Jurisdiction(s):
United Kingdom

Right of first refusal: post-disposal incumbrances bind unless disapplied; s19(1) orders confer no proprietary interest—Donovan v Prescott Place (England and Wales)

Published on: 10 April 2024

Published by a LexisNexis Property Disputes expert

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Article summary

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...

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