Termination of Tenancies for Tenant Default - Law Commission

82. Clause 10(7) provides that the nominated transferee may be a company
not in existence at the time of the application. That may be relevant in a case
where a block of flats is let on a single head tenancy, subject to sub-tenancies for
each of the flats. If the freeholder takes termination action against the head
tenant, the sub-tenants may apply for a transfer order in favour of a company
which they propose to form for the purpose of holding the head tenancy and
managing the block.
83. By clause 15(1), the court must specify the day for the transfer to be made.
That day must be no more than six weeks after the order is made. However, if the
court is satisfied that there would be exceptional hardship were the tenancy
transferred within six weeks, it may postpone the transfer for up to twelve weeks
from the date of the order.
84. Subsection (4) provides that the court may transfer the tenancy by means
of the court order itself. The court might decide that such provision is appropriate
where it is, for example, feasible for the transfer to take effect on the day that the
order is made. This is not, however, the only option available: see clause 9(5)
and the accompanying notes. Where the interest being transferred is a
registrable disposition within section 27 of the Land Registration Act 2002, it will
be a disposition by operation of law. The applicant or nominee will not hold the
legal title to the tenancy being transferred until title to the interest has been
registered with HM Land Registry.
85. Subsections (5) and (6) modify section 29 of the Land Registration Act
2002 in its application to a transfer made pursuant to a transfer order. Not every
such transfer will be registrable (for example, if the term of the tenancy does not
exceed seven years). However, where a transfer is registrable, the modification
will ensure that the provisions about priority of interests on registration of title
apply, despite the requirement in section 29(1) of that Act that dispositions must
be for valuable consideration.
86. Note that the power to make a transfer order is subject to any covenant in
the tenancy against assignment of the demised premises (see clause 11(3), (4)
and (6) and the accompanying notes).
Clause 16: New tenancy order
87. By clause 10(8), a new tenancy order is an order that a new tenancy of the
demised premises, or a specified part of them, is to be granted to the applicant.
As a result of clause 11(1), a new tenancy order can be made only on an
application by the holder of a qualifying interest in the tenancy.
88. Clause 16(1) provides that a new tenancy order has effect as a termination
order, the new tenancy beginning immediately on termination of the tenancy
which is the subject of the termination claim.
89. The terms of the new tenancy will be agreed so far as possible by the
parties. In the absence of agreement, the court will determine the disputed
matters.
90. Subsection (3) makes provision in relation to a new tenancy order along the
same lines as that made in clause 15(4) in relation to a transfer order.
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