Reversionary interest meaning

This Checklist is for use as part of a due diligence exercise when reviewing an option to renew a lease. It is chiefly directed at a buyer of a reversionary interest in the lease that includes the option, though it also flags matters a buyer of leasehold property benefiting from an option should consider. Ask whether the option gives rise to a perpetually renewable lease. Confirm the renewal provision clearly states the new lease will not itself include a further option to renew. Where each renewal lease carries another option, a perpetually renewable lease is created. A perpetually renewable lease is converted into: in the case of a head lease, the grant of a lease for 2,000 years; and in the case of an underlease, the grant of a lease for a term ending one day before the expiry of the term from which it is derived, and in both scenarios without any right to renew...

This Checklist is intended for situations where: a leasehold property is being purchased and the tenant (or a predecessor in title) entered into an agreement for lease prior to completion of the lease; or a reversionary interest is being bought and the reversioner (or a predecessor in title) entered into an agreement for lease before completion of an existing occupational lease, or an agreement for lease remains in place pending completion of a lease. In each case, the agreement for lease predates completion of the relevant lease. You should confirm whether any outstanding or continuing obligations in the agreement for lease (eg to rectify defects or undertake works) will bind the purchaser. Any surviving obligations that bind successors in title could adversely affect the property’s investment value. Note that this Checklist is not comprehensive and, depending on the nature of the transaction, other issues may arise from the agreement for lease and require consideration. This Checklist also does not address limitation periods...

What are the practical implications of this case? From a purchaser’s perspective, the decision emphasises qualifying tenants’ statutory right of first refusal under LTA 1987 when a landlord proposes to dispose of its reversionary interest in a block of flats in question. Where LTA 1987 applies, the landlord is prohibited from transferring any estate or interest in the property unless it first serves a s 5 notice offering the reversionary interest to the qualifying tenants on the same terms as offered. A landlord who omits this step may commit a criminal offence, and there are significant consequences for the buyer as well in practice. Under s 12B(2), more than 50% of the qualifying tenants of the constituent flats can serve a purchase notice on the buyer, requiring the buyer to pass to the tenants’ nominee the estate or interest that formed the subject-matter of the original disposal, and to do so on the terms on which that disposal was originally concluded...

A split reversion, sometimes termed a severed reversion, arises where the reversionary interest in one segment of a leasehold estate is vested in one reversioner, while the reversion to the remaining part is vested in another reversioner. The presence of a split reversion may create several difficulties in relation to: apportionment of rent (see Apportionment of rent and deeds of apportionment below) compliance with the landlord covenants in the lease (see Compliance with landlord covenants below) a buyer’s indemnity covenant (see Buyer’s indemnity covenant below) business tenancies (see Tenancies under Part II of the Landlord and Tenant Act 1954 below) forfeiture and notices to quit (see Forfeiture and notices to quit below) surrender (see Surrender below) Examples of split reversions Two or more landlords owning separate parts of the reversion This can occur where two or more landlords, each owning different properties, come together to grant a single lease of all or part of those properties to...

Private Client England & Wales glossary A Abatement When, after settling the deceased’s funeral costs, debts and liabilities, the remaining estate cannot satisfy all legacies in full, the gifts are reduced accordingly, unless the Will shows a different intention. In a solvent estate, the order for reduction appears in Part II of Schedule 1 to the Administration of Estates Act 1925. Refer to Practice Note: Payment of legacies. Accruals basis Where income is taxed on an accruals basis, it is attributed to a given tax year by reference to the number of days within that year during which the activity giving rise to the liability accrued. See Practice Note: What is the basis of income tax?. Accumulation and maintenance (A&M) trust A form of non‑interest in possession trust designed to benefit children and young people up to 25, which received favourable inheritance tax treatment between 1975 and 2006. See Practice Note: Accumulation and maintenance trusts—IHT [Archived]. Accredited Legal Representative (ALR) ...

FORTHCOMING CHANGE: The Renters’ Rights Act 2025 The Renters’ Rights Act 2025 obtained Royal Assent on 27 October 2025. For guidance on the Act’s effect on residential tenancies in England, see Practice Note: Renters’ Rights Act 2025—key provisions... A Absolute title A category of title available for registered land. Absolute title is the strongest class that can be granted; it denotes that, apart from matters on the register and any overriding interests, nothing affects the registered proprietor’s freedom to deal with the land... Abstract (of title) A certified summary, prepared by a lawyer, setting out the contents of the title deeds for a particular property... Acquiring authority See Compulsory purchase... Act of Parliament Legislation passed by both Houses of Parliament in the form of a written Bill and given Royal Assent. Sometimes called primary legislation. See also Secondary legislation... Adoption The legal process by which a highway in private ownership becomes a highway maintainable at the public expense....

Acquisition or appropriation of remainderman's interest Under a life interest trust, the life tenant is entitled to live in the property or take the income it produces. The scenario assumes the life tenant might acquire the remainderman’s interest in the property, thereby converting their position into an absolute interest. In such a case, the remainderman would receive cash in exchange for their reversionary interest. Where the Will trust does not confer an express power on trustees to reallocate or modify beneficial interests, the life tenant and the remainderman may agree a variation pursuant to the rule in Saunders v Vautier, so long as they are both of full age and have capacity. This route is unavailable if any minors or unborn persons have, or may have, an interest under the trust. If there are potential beneficiaries of that kind, an application can be made to the court to approve the arrangement under the Variation of Trusts Act 1958. For further guidance, see: Termination of trusts—overview...