How to avoid a lease plan being rejected on assignment - the do's and don'ts

The Land Registry's strict and extensive rules on demise plans have long been known. However, whereas previously these rules only applied to new leases being granted for a term of 21 years or more, the Land Registration Act 2002 has changed this position. This has led to lease registration headaches for prospective tenants.

The introduction of the Land Registration Act 2002 on 13 October 2003 reduced the length of a registrable lease from 21 to 7 years. Since that date, the grant of a new lease for more than 7 years or the assignment of an existing lease with more than 7 years to run must be registered. It is the assignment of existing leases which has turned out to be problematic as it was never envisaged at the date of grant that these leases would ever have to be submitted for registration. It transpires in practice that many demise plans in these leases do not comply with the Land Registry's rules. This has resulted in many applications to register assignments being rejected due to defective plans resulting in tenants being unable to register their interests.

So, how can this problem be avoided? Firstly, it is crucial to check at an early stage in negotiations for the assignment whether the current lease plan will be acceptable or not. The Land Registry guidelines are lengthy but some basic hints on how to avoid plan rejection are set out below.

DOs

• Use metric not imperial measurements to two decimal places.
• Use a scale of 1/1250 or 1/500 for urban areas and 1/2500 for rural areas. State the scale used.
• If the plan has been reduced from the original, it must be endorsed with a statement to that effect and the actual scale must be stated.
• Include a North point for orientation.
• Include enough detail so the Land Registry can identify the demise on the Ordnance Survey map.
• Show the demise clearly, e.g. by edging of a thickness that does not obscure any other detail.
• Identify different floor levels (where appropriate).

DON'Ts

• Mark the plan as "for identification purposes only" or "not to scale".
• Include a statement or disclaimer used under the Property Misdescriptions Act 1991.
• Use a photocopy of a plan. Even minor discrepancies can lead to rejection by the Land Registry. Instead, use prints of the original plan produced by the surveyor or architect.

If the lease plan doesn't shape up, a new plan will need to be produced. This can be an extremely costly exercise for a prospective tenant depending on the complexity of the property involved. For example, if the demise is of various floors within a building, each floor will need to be mapped. In contrast, for a lease of a whole building it might simply be a case of obtaining a copy of the relevant Ordnance Survey map.

Secondly, if a new plan is required you should involve the landlord in this process as soon as possible as it will need to approve and execute the new plan. This can be arranged as part and parcel of obtaining landlord's licence to assign. However, in the case of an assignment not requiring landlord's consent please bear in mind that the landlord will still need to approve the new plan. Failure to contact the landlord early enough could lead to delayed completion of the assignment.