Notice of Assignment UK — LPA 1925 s.136, Leasehold Assignments, Mortgage Notifications, and Freeholder Consent

When Is a Notice of Assignment Required?

A notice of assignment is required in several overlapping situations: (a) Lease covenant: virtually all residential and commercial leases contain a covenant requiring the tenant to give notice of any assignment to the landlord within a specified period (typically 21-28 days after completion of the transfer); the landlord is entitled to a registration fee (typically £25-£150 as specified in the lease, though some modern leases allow the landlord to charge 'reasonable' costs); (b) LPA 1925 s.136 (legal assignments of choses in action): where a lease is assigned at law, LPA 1925 s.136 requires written notice to be given to the landlord for the assignment to take full legal effect against the landlord; without notice, the assignment may be effective in equity but the landlord can continue to deal with the outgoing tenant; (c) Notice of charge: a separate notice is required when the leasehold interest is mortgaged; the notice of charge alerts the landlord that a mortgagee has an interest in the property and enables the mortgagee to receive copies of breach notices and to step in if the tenant defaults; (d) Absolute necessity: where the lease requires notice as a condition of registration, failure to serve means the new owner may not be recognised by the landlord — service charge demands, consent requests, and notices served on the old owner may not bind the new owner; (e) Management company registration: where a management company exists (separate from the freeholder), notice must typically be served on both the landlord and the management company; check the lease carefully.

• Lease covenant: most leases contain an express obligation to give notice within 21-28 days of completion; late notice typically results in the registration fee doubling
• LPA 1925 s.136: legal assignment of a lease requires written notice to the landlord for the assignment to be fully effective at law against them
• Notice of charge: a separate notice required when the leasehold is mortgaged — enables the mortgagee to receive breach notices and to step in on default
• Management company: check whether the lease requires notice to both the freeholder and the management company — two separate notices and two separate registration fees may apply
• Failure to notify: the new owner risks not being recognised for service charge demands, ground rent demands, and lease notices; the outgoing owner may remain liable on the covenants

How to Serve a Notice of Assignment — Form and Content

The notice of assignment must comply with the requirements of the lease: (a) Content: the notice must typically state: the names of the assignor (seller) and assignee (buyer); the property description; the date of the assignment; the consideration (purchase price) — although some landlords' solicitors accept a notice without the consideration; the mortgagee's details (for a notice of charge); (b) Form: the lease may specify a form of notice; in practice, a short letter addressed to the landlord (and its solicitors if identified in the lease) containing the required information is sufficient; (c) Service: serve on the person or address specified in the lease for service of notices; where the lease specifies service by first class post, this is deemed effective on posting; (d) Registration fee: the lease specifies the registration fee; the landlord is entitled to refuse to register the assignment until the fee is paid; the Land Registration Act 2002 and Commonhold and Leasehold Reform Act 2002 do not cap registration fees unless the lease provides a specific sum — 'reasonable' costs clauses allow the landlord to charge for actual administrative costs; (e) Completion: the buyer's solicitor typically serves the notice of assignment and notice of charge simultaneously with or shortly after completion; in practice, most residential conveyancers include notice service as a standard post-completion step; (f) Retention on completion: where the service of notices is a condition of title, the buyer's solicitor typically retains a sum from the completion monies to fund the notice fees and serves the notices promptly after completion.

• Standard content: assignor and assignee names; property description; date of assignment; purchase price (if required by the lease); mortgagee details if applicable
• Service address: serve on the address specified in the lease for notices — often the landlord's solicitors or managing agent, not just the freeholder's address
• Registration fee: payable on service; the landlord can refuse to register until paid; fees set by the lease or charged at 'reasonable' costs; typically £25-150 for residential leases
• Buyer's solicitor responsibility: notice service is a standard post-completion obligation of the buyer's solicitor — check the completion file if you are uncertain whether notices were served
• Dual notices: where the lease requires notice to both the freeholder and the management company, two separate notices (and fees) are payable

Absolute Leases, Qualified Covenants, and Landlord Consent

Some leases require the landlord's consent to assignment before the transfer completes — a separate obligation from giving notice after completion: (a) Absolute prohibition: the lease prohibits assignment entirely — the tenant cannot assign without the landlord's consent and the landlord can withhold consent unreasonably; rare in practice for residential leases but more common in short commercial leases; (b) Qualified covenant: the lease prohibits assignment without the landlord's consent, but the landlord cannot unreasonably withhold or delay consent (LTA 1927 s.19; LT(C)A 1988); the tenant must apply for consent before exchanging contracts; the landlord must respond within a reasonable time (typically 4-8 weeks depending on the circumstances) and can only refuse on reasonable grounds; (c) Fully qualified covenant: the qualified prohibition contains an express statement that the landlord's consent shall not be unreasonably withheld; (d) Consent conditions: in commercial leases (Landlord and Tenant Act 1988), the landlord can impose reasonable conditions on consent — e.g. requirement for an authorised guarantee agreement (AGA) from the outgoing tenant; (e) Residential leases (CLRA 2002): for residential long leases, the consent requirement must comply with specific statutory grounds — a landlord cannot withhold consent to assignment of a long lease (over 21 years) unless the lease has an absolute covenant (which CLRA 2002 s.89 significantly limits); most modern residential long leases have no consent requirement for assignment; (f) Notice vs consent: notice of assignment is a post-completion obligation; consent to assign (licence to assign) is a pre-completion obligation — they are separate requirements and a lease may require both.

• Licence to assign: a pre-completion consent required where the lease has an absolute or qualified prohibition on assignment; obtain before exchange of contracts
• LTA 1988: qualified covenant — landlord cannot unreasonably withhold or delay consent; must respond with a written decision within a reasonable time
• AGA conditions: in commercial leases, the landlord can require the outgoing tenant to give an AGA (authorised guarantee agreement) as a condition of consent — making them a guarantor for the incoming tenant
• Residential long leases: most modern residential long leases (over 21 years) do not require consent to assign — only post-completion notice
• Notice vs consent: do not confuse pre-completion consent (licence to assign) with post-completion notice of assignment — both may be required under the same lease

Consequences of Failure to Give Notice and Practical Checklist

Failing to serve notices of assignment and charge has serious practical consequences: (a) Service charge demands: a landlord or management company that is unaware of the assignment will continue to serve demands on the outgoing owner; the outgoing owner may suffer financial loss if demands are not passed on; the incoming owner may not receive valid demands and may accrue arrears without knowing; (b) Ground rent demands: statutory ground rent demands must be served on the current tenant by their correct name and address; service on the previous owner is not valid; (c) Covenant liability: where the tenant has entered into direct covenants with the landlord (as in pre-1996 leases governed by the privity of contract rule), the outgoing tenant remains liable on the covenants until the landlord is notified and formally releases them — in a pre-1996 lease, the outgoing tenant is permanently liable on the covenants regardless of notice; in a post-LT(C)A 1995 lease, liability ends on assignment but the landlord may require an AGA; (d) Mortgagee protection: a mortgagee that has not served a notice of charge is not recognised by the landlord — the landlord may take steps (such as forfeiture proceedings) without notifying the mortgagee, depriving the mortgagee of the opportunity to step in; (e) Practical checklist: (i) on purchase — buyer's solicitor serves notice of assignment and notice of charge within 21-28 days of completion; (ii) on sale — confirm notices were served by the buyer's solicitor (request a copy); (iii) on mortgage — lender's solicitor serves notice of charge; (iv) keep a record of all notices served, fees paid, and landlord acknowledgements.

• Service charge demands: if the landlord doesn't know about the assignment, demands go to the wrong owner — this creates administrative chaos and potential liability for both parties
• Ground rent validity: demands served on the previous owner are not valid; the incoming owner misses demands, potentially leading to forfeiture risk
• Pre-1996 leases: the outgoing tenant remains permanently liable on the covenants regardless of notice — this makes formal completion of the assignment process critical
• Mortgagee protection: a mortgagee must serve a notice of charge to ensure they receive enforcement notices and can step in on the tenant's default
• Buyer's solicitor: the primary obligation to serve notices post-completion rests with the buyer's solicitor; confirm they have served notices and obtained landlord acknowledgements

Frequently asked questions