Legal Practice Notes

In broad terms, the doctrine of overreaching permits purchasers (including tenants and mortgagees) acting in good faith for money or money’s worth to rely exclusively on the legal title. For registered land, this refers to the entries on the register of title, which records ownership of the legal estate and does not concern itself with equitable interests. A buyer taking a legal estate in land from trustees will not be affected by any trusts on which the land is held if the purchase price is paid to all the trustees (there must be at least two) or to a trust corporation. Payment in that form results in the beneficiaries’ interests being ‘overreached’. This is commonly called the 'two trustee' rule. Overreaching also occurs on sales: under the powers of the Settled Land Act 1925 by a mortgagee (see Overreaching by a mortgagee) or personal...

This Practice Note examines when obligations in a property contract fuse on completion and what remedies might still be available once completion has taken place. For remedies relating to property contracts in general, see the following Practice Notes: Specific performance of property agreements Notice to complete Termination for breach of property contract Repudiation of property sale contracts Return or forfeiture of a deposit Misrepresentation, misstatement and non-disclosure in property matters Rectification—mutual mistake, and Rectification—unilateral mistake The general rule At common law, the same subject matter cannot be governed by two concurrent agreements. Where a contract is completed by deed, any contractual provisions that overlap with the deed are absorbed into the executed instrument and the contractual terms are extinguished. For instance, a sale contract for land merges into the transfer or conveyance, and an agreement for lease merges into the...

Once hailed as a demonstration of the English knack for bending the most rarefied ideas to commercial ends, floating charges are now widespread and, in practice, almost indispensable to finance deals. This Practice Note flags the key distinctions between the laws of Scotland and England concerning floating charges, looking in particular at their make-up, the rules on registration, and the mechanisms for enforcement in each jurisdiction. It concentrates on the status of a ‘qualifying floating charge’ as that expression is defined in the Insolvency Act 1986 ( IA 1986), and how the concept operates across both Scotland and England. The floating charge Although fixed securities give a lender priority ahead of floating charge holders and unsecured creditors, they are confined to the identified asset over which they are granted and limit the borrower’s freedom to deal with that asset without the fixed security holder’s...

STOP PRESS: ECCTA 2023 brings in identity verification obligations for everyone submitting filings with Companies House. These rules are expected to become mandatory in November 2026. See the Changes under ECCTA 2023 section below for additional detail and timing. STOP PRESS: On 16 March 2026, Companies House announced that on Friday 13 March it became aware of a security issue whereby a signed-in Web Filing user could, after carrying out a particular sequence of steps within the portal, potentially view and amend certain aspects of another company’s information without that company’s consent, including specific fields and entries. For the avoidance of doubt, Companies House has confirmed that no already-filed documents, including accounts or confirmation statements, could have been changed. Nevertheless, there is a risk that some personal data might have been accessed and that unauthorised filings may have been submitted. Although information is currently limited, this could, for...

This Practice Note outlines the nature and core characteristics of easements. It considers the need for both a dominant and a servient tenement, and for those to be held in separate ownership; the requirement that the easement must accommodate the dominant tenement; and the necessity for it to be capable of constituting the subject matter of a grant. Nature of an easement An easement is an incorporeal right enjoyed by the holder of a legal estate (the dominant tenement) over land belonging to another (the servient tenement), which binds successors in title. Most easements are positive, permitting the dominant owner to enter upon or use the servient land in some fashion (eg a right of way). They can also be negative, stopping something from being done on the servient land and thereby giving the dominant owner the right to receive something from that land (eg a right to...

Key differences in the legal risk profile, compared to a direct property purchase In general, a person acquiring the shares in an SPV that owns UK property seeks to emulate the commercial position that would exist on a direct purchase of that property. Typically, property-related points are handled through replies to enquiries and the buyer’s own investigations, with any other issues dealt with separately via due diligence and the corporate documentation. Nevertheless, the risk profile of an SPV transaction is, unavoidably, quite different from that of buying the property directly. Two principal reasons explain this: on a direct purchase, the buyer can rely directly on property searches and the process of land registration to secure good title to the property, free of encumbrances. In an SPV share acquisition, those searches provide only indirect protection the purchaser of SPV shares will inherit, albeit...

Introduction The adoption of sewers is the mechanism by which sewers are vested in the sewerage undertaker or an appointed sewerage company, after which the undertaker meets the cost of maintenance. A sewer adoption agreement (described in this Practice Note as a ‘section 104 agreement’) is the contract that developers or, in Ofwat’s terminology, ‘self-lay providers’ ( SLPs) enter into with the undertaker when the developer wishes the undertaker to assume responsibility for sewerage infrastructure they have built so that it becomes a public sewer. A sewer adoption agreement can likewise be used where a section 160 Water Industry Act 1991 ( WIA 1991) arrangement exists under which the undertaker agrees to carry out works connected with constructing sewerage infrastructure at the relevant person’s expense. The statutory basis for undertakers to enter such agreements is WIA 1991, s 104. The approach to adopting new...

Intercreditor agreements Intercreditor agreements are intricate, highly detailed frameworks between two or more creditor groups, requiring careful, case-specific scrutiny. That scrutiny spans the extent of rights and safeguards afforded to each creditor class in each case, and whether the structure, taken as a whole, functions economically within the context of the relevant lending arrangements. For information on intercreditor arrangements in a general context, see Practice Notes: Introductory guide to Intercreditor Agreements Intercreditor payment priorities and requisite majorities Basic introduction to super senior, senior, mezzanine and junior debt Intercreditor agreements are regularly encountered in real estate finance because many lenders are only willing to lend on a senior basis up to a specified loan to value, which varies from deal to deal by reference to the nature of the underlying real estate, the ultimate risk profile of the transaction, and prevailing market...

Entitlements arising under insurance policies constitute contractual rights. A lender may obtain security over an insurance policy through an assignment granted as security, effected by way of security. Additional protections can also be deployed in relation to insurance, including noting the lender’s interest on the policy or arranging co-insurance status for the lender. These alternatives take varied forms and deliver distinct advantages to the lender. This Practice Note concentrates on the issues that arise when taking security over rights under insurance policies. For general guidance on securing contractual rights, refer also to Practice Note: Taking security over contractual rights in general. Nature of insurance policies Rights arising under insurance policies are intangible assets rather than physical property. They sit within the class of contractual rights. Such a right is a chose in action (or thing in action), that is to say, a claim...

This Practice Note provides a primer on arbitration in Scotland under the Arbitration ( Scotland) Act 2010 ( A( S) A 2010) and associated topics. It concentrates on how A( S) A 2010 diverges from the Arbitration Act 1996 ( AA 1996) as it applies in England, Wales and, separately, Northern Ireland (using ‘ England’ and ‘ English’ as convenient shorthand). For an overview of AA 1996, see Practice Note: A guide to the Arbitration Act 1996 ( AA 1996). Background to A( S) A 2010 Scotland’s legal system (‘ Scots law’) evolved independently from that of England and Wales. Its foundations lie in customary law, canon (church) law and Roman law, brought into Scotland in the late medieval era when Scottish jurists returned from study in the Netherlands and other continental European jurisdictions. After the 1707 union of the Scottish and English...

What is a letter of non-crystallisation? When carrying out title due diligence on property owned by a company, the existence of a floating charge may well be revealed. See Practice Notes: Pre-contract searches— Company search and Pre-completion searches— Company search. In such circumstances, a letter or certificate of non-crystallisation might be needed in order to confirm that: the floating charge has not crystallised in relation to that specific property no action has been taken that has caused, or would cause, the charge to crystallise and attach to the property, and the chargee agrees to the property being sold, or to a second floating charge being created over it This confirms the company can transact with the property (still subject to any fixed charges and other title restrictions and limitations). Either the chargee or the chargor may issue the letter. However, it is better to...

Scope of this Practice Note Land (or real property) is routinely provided as collateral for borrowing. In this setting, land is more significant than some other assets, as it may serve in personal lending scenarios (e.g. home purchases) just as much as in commercial lending transactions......

It is almost invariably sensible for the partners of a limited liability partnership ( LLP) to put in place a limited liability partnership agreement, both to prevent any unsuitable default rules under the Limited Liability Partnerships Act 2000 ( LLPA 2000) from automatically taking effect, and to augment the statutory legal regime where it is lacking. Default provisions The Limited Liability Partnerships Regulations 2001, SI 2001/1090 ( LLPR 2001) provide default terms that will govern how an LLP operates if, and to the extent that, there is no express agreement to the contrary......

On an asset acquisition that includes leasehold premises, the property can either be transferred in full to the purchaser or, alternatively, a fresh lease can be granted. Whenever a leasehold interest is involved—whether already in place or newly created—key points arise, outlined below. Existing lease: points to consider Assignment provisions Where the deal includes leasehold property, the lease’s alienation provisions must be scrutinised to ensure that every condition relating to assignment is strictly complied with. The remaining terms of the lease should likewise be reviewed to check that no clauses are impacted by an assignment, for example a break right that is personal to the seller, or a surrender‑back clause. If any lease contains an absolute prohibition on assignment, the buyer may require a deed of variation (or comparable certainty) from the landlord, or, alternatively, may ask for the property to be taken out of the...

What is a lease surrender? A lease surrender is a mutual, jointly agreed arrangement between the landlord and the tenant to terminate the lease prior to the expiry of the contractual term, and in a manner not contemplated within the lease itself (e.g. by exercising a break option, etc). An express surrender is effected formally, most commonly documented by deed, although a deed is not always necessary (see: Express surrender below). A surrender by operation of law (also called an implied surrender) arises where the landlord and tenant, through unequivocal and consistent conduct, demonstrate that they no longer regard the lease as continuing between them (see: Surrender by operation of law ( Implied surrender) below). Accordingly, a surrender is often the product of negotiation in circumstances where the tenant cannot otherwise divest itself of the lease. Its availability frequently depends on the...

What are heat networks? Heat networks are systems that deliver heating to multiple users within a single building (communal heating) or across several buildings (district heating), drawing on shared heat source(s) and a shared distribution network of pipes and plant. Heat is usually supplied as hot water—steam is uncommon—and there is a growing move towards circulating lower temperature, ‘ambient’ heat... Where a DHN connects multiple properties, heat exchangers are typically employed to provide hydraulic separation between the central network and the individual building systems. This permits different pressures and circulation rates, and makes it easier to manage temperatures (and ownership) within local buildings... For further detail on the engineering of district heating networks, see Practice Note: District heating/heat networks—technology. This Practice Note summarises the obligations under the Heat Network ( Metering and Billing) Regulations 2014, SI 2014/3120 (as amended), which form a specific element of the legal...

What is environmental insurance? Environmental insurance shifts risk by indemnifying the policyholder for losses arising from potential environmental liabilities. For property-focused cover, the insured might be the purchaser, the vendor, or both. A standalone environmental policy is often necessary because public liability insurance commonly excludes environmental liabilities, except for sudden, unintended and unexpected pollution incidents. In addition, public liability usually responds only to third party damages and not to remediation of the insured’s own property. On-site remediation Off-site remediation Civil disputes Legal expenses Role of insurance Securing insurance can enable transactions or developments to progress where environmental risks and liabilities exist, by providing financial security and reducing uncertainty. It places the burden of liability with a suitable third-party insurer. Insurance can also support operators of high-hazard facilities in making financial provision for environmental loss. Key...

Borrowers can choose from a broad range of debt and capital structuring routes. Traditionally, senior debt (typically provided by banks) sat at the top, then mezzanine finance, followed by junior debt, each ranking ahead of unsecured creditors and shareholders/equity holders. After the 2007/8 credit crunch, businesses increasingly tapped capital markets and non-bank sources (eg private credit) to widen their funding, adding further layers of indebtedness. This Practice Note offers a straightforward overview of the different tiers of debt and security a restructuring lawyer may encounter. It outlines the financing layers and the forms of security commonly seen in practice by a restructuring lawyer. It also sketches how those tiers now sit together in practice. Capital structures and interplay between creditors Typically, external borrowings sit at the operating company ( Opco) level. The Opcos own the core business assets (eg premises, key...

What are business rates? Business rates are a levy on property used for commercial purposes. They apply to most non-domestic premises, including shops, offices and pubs. Rates are also due where only part of a building is put to non-domestic use. For broader guidance on business rates, see Practice Note: Liability for business rates. Who is liable to pay business rates? In an insolvency setting, the occupier of the premises is responsible for business rates. A company is rateable as occupier only if it is in ‘actual possession’ and exercises a ‘sufficient measure of control to prevent strangers from interfering’. A company undergoing an insolvency process may still be treated as in occupation depending on the office-holder’s actions; for example, if trading continues while a buyer is sought. For more on what amounts to occupation, see Practice Note: Liability for business rates. A de minimis...

This Practice Note provides an overview of agency. It outlines the core features of the relationship between principal and agent, covering methods of appointing an agent to represent a principal, the various forms of appointment, and the scope of an agent’s authority to act for a principal. It also explains the extent and source of an agent’s power when acting for the principal. It identifies how appointments are made and the breadth of authority conferred in practice. Nature of agency Agency arises where a principal engages an agent to act in accordance with their instructions and for them, for defined objectives. In commercial settings, this typically involves introducing or finalising contracts between the principal and customers or other third parties. In practice, ‘agent’ is used loosely to describe, eg, distributors whose functions resemble those of agents, yet who are not agents in law......