Alarmed to see the wording “limited title guarantee”?

Alarmed to see the wording “limited title guarantee”?

10:09 AM, 7th February 2022, About 4 months ago 1

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Dear all, I am in the process of a lease extension for a flat we bought recently, our solicitor is happy for us to sign the new lease with a clause stating “In consideration of the Premium and the surrender unto the Landlord of the term of years created by the Previous Lease, the Landlord lets with limited title guarantee the Property to the Tenant for the Term.”.

We were alarmed to see the wording of “limited title guarantee” as the phrase never existed in our previous leases.

Furthermore, the neighbour directly above us in the same block had their lease extended in 2014 and the mirror clause in their new lease is “In consideration of the surrender of the Old Lease by the Tenant with full title guarantee and the payment of the premium by the Tenant, the Lessors hereby grant and demise the Premises to the Tenant (together with and subject to the same rights exceptions and reservations, if any contained in the Old lease) for the term specified.”

I.e. NO such wording as “limited title guarantee”.

My solicitor assured us that “The new lease is based on an industry-approved modern precedent and contains the correct terminology and statutory references as are required for a Statutory Lease extension of a lease made pursuant to section 56 of the 1993 Act.”. He said the Landlord doesn’t have to provide a full title guarantee. So the new lease will only have a limited title guarantee and this virtually won’t be in any way prejudice our position or adversely affect our property, its value or future sale.

I would be most grateful for any answers to the following questions and for any practical advice:
1. Is there anyone whose lease contains the wording of “limited title guarantee” and any problem occurred as a result?
2. What is the practical difference between a full title guarantee and a limited title guarantee in terms of property value, future sale and borrowing eligibility?
3. Should we insist on getting the full title guarantee from the landlord as it originally has? nb: our solicitor agreed to ask for a full title guarantee on our behalf, but didn’t think we’d get it. nb. also, the landlord does have title absolute for the land/building.

In a nutshell, how can we proceed from here to bring the lease extension to a swift conclusion?

Thank you all so much in advance.

Xiaolei



Comments

by Ian Narbeth

14:32 PM, 7th February 2022, About 4 months ago

Hi Xiaolei
I am a property solicitor. You do not need to worry about this. If you want to look it up "limited title guarantee" and "full title guarantee" were introduced in 1994
https://www.legislation.gov.uk/ukpga/1994/36/section/1

Your solicitor is correct. The landlord in not bound to enter into any covenants for title beyond those implied by a limited title guarantee (section 57(8)(b), Leasehold Reform, Housing and Urban Development Act 1993:

"(8)In granting the new lease the landlord shall not be bound to enter into any covenant for title beyond—
(a)those implied from the grant, and
(b)those implied under Part I of the Law of Property (Miscellaneous Provisions) Act 1994 in a case where a disposition is expressed to be made with limited title guarantee, but not including (in the case of an underlease) the covenant in section 4(1)(b) of that Act (compliance with terms of lease);"

Your neighbour surrendered his lease with full title guarantee but the landlord did not grant with full title guarantee.


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