This section of our Case Law Library looks at cases related to:
- The circumstances under which a Tribunal or Court may order that the terms of a lease be varied.
- The effect that the variation of a Lease has on Service Charge liabilities, past or present
Applications to Rectify an Alleged Error in a Lease:
This case was an Appeal against an earlier decision by the High Court that a Lease should be interpreted as though it contained other wording than that which was actually written. The England and Wales Court of Appeal overturned the decision of the High Court and set out very clear guidance on when a Court or Tribunal is entitled to interpret a Lease as though it contained wording other than that written in the Lease.
Variation of a Lease to allow a Landlord to Recover Costs:
Case where the Upper Tribunal decided that Section 35 of the Landlord and Tenant Act 1987 did not permit an application to be made by a Landlord to vary the terms of the Lease to include a clause allowing the recovery of managing agents fee in order to align the Service Charges of the relevant Leaseholders with the other Leaseholder in the block who paid the charge.
Variation of a Lease in respect of the Apportionment Method:
In this case the Upper Tribunal decided that application to vary the terms of the lease in respect of the apportionment method could only be made under Section 35 of the Landlord and Tenant Act 1987 to correct a situation where the collective shares paid by the Leaseholders was less than, or exceeded, 100%. An application could not be made for the purpose of reapportioning the shares each individual Leaseholder paid.
Variation of a Lease in respect of Repair Obligations:
In this case the Lands Tribunal stated that the decision as to whether a Lease makes unsatisfactory provision for one of the matters referred to in Section 35 of the Landlord and Tenant Act 1987 depends on the circumstances of the case. It also decided that a lease does not fail to make satisfactory provision “simply because it could have been better or more explicitly drafted“.
Applications under Section 37 of the Landlord and Tenant Act 1987:
Section 37 of the Landlord and Tenant Act 1987 states that an application to vary Leases may only be made under that section if, in a building or estate of more than 8 or more affected Leaseholders, more than 75% support the application and no more than 10% oppose it. In this case the Upper Tribunal decided that these qualifying conditions must be assessed at the time of the Application, and that subsequent expressions of support or opposition could not be taken into account in respect of that particular application..
A case where the Upper Tribunal carefully considered whether the proposed variation to the Lease met the requirement under Section 37 that “The grounds on which an application may be made under this section are that the object to be achieved by the variation cannot be satisfactorily achieved unless all the leases are varied to the same effect“. Rather unsurprisingly, the Upper Tribunal decided that introducing a clause which allowed the Landlord wider powers to recover legal and management fees was not required to achieve the objective of changing the heating system from a communal boiler to individual boilers, and the proposed variation was not granted.
Decision by the Upper Tribunal that in order for a resident to have been taken to have given their consent to the variation of a lease for the purposes of Section 37 of the Landlord and Tenant Act 1987 they must have first been given the opportunity to consider and consent to the proposed amendments to the wording of their lease.
Restrictions on making an Order to Vary a Lease
Section 38 (6) of the Landlord and Tenant Act 1987 states that an order to vary a lease may not be made if it is unreasonable to do so in the circumstances in which the application was made. In this case the Lands Tribunal decided that it was unreasonable to make certain variations to the leases in question because of an ongoing application by the leases to exercise their right to enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993
Case where the Upper Tribunal found that the LVT had made a correct decision to order the variation of the Leases concerned following an application under Section 37 of the Landlord and Tenant Act 1985. Significantly, in this case neither the introduction of new charge for the Landlord’s costs of managing the building, or interest on those charges if paid late, were not taken to create prejudice against the Leaseholders and no compensation was therefore due as a precondition of ordering the variation. This was important because under Section 38 (6) of the Landlord and Tenant Act 1987 an order to vary a lease may not be made if the variation causes significant prejudice to one of the parties to that lease which may not be adequately addressed by the award of compensation.
Back Dating the Effect of Varying a Lease:
Decision of the Upper Tribunal allowing the variation of a Lease to be backdated to a time before the Application to the vary the terms of the Lease was made.
Compensation under Section 38 of the LTA 1987
Decision by the Upper Tribunal that a leaseholder should not be entitled to compensation ‘merely’ because a variation of a lease results in their paying a higher proportion of the service charge costs.