The COVID-19 pandemic has lead the Association of Leasehold Practitioners (ALEP) to call on the Government to extend statutory deadlines for filing protective tribunal applications until the lockdown is over. The suggestion is that a three month extension is ratified to cover applications to determine the terms of collective enfranchisement and lease extension claims.
Many leaseholders are not aware of the statutory deadlines that apply to lease extensions and collective enfranchisements, nor the importance of them, because leasehold enfranchisement is such a specialist area of law. Moreover, many are unaware of the consequences of failing to adhere to the deadlines. Understanding these deadlines is more important now than ever, because we cannot fall into the trap of assuming that a blanket extension to the deadlines will be approved.
Not all deadlines within the two processes can be protected against by making a tribunal or court application. Therefore if the requested extension is granted, it is not necessarily a given that it will apply to these deadlines. This has led me to revisit an area of my training which was completely key to my development as a leasehold enfranchisement practitioner: what are the deadlines, how do they work, and what happens if you miss them?
The first area to cover is the timescale for serving a claim notice. This is not a deadline of itself but leaseholders should be aware of the need to serve their claim notice (be this for a lease extension or a collective enfranchisement) before their lease term drops below 80 years. This is because when a lease term falls below 80 years, the process starts to get much, much pricier. Further information on why can be found in my previous article.
With a collective enfranchisement claim, even before the landlord responds with a counter notice, there is a potential pit fall for the leaseholders. The landlord is able to require the leaseholders to produce evidence of title. This is a relatively simple matter of providing the landlord with up to date title entries for each flat but it must be done within 21 days of the request. Failure to comply with the request results in a deemed withdrawal of the collective enfranchisement claim meaning the claim cannot proceed and the leaseholders are prevented from making a second attempt for a period of 12 months. This can have dire consequences, particularly if the leases are nearing the 80 year point as referred to above.
The next deadline is for serving a counter notice which is stipulated in the claim notice and must take place at least two months after the service of the claim notice. There are severe consequences if the landlord misses the deadline. If no counter notice is served, or it is served after the deadline, the leaseholder is entitled to a lease extension or to acquire the freehold on the terms set out in the claim notice – this can result in a positive windfall for the leaseholder! In line with ALEP guidance, many practitioners are agreeing to accept service by email during the pandemic, however, it is wise never to assume that this will be acceptable and to check first.
With these first three points, there is no option to apply to either the tribunal or the court, and therefore, any extension to the deadlines for doing so is not going to be helpful if you are in the early stages of your claim.
The fourth deadline is the deadline for agreeing the terms of the lease extension or the freehold purchase. The parties have a period of six months calculated from the date of service of the counter notice to agree terms. If the terms are not agreed within that period then the claim notice is deemed to be withdrawn with the same consequences as mentioned above. If agreement is not looking likely, then the leaseholder would be well advised to submit a tribunal application to protect the claim.
The final deadline is for completion to take place. Once terms are agreed or otherwise determined by a tribunal, the parties have a period of four months within which to complete the transaction. If it looks as though completion will not take place, then the leaseholder should apply to the county court to protect their claim. Again, a failure to do so if the matter has not completed results in a deemed withdrawal, which will prevent a further claim being made for a period of 12 months.
Many leaseholders started their claims months ago, before the current situation had even hit the news, when it seemed certain that they would be able to complete; but now, things are not looking so certain. The effect of the pandemic on many tenants is that they are less financially stable and so I anticipate that many claims will fail over the coming months due to not completing on time.
If the Government agrees to ALEP’s request then it may be possible to extend the two key deadlines, which will buy leaseholders more time to agree terms and complete thereafter. This will be particularly helpful for those that have recently discovered their solicitor or valuer has been furloughed or those that have found themselves in the same situation.
But for the time being, the tribunal and/or court application should be made to avoid the deemed withdrawal of a claim. If you have found yourself without suitable representation, or have initiated your own lease extension or collective enfranchisement claim and are now concerned about deadlines and how the may affect you, please get in touch with our Leasehold Enfranchisement Team.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at May 2020.