Mind the gap – Landlord notices and the pitfalls of the registration gap

There is inevitably a period of time between the date a land transfer is completed and the completion of registration at the Land Registry, otherwise known as the ‘registration gap’. In Stodday Land Ltd v Pye [2016], an incoming landlord was caught by the pitfalls of the registration gap with the consequence of being stuck with an unwanted tenant.

Stodday transferred part of its land to Ripway, subject to an agricultural tenancy which could only be terminated by the landlord serving a notice to quit on the tenant.  During the ‘registration gap’, Ripway served a notice on the tenant. On that same date, Stodday also served a notice to quit in relation to the remainder of its land, which was also subject to the tenancy.

The tenant challenged the validity of both notices and the court agreed, finding that:

• Ripway’s notice was invalid because Ripway had only an equitable interest in the transferred land when it served its notice (the legal interest did not vest in Ripway until registration had taken place); and
• Stodday’s notice was invalid because its notice should have covered the entire holding, including the transferred part, on the basis that Stodday remained registered proprietor and legal owner.

Whilst this case is clearly important for agricultural landlords, the decision is wider-reaching in its implication, and applies to other forms of notices – including notices served on tenants in commercial premises. 

There are practical ways of overcoming the registration gap: notices can be served after registration has taken place; the buyer could serve notice as an agent for the seller pending registration; or the contract for sale could include a clause requiring the seller to serve notice during the registration gap. In all circumstances, however, care must be taken to ensure notices are valid so as to avoid tenants remaining in occupation on the basis of technicalities.