evidence would be the consent to cancellation by the person entitled to the lessee's interest (whose lease has been forfeited) and this will very rarely be forthcoming. If it is forthcoming and the title of the freehold and the leasehold is registered in the Land Registry the application can be processed on lodgement of an application in Form 57A of the LR Rules adapted to suit the facts of the particular case. Otherwise Form 57B should be lodged together with a supporting affidavit setting out the facts on which the application is based exhibiting any relevant proofs (e.g. re-entry clause in the lease and notice under section 14 of the Conveyancing Act, 1881), evidence of actual re-entry showing the intention to terminate the lease and the absence of violence, present occupation and possession of the premises, and dealing with any possible action for relief from forfeiture (e.g. s 14(2) of the Conveyancing Act, 1881 and s 49 of the Bankruptcy Act, 1988) (see page 274 Fitzgerald " Land Registry Practice", Second edition). Notice will be served. In all cases the issue of burdens or incumbrances on the leasehold have to be dealt with and notice served. It is to be noted that where there has been a valid forfeiture of a lease and peaceable reentry, all incumbrances on it, apart from the statutory rights of subleases will determine (see s 4 of the Conveyancing Act, 1892; see also s 75 of the Landlord and Tenant Bill 200- LRC and head 75 of the Draft General Scheme of the Landlord and Tenant Bill Also see Irish Landlord 8

9 and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph and Land Registry Practice, Second Edition, Brendan Fitzgerald, Page 272). Subleases in this context may, in certain cases, include mortgages by sub-demise (the position of a chargee re registered land is not so clear). If the application is in order the Land Registry will cancel the lease burden and close the leasehold folio (if any). Section 69 of the Landlord and Tenant Bill 200- LRC and head 69 of the Draft General Scheme of the Landlord and Tenant Bill 2011 provides for the modified procedure (to replace s 14 of the 1881 Act) for all cases of forfeiture as recommended by paragraphs to of the Consultation Paper of the General Law of Landlord and Tenant, Law Reform Commission, LRC CP As recommended by paragraph it is envisaged that the prescribed form will greatly simplify the requirements of s 14 of the 1881 Act warning the tenant of the intention to forfeit and identifying the breach of obligation relied upon. 5 Disclaimer by Liquidator A Liquidator can disclaim onerous property in the case of a company being wound up pursuant to s 290 of the Companies Act Leave of the court is required (s 290(1) of the Companies Act, 1963). A disclaimer in and of itself does not determine a lease and this is a matter that should be dealt with by the court (See Land Registry Practice, Second Edition, Brendan Fitzgerald, Paragraph 16.11). For a comprehensive look at disclaimer see Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph The following documents should be lodged: (i) Form 17; (ii) Original lease; (iii) The official copy of the court order giving the liquidator liberty to disclaim; (iv) The official copy of the Notice of Disclaimer by the liquidator; (v) The official copy of the vesting order of the court pursuant to s 290(7) of the Companies Act 1963 stating in whom the disclaimed leasehold property is to vest; (vi) An application in Form 57A of the LR Rules (adapted to meet the needs of the particular case) by the liquidator or the solicitor for the liquidator of the company lessee in question to cancel the lease registered as a burden on whatever folio is affected, to close the leasehold folio (if opened). A disclaimer by the liquidator, though it discharges the company and the liquidator from further liabilities under the lease, does not affect the rights of third parties and thus the court will have to address the issue of burdens on the leasehold folio (or incumbrances on the leasehold interest) e.g. charge or sub-lease (Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph 26.10). For disclaimers other than under s 290 of the Companies Act, 1963 the Land Registry requirements set out in paragraph 9 below apply. 9

10 Note s 290 of the Companies Act 1963 is being replaced by ss 615 and 616 of the Companies Act 2014 which is due to be commenced on the 1 st June Repudiation by an Examiner Section 20 of the Companies (Amendment) Act 1990 provides for repudiation of certain contracts. Sub-section (1) states: Where proposals for a compromise or scheme of arrangement are to be formulated in relation to a company, the company may, subject to the approval of the court, affirm or repudiate any contract under which some element of performance other than payment remains to be rendered both by the company and the other contracting party or parties. Sub-section (5) Where the court approves the affirmation or repudiation of a contract under this section, it may in giving such approval make such orders as it thinks fit for the purposes of giving full effect to its approval including orders as to notice to, or declaring the rights of, any party affected by such affirmation or repudiation. Re Linen Supply Ireland Limited,unreported, Supreme Court, December 10, 2009 sets out the law that examiners may repudiate leases as part of a compromise or scheme of arrangement, subject to the approval of the court. The Supreme Court confirmed that a lease for the purposes of s 20 of the 1990 Act can be construed as any contract and by their nature, leases involve the performance of obligations by both lessor and lessee and, as such, leases satisfy the limitation imposed by s 20 that the contract must include some element of performance other than payment remains to be rendered. Thus a lease may be repudiated pursuant to s 20 of the 1990 Act, subject to the approval of the court. (See Landlords and Examinership, Conor Feeney, (2010) 17(3) CLP 47). The following documents should be lodged: (i) Form 17; (ii) Original lease; (iii) The official copy of the court order giving approval for the lease to be repudiated by the examiner; (iv) An application in Form 57A of the LR Rules (adapted to meet the needs of the particular case) by the lessee company or the solicitor for the lessee company in question to cancel the lease registered as a burden on whatever folio is affected, to close the leasehold folio (if opened). The issue of burdens on the leasehold folio (or incumbrances on the leasehold interest) e.g. charge or sub-lease will have to be addressed (s 20(5) of the 1990 Act). Note s 20 of the Companies (Amendment) Act 1990 is being replaced by s 537 of the Companies Act 2014 which is due to be commenced on the 1st June Merger 10

11 Merger is where lesser estates are absorbed into larger estates and ultimately into the fee simple in property. Merger can arise in the event of enlargement of a lease into the fee simple or the purchase of the fee simple by a lessee by agreement or by statute, e.g. under s 65 of the Conveyancing Act 1881 (paragraph of the Consultation Paper of the General Law of Landlord and Tenant, Law Reform Commission, LRC CP recommends the repeal without replacement of s 65 and this is proposed under Draft General Scheme of the Landlord and Tenant Bill 2011) or under the Landlord and Tenant (Ground Rents) Acts (surrender of a lease is the opposite of merger of a lease). Merger is based on equitable principles designed to uphold the intention of the parties, in particular the acquiring party. The basic underlying principle is that there is a presumption that a merger of a lesser estate or interest in the greater one takes place unless the circumstances of the particular case rebut this. Most conveyances where merger is intended and required include the usual declaration of merger, e.g.. to the intent that the leasehold estate etc. be merged and extinguished in the freehold reversion thereof. For a detailed look at merger see Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph (and also Consultation Paper of the General Law of Landlord and Tenant, Law Reform Commission, LRC CP , paragraph ). 7.1 Applications for Merger All applications for merger lodged in the Land Registry should include: (i) Form 17 (ii) The original lease (iii) Should also deal with incumbrances on the leasehold interest or burdens on the leasehold folio. In relation to incumbrances on the leasehold interest note s 28 of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978 (as amended by s 77 of the Registration of Deeds and Title Act, 2006) in relation to covenants and s 29 in relation to mortgages or charges on the prior leasehold interest. The issue of burdens on the leasehold folio (and incumbrances on the leasehold interest) will have to be considered. The general effect of merger is that the lesser estate disappears (See Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Paragraph 25.23). Section 29 of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978 states that on a conveyance of the fee simple (not assignment of head-lease) to the owner of a leasehold interest a mortgage or charge on the leasehold interest is deemed to be a charge on the fee simple. In the case of sub-leases the lessors' interest acquired by the lessee becomes the reversion on the sub-lease (s 9 of the Real property Act, 1845; see also ss 57 and 58 of the Landlord and Tenant Bill 200- LRC and head 57 and 58 of the Draft General Scheme of the Landlord and Tenant Bill 2011). The Land Registry will close the head-leasehold folio and register the sub-lease as a burden on the freehold folio. The matter of rights-of-way on leasehold interests, whether subject rights or appurtenant rights, require to be considered. In general it can be said that subject rights-of-way over leases which merge in the fee simple, will be carried over and registered on the freehold folio as burdens during the period specified in Inst..., i.e. during the period of the merged lease. In the situation where a lease enjoys appurtenant rights-of-way over adjoining properties this appurtenant right will also be brought over to the freehold folio as an appurtenance if so previously registered 11

12 on a leasehold folio. Again, the entry of such appurtenant rights would be registered as during the period specified in Inst...., the period of the lease then merged in the freehold. However appurtenant rights may attach to land and be transferred on without registration (s 44 of the Registration of Title Act, 1964). 7.2 Different ways Merger may arise For the Land Registry merger arises in many different ways and there follows a number of situations where merger is involved and the Land Registry requirements in relation to each case (See Land Registry Practice, Second Edition, Brendan Fitzgerald, Paragraph 16.12). Note the general Land Registry Requirements set out in 7.1 above apply to all the cases. Where there is part of a freehold registered folio together with a lease which is registered as a burden but in respect of which there is no leasehold folio. The normal Land Registry requirements re first registration apply (See Practice Direction First Registration and Other Examiner Cases and Chapter 13 of the Law Society Conveyancing, 7 th Edition, Oxford University Press) and these include: (i) (ii) (iii) Form 2 of the LR Rules showing full title of the vendor to the lease with paragraph 9 amended to apply for merger; All documents of title relating to the lease; All searches dealing with the leasehold interest in vendor's possession together with up to date searches. When the leasehold title has been satisfactorily investigated applicant is registered as full owner of a new freehold folio and the lease, which was registered as a burden, is cancelled. Merger may also occur where the purchaser may have acquired the freehold folio and the leasehold interest thereon the title to which is registered on a leasehold folio. If vendor is registered as owner on both folios, the applicant is merely required to lodge the transfer together with a request that the lease be merged in the freehold folio. The transfer would most likely contain a declaration of merger in any event. In this case the purchaser is registered as full owner of the freehold folio, the lease burden is cancelled thereon and the leasehold folio is closed. Merger may also occur where a sub-lessee, whose lease is registered as a burden on a leasehold folio (his superior leasehold interest), gets in his superior leasehold interest. In this case, title to the sub-lease should be furnished as above at (i) to (iii). On registration of the applicant as owner of the superior leasehold registered title, the sub-lease, which is registered as a burden, will then be cancelled. It may also take place where both the superior leasehold title and the sub-lease title are registered on leasehold folios and the applicant has acquired the superior leasehold interest. The same requirements as above at (i) to (iii). If s/he has acquired it by way of transfer a declaration of merger will be the clearest way of indicating intention of merger. On registration of the applicant, the sub-lease, which was registered as a burden on the superior leasehold folio, is cancelled, and the leasehold folio for the sub-lease is cancelled. 12

13 The application of merger in relation to acquisition by tenants of the fee simple under the Landlord and Tenant (Ground Rents) (No. 2) Act 1978, Part 3 (Vesting Certificate) is dealt with in PRA Practice Direction Vesting Certificates. 8 Expiry A lease can determine automatically by expiry or effluxion of time when the term for which it was granted comes to its natural end. There is no need for either party to take any action e.g. for the landlord to serve notice. Applications to cancel a lease burden on a folio (and if relevant the consequent closure of a leasehold folio) can be made in Form 57A or 57B of the LR Rules as appropriate together with a supporting affidavit setting out the basis of the claim and exhibiting the appropriate proofs. Certain questions will have to be addressed. Was the lease renewed or replaced on expiry? If not, was possession recovered by the then landlord on expiry? Has any claim for a new lease has been made under the Landlord and Tenant Acts or otherwise by the lessee or her/his successors in title and are any proceedings by any such party or parties pending in relation to this part of the property. Is the applicant in possession of this portion of the property? Land Registry requirements re applications to cancel notes of short term leases (registered under s 72(3) of the Registration of Title Act, 1964) on the basis of expiry are dealt with in paragraph 6.9. of PRA Practice Direction Burdens -Cancellation of Burdens. 9 Other methods of determining leases Leases can be determined in a number of other ways, enlargement, frustration, notice to quit, ejectment, disclaimer other than by a liquidator and under the Statute of Limitations (See Irish Landlord and Tenant Law, Second Edition, J.C.W. Wylie, Chapter 23, 26-28, Consultation Paper of the General Law of Landlord and Tenant, Law Reform Commission, LRC CP , Chapter 12-16). There is some overlap with the methods dealt with above. It is not proposed to go into detail in relation to these methods. Such applications should be made in Form 57A or 57B of the LR Rules as appropriate together with a supporting affidavit setting out the basis of the claim and exhibiting the appropriate proofs. 13