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If a head leasehold title is disclaimed and the Land Registry closes the disclaimed title, what effect does this have on any subservient subleases (and legal charges)?
We have assumed that the disclaimer of the leasehold title was pursuant to liquidation or bankruptcy.
A tenant’s liabilities under the lease come to an end upon disclaimer by a liquidator or a trustee in bankruptcy, but the liability of other parties, including subtenants, does not. The headlease accordingly continues as a ‘notional’ reversion (as described in the High Court case of Scottish Widows Plc v Tripipatkul). However, the landlord and subtenant do not have a direct relationship. Accordingly, if the subtenant performs the covenants in the headlease, the landlord will not be entitled to possession. The landlord does, however, have various options and remedies available, including forfeiture in the event that the subtenant breaches the terms of the headlease. See Practice Note: Disclaimer of a lease-impact on landlords, tenants and third parties.
The landlord, or any person who
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