A landlord who grants a lease keeps the reversion for the whole of the term
A worked RES examination question on future interests reversion, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
A landlord granted a three-year tenancy over a shop unit in a suburban row and then sold the property in the second year of the term, without telling the tenant anything about it until the transfer had already gone through. The tenant, who has spent a good deal on shopfitting and has fourteen months still to run, has since asked his own lawyer whether he must move out and whether he has any claim for the money he has laid out.
Which statement is correct?
The answer, and why
Answer: B
The rule. A landlord who grants a lease keeps the reversion for the whole of the term. It is the reversion that he sells, and the purchaser takes subject to the tenancy.
Why B is correct. He sold the reversion, and the tenancy binds the purchaser.
The other options.
- A says he had nothing to sell.
- C and D both end the tenancy — C on the sale and D on registration. D is the more attractive of the two because registration genuinely is the operative step for many things in this subject; it is not a way of extinguishing a lease.
Exam note. Selling during a term is ordinary. What changes is the identity of the landlord, not the existence of the lease.
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