A husband and wife have served notice of an enfranchisement claim, under the Leasehold Reform Act 1967, and have been served with a counter-notice. If they divorce, would the claim need to be assigned or any action need to be taken in respect of the claim when the property is transferred?
Under section 37 of the Law of Property Act 1925 (LPA 1925), married persons are to be treated as separate persons for the purposes of ownership of property. That means that the usual rules of joint ownership under a trust apply, whether they own as joint tenants or tenants in common, pursuant to LPA 1925, s 36. Section 6(1)(b) of the Leasehold Reform Act 1967 (LRA 1967) states that occupation under a trust arising under LPA 1925, s 36 is sufficient to qualify for enfranchisement under LRA 1967.
LRA 1967, s 5(2) makes clear that the rights under a notice under that act are assignable. However, the rights under the notice cannot exist apart from the interest in the lease. This means that the benefit of the notice and the lease must be assigned simultaneously, otherwise the notice will cease to have effect. The consequence of the above is that both husband and wife must assign their rights under the notice at the same time as selling the property. This is the case irrespective of whether the parties are married or divorced, and whether or not the transfer is made voluntarily or pursuant to a court order. It also means that if the spouses are transferring their joint interests to just one of them so that one spouse remains the sole owner, the benefit of the notice should also be transferred.
In other words, the spouses should be treated as two co-owners, irrespective of their marital status, and the benefit of the notice transferred with their respective interests accordingly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
