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05th December 2016

Mind the gap when serving a notice to quit

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On 7th October 2016 the High Court in Stodday Land Ltd v Pye considered the validity of a notice to quit in respect of an agricultural tenancy.

The notice to quit was served by a landlord that had purchased part of an agricultural holding, but before the purchase had been registered at the Land Registry (during the period between the transfer and registration, known as “the registration gap”).

The tenant had an oral yearly periodic agricultural tenancy, which he had held since 1950. In 2006, Stodday Land Ltd became the registered owner of the holding. On 19th June 2013 Stodday completed a sale of part of the holding to Ripway Properties Limited. Ripway did not become the registered owner until 16th July 2013. On 1st July 2013 Ripway served a notice to quit on the tenant seeking possession of that part of the holding that they had purchased. On the same day Stodday served a notice to quit in respect of the remainder of the holding.

A notice to quit must comply with a number of common law requirements in order to be valid, one of which is the notice must be given by the legal owner of the estate. When registered land is transferred, the purchaser does not become the legal owner until the transfer is registered at the Land Registry.

The tenant contested the validity of the notices on the basis that the notice from Ripway had not been given by the legal owner of the holding and Stodday’s notice was not given in relation to all of the land comprised in the holding. Ripway argued that they were the landlord under the definition given in section 96 Agricultural Holdings Act 1986, in that they were entitled to receive the rents and profits, and therefore were entitled to serve a notice to quit. Ripway also argued that as they were entitled to receive the income, they were able to enforce every provision in the tenancy agreement (section 141(2) Law of Property Act 1925). Finally, as Ripway was entitled to be registered as the proprietor of the holding they argued that they were entitled to exercise all of the owner’s powers (section 24 Land Registration Act 2002).

The High Court determined that Ripway could not terminate the tenancy by notice to quit. The section 96 AHA 1986 definition of “landlord” only applied “unless the context otherwise requires” and that context included the common law requirements for a valid notice to quit. Although Ripway was entitled to be registered as the proprietor, at the time that the notice was served they were only the equitable owner, which was not sufficient title to allow them to serve a valid notice. The notice could not be made retrospectively valid by Ripway becoming the legal owner. As Ripway’s notice was not valid, this meant that Stodday’s notice was also invalid as it did not relate to all of the land in the holding.

This case is a warning to those acquiring leases of agricultural holdings to be mindful of the “registration gap” between purchase and registration at the Land Registry. During this period it will not be possible to serve a valid notice to quit. The judge suggested that a solution to this problem would be for the sale to include appropriate documentation appointing the purchaser as agent of the seller in all matters concerning the property transferred pending registration, such that the purchaser could serve a notice to quit on behalf of the seller.

For further information, please contact Eleanor Rutherford in our Property Litigation team on 01604 463340 or email Eleanor by clicking here.