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- What is a deed of variation?
- What if the parties do not agree?
- Section 35 Landlord and Tenant Act 1987
- Section 37 Landlord and Tenant Act 1987
- Cost of a deed of variation
What is a deed of variation?
Sometimes, one or more parties to a residential long lease is unhappy with a lease term or terms. Often, the cause is a perceived injustice resulting from poor lease drafting. Common examples are:
- A failure of a lease to apportion service charges.
- When the leaseholders’ combined payments are less than 100% of the landlord’s expenditure.
“The insights that you provided have been very helpful and confidence boosting.” MG
What if the parties do not agree?
If the parties cannot agree the proposed variation, the following can apply to the First Tier Tribunal (Property Chamber) for an order to vary the lease terms:
- a leaseholder;
- the management company;
- a Right to Manage company;
- the landlord.
There are two routes to the Tribunal: Section 35 and Section 37.
Section 35 Landlord and Tenant Act 1987
Any party can apply to vary the lease under Section 35 of the Landlord and Tenant Act 1987 if the lease fails to make “satisfactory provision” for one or more of the following:
Section 37 Landlord and Tenant Act 1987
An application can be made under Section 37 of the Landlord and Tenant Act 1987 to vary the lease if supported by a minimum number of parties and:
- if the required variation does not fall under one of the “satisfactory provisions” listed above; or
- more than two leases are defective.
Cost of deed of variation lease
The cost of varying a lease term or terms depends largely on the amount of work involved. Where both parties agree in principle to the variation, the cost should be limited to taking legal advice and thereafter drafting the deed. If an agreed variation is at the request of the tenant, the landlord may require the tenant to meet both parties’ legal costs.
If an application to the First Tier Tribunal (Property Chamber) proves necessary, understandably, costs will be higher.