If you own a flat within a block, the chances are that you own as a leaseholder – for a set amount of time and subject to the rules within your lease. Leases will be prepared when the flat is sold for the first time and often the flat will pass through several owners without anything changing within the flat’s lease itself – even the original owner’s name will stay on that document!
As a result, all too often buyers will find themselves as owners of a flat via a lease which contains old-fashioned and indecipherable legal jargon.
Over time, language itself has changed as has the practice of the solicitors and legal advisors preparing these documents. But, jargon remains, as do the old-fashioned leases granted when some blocks of flats were originally constructed in the mid-20th century.
Here is a short list of some common terms and we have tried to break these down into plain English for those struggling to get to grips with what these documents mean:
Freeholder – The permanent and absolute owner of land/property.
Leaseholder – The temporary and conditional owner of land/property, who is bound by the terms of the lease under which they hold the property. A leaseholder can sublet to another person, who will then become a sub-leaseholder.
Deed of Variation – A document entered into between landlord and tenant to vary the terms of the existing lease.
Lessor/Landlord – The person/entity who grants a lease of property to another person/entity. Can be the freeholder or a leaseholder if they sublet. Lessor and landlord are interchangeable terms, though you may find that older leases tend to use lessor and newer leases use landlord.
Lessee/Tenant – The person/entity who is granted the lease of the property and has the benefit of the lease for the term set out within. Again, lessee and tenant are interchangeable terms. The word ‘tenant’ does hold some connotations of shorter-term lettings, but there is no legal difference between the words.
Management Company/Manager – A defined person/entity which has responsibility for managing the block within which the flat is located. Their responsibilities are defined within the lease. If there is no management company/manager named, generally responsibilities will be set out as either a landlord or tenant obligation. Management Companies will often be owned and run by the tenants of flats within a block.
Managing Agent – A professional company/entity which can be instructed to assist the landlord/management company with the routine day to day management of the building, maintenance and insurance where the landlord/management company does not have the experience/capacity to do so themselves.
Rent – A regular amount payable by a tenant to a landlord as set out within a lease. The landlord can then use that money as they see fit.
Service charges/maintenance charges – A charge due under the lease, which is usually variable to fit circumstances. These charges can include proportions of payments the landlord/management company themselves spend or expect to spend on maintenance, insurance, repairs, and other items such as gardening, contracted staff, shared utilities and more. These can only be recovered in accordance with the terms of the lease and the landlord/management company does not have an unfettered discretion to charge unreasonably nor beyond what is set out within the lease terms.
Sinking fund/reserve fund – A collection of funds put aside towards future expected expenditure, whether for a specific purpose or for emergency expenditure. Largely these terms are interchangeable.
Peppercorn – Often leases will contain a rent payable of a ‘peppercorn’. In a literal sense, the landlord could demand a peppercorn from the tenant. However, this is a traditional object of no real value which has been used to signify a nil rent, because it is arguable that a lease without a rent is not valid. Other alternatives seen in residential leases include a white rose.
Covenant – A legally enforceable promise by one party to another restricting their use of their own property. Landlords and tenants will both usually give covenants within a lease about what they must and must not do.
Easement/Right – A legally enforceable right for one party over another’s property. These can extend to rights of way (for example, to allow a tenant to access their flat), rights to use services (to allow the tenant their utilities), rights of support (to prevent a landlord from removing any supporting structures around a flat and potentially undermining the structural integrity of the unit) and more.
Demise – A more traditional legal term which the grant of a new lease of a property. You may also see ‘demised premises’ defined within a lease – which usually means the main property which the tenant is allowed to use under the terms of the lease – the flat itself.
Assignment – Another old-fashioned legal term used to describe the transfer of a lease from one party to another whether by sale, gift or otherwise.
Breach – When a party contravenes a term of the lease, they are said to be in breach. Leases will usually provide remedies for the aggrieved party.
The above does not offer a comprehensive outline of all of the terms within leases, nor can it overturn any express meanings defined within any particular lease – it is merely a general outline of some of the wording usually found in residential leases. We would recommend you seek legal advice based on your own circumstances if you are in any doubt.
If you are a residential leaseholder or a freeholder and you need legal advice whether connected to the points made in this article or otherwise, please do not hesitate to get in touch via firstname.lastname@example.org or 01202 558844.