Variation of a lease

Variation of a lease

Posted by Alan_Riley on Mon, 24/03/2008 - 18:45 in

This document is a draft deed of variation of an existing lease - whether a head-lease or an under-lease, and whether title to the lease or the reversion is registered or unregistered.

As with any lease variation, the deed should be executed by the current landlord and tenant, and any guarantor of the tenant's obligations. Failure to obtain the consent of a tenant's guarantor to a lease variation may result in the release of the guarantor. Where the lease is registered with its own title, or noted against the landlord's title, it is good practice to ensure that the deed itself is noted against that title. In the case of unregistered titles, it is good practice to record a memorandum of the deed on the original and counterpart of the lease.

If your variation has the effect of increasing the length of the term, or increasing the extent of property demised, the deed will take effect as an implied surrender and re-grant by operation of law. (See Friends Provident Life Office v BRB [1996] 1 All ER 336). This can have serious implications in terms of SDLT liability, lease registration, and the 1954 Act status of the lease. If your variation is intended to operate as a surrender and re-grant, and indeed is expressed to do so, then the re-grant would not arise by operation of law, but by the deliberate acts of the parties. That being the case, the re-granted lease would not be excepted from the need to comply with Land Registry rules on prescribed clauses in leases.

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