The case concerned an RTM claim and whether, as part of the RTM process, all qualifying tenants were served with the notice of invitation to participate in the claim. In particular, this relates to a tenant who had been granted a new lease of one of the flats but that lease had not yet been registered at Land Registry.
In that case, the Court of Appeal recently allowed the Landlord’s appeal against a decision by the Upper Tribunal by deciding that the RTM company’s failure to serve a notice of invitation to participate on the tenant, in that scenario, invalidated the right to manage claim. For the purposes of s78 of the Commonhold and Leasehold Reform Act 2002 (“the Act”) such a notice should be given by the RTM company to all qualifying leaseholders who are not members of the RTM company and the subsequent claim notice may not be given unless each person has been given the notice of invitation to participate at least 14 days beforehand. This decision was contrary to the decision in the Upper Tribunal which held that although the tenant was a qualifying tenant, the RTM claim was still valid even though the tenant whose interest had not yet been registered was never served with the notice of invitation to participate. Interestingly the First Tribunal found the claim notice to be valid but for different reasons i.e.it is difficult identifying an equitable tenant.
Generally speaking, there are limited grounds on which to challenge any RTM claim. One which is used is that the notice of invitation to participate has not be served correctly. The Upper Tribunal and Court of Appeal both agreed that that the tenant here was a qualifying tenant for the purposes of s75 of the Act but the latter held that if a qualifying tenant does not receive a notice of invitation to participate in accordance with the provisions in the Act, the Act itself clearly sets out that the claim notice is not valid. The Court held that where the Act clearly sets out a consequence of non-compliance the courts should apply those and should not consider the case further. As a result, the appeal was allowed.
RTM claims are being used more frequently in light of the pending reforms to the enfranchisement regime, and this case is one which demonstrates that legal advice is key to ensuring the procedure is followed correctly.
The registration gap has caused issues in many cases, and it is notable that both the Tribunal and Court of Appeal agreed that the tenant was a qualifying tenant here where a new lease had been granted and had not yet been registered as their interest takes effect in equity.
If you need help with any RTM claim then please get in touch with one of our property dispute solicitors today.
