Commonhold and Leasehold Reform Act 2002

• Citation: 2002 c. 15
• Sections: 368

Section 1 Commonhold land

(1) Land is commonhold land if—

(a) the freehold estate in the land is registered as a freehold estate in commonhold land,

(b) the land is specified in the articles of association of a commonhold association as the land in relation to which the association is to exercise functions, and

(c) a commonhold community statement makes provision for rights and duties of the commonhold association and unit-holders (whether or not the statement has come into force).

(2) In this Part a reference to a commonhold is a reference to land in relation to which a commonhold association exercises functions.

(3) In this Part—

“ commonhold association ” has the meaning given by section 34,

“ commonhold community statement ” has the meaning given by section 31,

“ commonhold unit ” has the meaning given by section 11,

“ common parts ” has the meaning given by section 25, and

“ unit-holder ” has the meaning given by sections 12 and 13.

(4) Sections 7 and 9 make provision for the vesting in the commonhold association of the fee simple in possession in the common parts of a commonhold.

Section 2 Application

(1) The Registrar shall register a freehold estate in land as a freehold estate in commonhold land if—

(a) the registered freeholder of the land makes an application under this section, and

(b) no part of the land is already commonhold land.

(2) An application under this section must be accompanied by the documents listed in Schedule 1.

(3) A person is the registered freeholder of land for the purposes of this Part if—

(a) he is registered as the proprietor of a freehold estate in the land with absolute title, or

(b) he has applied, and the Registrar is satisfied that he is entitled, to be registered as mentioned in paragraph (a).

Section 3 Consent

(1) An application under section 2 may not be made in respect of a freehold estate in land without the consent of anyone who—

(a) is the registered proprietor of the freehold estate in the whole or part of the land,

(b) is the registered proprietor of a leasehold estate in the whole or part of the land granted for a term of more than than 21 years,

(c) is the registered proprietor of a charge over the whole or part of the land, or

(d) falls within any other class of person which may be prescribed.

(2) Regulations shall make provision about consent for the purposes of this section; in particular, the regulations may make provision—

(a) prescribing the form of consent;

(b) about the effect and duration of consent (including provision for consent to bind successors);

(c) about withdrawal of consent (including provision preventing withdrawal in specified circumstances);

(d) for consent given for the purpose of one application under section 2 to have effect for the purpose of another application;

(e) for consent to be deemed to have been given in specified circumstances;

(f) enabling a court to dispense with a requirement for consent in specified circumstances.

(3) An order under subsection (2)(f) dispensing with a requirement for consent—

(a) may be absolute or conditional, and

(b) may make such other provision as the court thinks appropriate.

Section 4 Land which may not be commonhold

Schedule 2 (which provides that an application under section 2 may not relate wholly or partly to land of certain kinds) shall have effect.

Section 5 Registered details

(1) The Registrar shall ensure that in respect of any commonhold land the following are kept in his custody and referred to in the register—

(a) the prescribed details of the commonhold association;

(b) the prescribed details of the registered freeholder of each commonhold unit;

(c) a copy of the commonhold community statement;

(d) a copy of the articles of association of the commonhold association.

(2) The Registrar may arrange for a document or information to be kept in his custody and referred to in the register in respect of commonhold land if the document or information—

(a) is not mentioned in subsection (1), but

(b) is submitted to the Registrar in accordance with a provision made by or by virtue of this Part.

(3) Subsection (1)(b) shall not apply during a transitional period within the meaning of section 8.

Section 6 Registration in error

(1) This section applies where a freehold estate in land is registered as a freehold estate in commonhold land and—

(a) the application for registration was not made in accordance with section 2,

(b) the certificate under paragraph 7 of Schedule 1 was inaccurate, or

(c) the registration contravened a provision made by or by virtue of this Part.

(2) The register may not be altered by the Registrar under Schedule 4 to the Land Registration Act 2002 (c. 9) (alteration of register).

(3) The court may grant a declaration that the freehold estate should not have been registered as a freehold estate in commonhold land.

(4) A declaration under subsection (3) may be granted only on the application of a person who claims to be adversely affected by the registration.

(5) On granting a declaration under subsection (3) the court may make any order which appears to it to be appropriate.

(6) An order under subsection (5) may, in particular—

(a) provide for the registration to be treated as valid for all purposes;

(b) provide for alteration of the register;

(c) provide for land to cease to be commonhold land;

(d) require a director or other specified officer of a commonhold association to take steps to alter or amend a document;

(e) require a director or other specified officer of a commonhold association to take specified steps;

(f) make an award of compensation (whether or not contingent upon the occurrence or non-occurrence of a specified event) to be paid by one specified person to another;

(g) apply, disapply or modify a provision of Schedule 8 to the Land Registration Act 2002 (c. 9) (indemnity).

Section 7 Registration without unit-holders

(1) This section applies where—

(a) a freehold estate in land is registered as a freehold estate in commonhold land in pursuance of an application under section 2, and

(b) the application is not accompanied by a statement under section 9(1)(b).

(2) On registration—

(a) the applicant shall continue to be registered as the proprietor of the freehold estate in the commonhold land, and

(b) the rights and duties conferred and imposed by the commonhold community statement shall not come into force (subject to section 8(2)(b)).

(3) Where after registration a person other than the applicant becomes entitled to be registered as the proprietor of the freehold estate in one or more, but not all, of the commonhold units—

(a) the commonhold association shall be entitled to be registered as the proprietor of the freehold estate in the common parts,

(b) the Registrar shall register the commonhold association in accordance with paragraph (a) (without an application being made),

(c) the rights and duties conferred and imposed by the commonhold community statement shall come into force, and

(d) any lease of the whole or part of the commonhold land shall be extinguished by virtue of this section.

(4) For the purpose of subsection (3)(d) “ lease ” means a lease which—

(a) is granted for any term, and

(b) is granted before the commonhold association becomes entitled to be registered as the proprietor of the freehold estate in the common parts.

Section 8 Transitional period

(1) In this Part “ transitional period ” means the period between registration of the freehold estate in land as a freehold estate in commonhold land and the event mentioned in section 7(3).

(2) Regulations may provide that during a transitional period a relevant provision—

(a) shall not have effect, or

(b) shall have effect with specified modifications.

(3) In subsection (2) “ relevant provision ” means a provision made—

(a) by or by virtue of this Part,

(b) by a commonhold community statement, or

(c) by the articles of the commonhold association.

(4) The Registrar shall arrange for the freehold estate in land to cease to be registered as a freehold estate in commonhold land if the registered proprietor makes an application to the Registrar under this subsection during the transitional period.

(5) The provisions about consent made by or under sections 2 and 3 and Schedule 1 shall apply in relation to an application under subsection (4) as they apply in relation to an application under section 2.

(6) A reference in this Part to a commonhold association exercising functions in relation to commonhold land includes a reference to a case where a commonhold association would exercise functions in relation to commonhold land but for the fact that the time in question falls in a transitional period.

Section 9 Registration with unit-holders

(1) This section applies in relation to a freehold estate in commonhold land if—

(a) it is registered as a freehold estate in commonhold land in pursuance of an application under section 2, and

(b) the application is accompanied by a statement by the applicant requesting that this section should apply.

(2) A statement under subsection (1)(b) must include a list of the commonhold units giving in relation to each one the prescribed details of the proposed initial unit-holder or joint unit-holders.

(3) On registration—

(a) the commonhold association shall be entitled to be registered as the proprietor of the freehold estate in the common parts,

(b) a person specified by virtue of subsection (2) as the initial unit-holder of a commonhold unit shall be entitled to be registered as the proprietor of the freehold estate in the unit,

(c) a person specified by virtue of subsection (2) as an initial joint unit-holder of a commonhold unit shall be entitled to be registered as one of the proprietors of the freehold estate in the unit,

(d) the Registrar shall make entries in the register to reflect paragraphs (a) to (c) (without applications being made),

(e) the rights and duties conferred and imposed by the commonhold community statement shall come into force, and

(f) any lease of the whole or part of the commonhold land shall be extinguished by virtue of this section.

(4) For the purpose of subsection (3)(f) “ lease ” means a lease which—

(a) is granted for any term, and

(b) is granted before the commonhold association becomes entitled to be registered as the proprietor of the freehold estate in the common parts.

Section 10 Extinguished lease: liability

(1) This section applies where—

(a) a lease is extinguished by virtue of section 7(3)(d) or 9(3)(f), and

(b) the consent of the holder of that lease was not among the consents required by section 3 in respect of the application under section 2 for the land to become commonhold land.

(2) If the holder of a lease superior to the extinguished lease gave consent under section 3, he shall be liable for loss suffered by the holder of the extinguished lease.

(3) If the holders of a number of leases would be liable under subsection (2), liability shall attach only to the person whose lease was most proximate to the extinguished lease.

(4) If no person is liable under subsection (2), the person who gave consent under section 3 as the holder of the freehold estate out of which the extinguished lease was granted shall be liable for loss suffered by the holder of the extinguished lease.

Section 11 Definition

(1) In this Part “ commonhold unit ” means a commonhold unit specified in a commonhold community statement in accordance with this section.

(2) A commonhold community statement must—

(a) specify at least two parcels of land as commonhold units, and

(b) define the extent of each commonhold unit.

(3) In defining the extent of a commonhold unit a commonhold community statement—

(a) must refer to a plan which is included in the statement and which complies with prescribed requirements,

(b) may refer to an area subject to the exclusion of specified structures, fittings, apparatus or appurtenances within the area,

(c) may exclude the structures which delineate an area referred to, and

(d) may refer to two or more areas (whether or not contiguous).

(4) A commonhold unit need not contain all or any part of a building.

Section 12 Unit-holder

A person is the unit-holder of a commonhold unit if he is entitled to be registered as the proprietor of the freehold estate in the unit (whether or not he is registered).

Section 13 Joint unit-holders

(1) Two or more persons are joint unit-holders of a commonhold unit if they are entitled to be registered as proprietors of the freehold estate in the unit (whether or not they are registered).

(2) In the application of the following provisions to a unit with joint unit-holders a reference to a unit-holder is a reference to the joint unit-holders together—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) section 15(1) . . . ,

(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) section 20(1),

(e) section 23(1),

(f) section 35(1)(b), and

(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(i) section 47(2).

(3) In the application of the following provisions to a unit with joint unit-holders a reference to a unit-holder includes a reference to each joint unit-holder and to the joint unit-holders together—

(a) section 1(1)(c),

(aa) section 14(3),

(ab) section 15(3),

(b) section 16,

(ba) section 19(2) and (3),

(c) section 31(1)(b), (3)(b), (5)(j) and (7),

(d) section 32(4)(a) and (c),

(e) section 35(1)(a), (2) and (3),

(f) section 37(2),

(fa) section 38(1),

(faa) section 38A(1),

(fb) section 39(2),

(g) section 40(1), and

(h) section 58(3)(a).

(4) Regulations under this Part which refer to a unit-holder shall make provision for the construction of the reference in the case of joint unit-holders.

(5) Regulations may amend subsection (2) or (3).

(6) Regulations may make provision for the construction in the case of joint unit-holders of a reference to a unit-holder in—

(a) an enactment,

(b) a commonhold community statement,

(c) the articles of association of a commonhold association, or

(d) another document.

Section 14 Use , maintenance and building safety

(1) A commonhold community statement must make provision regulating the use of commonhold units.

(2) A commonhold community statement must make provision imposing duties in respect of the insurance, repair and maintenance of each commonhold unit.

(3) A duty under subsection (2) may be imposed on the commonhold association or the unit-holder.

(4) A commonhold community statement for a higher-risk commonhold must make provision requiring the commonhold association to comply with its duties under Part 4 of the Building Safety Act 2022, or regulations made under that Part of the Act, in relation to each commonhold unit.

Section 15 Transfer

(1) In this Part a reference to the transfer of a commonhold unit is a reference to the transfer of a unit-holder’s freehold estate in a unit to another person—

(a) whether or not for consideration,

(b) whether or not subject to any reservation or other terms, and

(c) whether or not by operation of law.

(2) A commonhold community statement may not prevent or restrict the transfer of a commonhold unit.

(3) On the transfer of a commonhold unit the new unit-holder shall notify the commonhold association of the transfer.

(4) Regulations may—

(a) prescribe the form and manner of notice under subsection (3);

(b) prescribe the time within which notice is to be given;

(c) make provision (including provision requiring the payment of money) about the effect of failure to give notice.

Section 16 Transfer: effect

(1) A right or duty conferred or imposed—

(a) by a commonhold community statement, or

(b) in accordance with section 20,

shall affect a new unit-holder in the same way as it affected the former unit-holder.

(2) A former unit-holder shall not incur a liability or acquire a right—

(a) under or by virtue of the commonhold community statement, or

(b) by virtue of anything done in accordance with section 20.

(3) Subsection (2)—

(a) shall not be capable of being disapplied or varied by agreement, and

(b) is without prejudice to any liability or right incurred or acquired before a transfer takes effect.

(4) In this section—

“ former unit-holder ” means a person from whom a commonhold unit has been transferred (whether or not he has ceased to be the registered proprietor), and

“ new unit-holder ” means a person to whom a commonhold unit is transferred (whether or not he has yet become the registered proprietor).

Section 17 Leasing: residential

(1) It shall not be possible to create a term of years absolute in a residential commonhold unit unless the term satisfies prescribed conditions.

(2) The conditions may relate to—

(a) length;

(b) the circumstances in which the term is granted;

(c) any other matter.

(3) Subject to subsection (4), an instrument or agreement shall be of no effect to the extent that it purports to create a term of years in contravention of subsection (1).

(4) Where an instrument or agreement purports to create a term of years in contravention of subsection (1) a party to the instrument or agreement may apply to the court for an order—

(a) providing for the instrument or agreement to have effect as if it provided for the creation of a term of years of a specified kind;

(b) providing for the return or payment of money;

(c) making such other provision as the court thinks appropriate.

(5) A commonhold unit is residential if provision made in the commonhold community statement by virtue of section 14(1) requires it to be used only—

(a) for residential purposes, or

(b) for residential and other incidental purposes.

Section 18 Leasing: non-residential

An instrument or agreement which creates a term of years absolute in a commonhold unit which is not residential (within the meaning of section 17) shall have effect subject to any provision of the commonhold community statement.

Section 19 Leasing: supplementary

(1) Regulations may—

(a) impose obligations on a tenant of a commonhold unit;

(b) enable a commonhold community statement to impose obligations on a tenant of a commonhold unit.

(2) Regulations under subsection (1) may, in particular, require a tenant of a commonhold unit to make payments to the commonhold association or a unit-holder in discharge of payments which—

(a) are due in accordance with the commonhold community statement to be made by the unit-holder, or

(b) are due in accordance with the commonhold community statement to be made by another tenant of the unit.

(3) Regulations under subsection (1) may, in particular, provide—

(a) for the amount of payments under subsection (2) to be set against sums owed by the tenant (whether to the person by whom the payments were due to be made or to some other person);

(b) for the amount of payments under subsection (2) to be recovered from the unit-holder or another tenant of the unit.

(4) Regulations may modify a rule of law about leasehold estates (whether deriving from the common law or from an enactment) in its application to a term of years in a commonhold unit.

(5) Regulations under this section—

(a) may make provision generally or in relation to specified circumstances, and

(b) may make different provision for different descriptions of commonhold land or commonhold unit.

Section 20 Other transactions

(1) A commonhold community statement may not prevent or restrict the creation, grant or transfer by a unit-holder of—

(a) an interest in the whole or part of his unit, or

(b) a charge over his unit.

(2) Subsection (1) is subject to sections 17 to 19 (which impose restrictions about leases).

(3) It shall not be possible to create an interest of a prescribed kind in a commonhold unit unless the commonhold association—

(a) is a party to the creation of the interest, or

(b) consents in writing to the creation of the interest.

(4) A commonhold association may act as described in subsection (3)(a) or (b) only if—

(a) the association passes a resolution to take the action, and

(b) at least 75 per cent. of those who vote on the resolution vote in favour.

(5) An instrument or agreement shall be of no effect to the extent that it purports to create an interest in contravention of subsection (3).

(6) In this section “ interest ” does not include—

(a) a charge, or

(b) an interest which arises by virtue of a charge.

Section 21 Part-unit: interests

(1) It shall not be possible to create an interest in part only of a commonhold unit.

(2) But subsection (1) shall not prevent—

(a) the creation of a term of years absolute in part only of a residential commonhold unit where the term satisfies prescribed conditions,

(b) the creation of a term of years absolute in part only of a non-residential commonhold unit, or

(c) the transfer of the freehold estate in part only of a commonhold unit where the commonhold association consents in writing to the transfer.

(3) An instrument or agreement shall be of no effect to the extent that it purports to create an interest in contravention of subsection (1).

(4) Subsection (5) applies where—

(a) land becomes commonhold land or is added to a commonhold unit, and

(b) immediately before that event there is an interest in the land which could not be created after that event by reason of subsection (1).

(5) The interest shall be extinguished by virtue of this subsection to the extent that it could not be created by reason of subsection (1).

(6) Section 17(2) and (4) shall apply (with any necessary modifications) in relation to subsection (2)(a) and (b) above.

(7) Where part only of a unit is held under a lease, regulations may modify the application of a provision which—

(a) is made by or by virtue of this Part, and

(b) applies to a unit-holder or a tenant or both.

(8) Section 20(4) shall apply in relation to subsection (2)(c) above.

(9) Where the freehold interest in part only of a commonhold unit is transferred, the part transferred—

(a) becomes a new commonhold unit by virtue of this subsection, or

(b) in a case where the request for consent under subsection (2)(c) states that this paragraph is to apply, becomes part of a commonhold unit specified in the request.

(10) Regulations may make provision, or may require a commonhold community statement to make provision, about—

(a) registration of units created by virtue of subsection (9);

(b) the adaptation of provision made by or by virtue of this Part or by or by virtue of a commonhold community statement to a case where units are created or modified by virtue of subsection (9).

Section 22 Part–unit: charging

(1) It shall not be possible to create a charge over part only of an interest in a commonhold unit.

(2) An instrument or agreement shall be of no effect to the extent that it purports to create a charge in contravention of subsection (1).

(3) Subsection (4) applies where—

(a) land becomes commonhold land or is added to a commonhold unit, and

(b) immediately before that event there is a charge over the land which could not be created after that event by reason of subsection (1).

(4) The charge shall be extinguished by virtue of this subsection to the extent that it could not be created by reason of subsection (1).

Section 23 Changing size

(1) An amendment of a commonhold community statement which redefines the extent of a commonhold unit may not be made unless the unit-holder consents—

(a) in writing, and

(b) before the amendment is made.

(2) But regulations may enable a court to dispense with the requirement for consent on the application of a commonhold association in prescribed circumstances.

Section 24 Changing size: charged unit

(1) This section applies to an amendment of a commonhold community statement which redefines the extent of a commonhold unit over which there is a registered charge.

(2) The amendment may not be made unless the registered proprietor of the charge consents—

(a) in writing, and

(b) before the amendment is made.

(3) But regulations may enable a court to dispense with the requirement for consent on the application of a commonhold association in prescribed circumstances.

(4) If the amendment removes land from the commonhold unit, the charge shall by virtue of this subsection be extinguished to the extent that it relates to the land which is removed.

(5) If the amendment adds land to the unit, the charge shall by virtue of this subsection be extended so as to relate to the land which is added.

(6) Regulations may make provision—

(a) requiring notice to be given to the Registrar in circumstances to which this section applies;

(b) requiring the Registrar to alter the register to reflect the application of subsection (4) or (5).

Section 25 Definition

(1) In this Part “ common parts ” in relation to a commonhold means every part of the commonhold which is not for the time being a commonhold unit in accordance with the commonhold community statement.

(2) A commonhold community statement may make provision in respect of a specified part of the common parts (a “ limited use area ”) restricting—

(a) the classes of person who may use it;

(b) the kind of use to which it may be put.

(3) A commonhold community statement—

(a) may make provision which has effect only in relation to a limited use area, and

(b) may make different provision for different limited use areas.

Section 26 Use , maintenance and building safety

(1) A commonhold community statement must make provision—

(a) regulating the use of the common parts;

(b) requiring the commonhold association to insure the common parts;

(c) requiring the commonhold association to repair and maintain the common parts.

(2) A commonhold community statement for a higher-risk commonhold must make provision requiring the commonhold association to comply with its duties under Part 4 of the Building Safety Act 2022, or regulations made under that Part of that Act, in relation to the common parts.

Section 27 Transactions

(1) Nothing in a commonhold community statement shall prevent or restrict—

(a) the transfer by the commonhold association of its freehold estate in any part of the common parts, or

(b) the creation by the commonhold association of an interest in any part of the common parts.

(2) In this section “ interest ” does not include—

(a) a charge, or

(b) an interest which arises by virtue of a charge.

Section 28 Charges: general prohibition

(1) It shall not be possible to create a charge over common parts.

(2) An instrument or agreement shall be of no effect to the extent that it purports to create a charge over common parts.

(3) Where by virtue of section 7 or 9 a commonhold association is registered as the proprietor of common parts, a charge which relates wholly or partly to the common parts shall be extinguished by virtue of this subsection to the extent that it relates to the common parts.

(4) Where by virtue of section 30 land vests in a commonhold association following an amendment to a commonhold community statement which has the effect of adding land to the common parts, a charge which relates wholly or partly to the land added shall be extinguished by virtue of this subsection to the extent that it relates to that land.

(5) This section is subject to section 29 (which permits certain mortgages).

Section 29 New legal mortgages

(1) Section 28 shall not apply in relation to a legal mortgage if the creation of the mortgage is approved by a resolution of the commonhold association.

(2) A resolution for the purposes of subsection (1) must be passed—

(a) before the mortgage is created, and

(b) unanimously.

(3) In this section “ legal mortgage ” has the meaning given by section 205(1)(xvi) of the Law of Property Act 1925 (c. 20) (interpretation).

Section 30 Additions to common parts

(1) This section applies where an amendment of a commonhold community statement—

(a) specifies land which forms part of a commonhold unit, and

(b) provides for that land (the “ added land ”) to be added to the common parts.

(2) The amendment may not be made unless the registered proprietor of any charge over the added land consents—

(a) in writing, and

(b) before the amendment is made.

(3) But regulations may enable a court to dispense with the requirement for consent on the application of a commonhold association in specified circumstances.

(4) On the filing of the amended statement under section 33—

(a) the commonhold association shall be entitled to be registered as the proprietor of the freehold estate in the added land, and

(b) the Registrar shall register the commonhold association in accordance with paragraph (a) (without an application being made).

Section 31 Form and content: general

(1) A commonhold community statement is a document which makes provision in relation to specified land for—

(a) the rights and duties of the commonhold association, and

(b) the rights and duties of the unit-holders.

(2) A commonhold community statement must be in the prescribed form.

(3) A commonhold community statement may—

(a) impose a duty on the commonhold association;

(b) impose a duty on a unit-holder;

(c) make provision about the taking of decisions in connection with the management of the commonhold or any other matter concerning it.

(4) Subsection (3) is subject to—

(a) any provision made by or by virtue of this Part, and

(b) any provision of the articles of the commonhold association.

(5) In subsection (3)(a) and (b) “ duty ” includes, in particular, a duty—

(a) to pay money;

(b) to undertake works;

(c) to grant access;

(d) to give notice;

(da) to give information;

(db) to apply for grants or other funding;

(e) to refrain from entering into transactions of a specified kind in relation to a commonhold unit;

(f) to refrain from using the whole or part of a commonhold unit for a specified purpose or for anything other than a specified purpose;

(g) to refrain from undertaking works (including alterations) of a specified kind;

(h) to refrain from causing nuisance or annoyance;

(i) to refrain from specified behaviour;

(j) to indemnify the commonhold association or a unit-holder in respect of costs arising from the breach of a statutory requirement.

(6) Provision in a commonhold community statement imposing a duty to pay money (whether in pursuance of subsection (5)(a) or any other provision made by or by virtue of this Part) may include provision for the payment of interest in the case of late payment.

(7) A duty conferred by a commonhold community statement on a commonhold association or a unit-holder shall not require any other formality.

(8) A commonhold community statement may not provide for the transfer or loss of an interest in land on the occurrence or non-occurrence of a specified event.

(9) Provision made by a commonhold community statement shall be of no effect to the extent that—

(a) it is prohibited by virtue of section 32,

(b) it is inconsistent with any provision made by or by virtue of this Part,

(c) it is inconsistent with anything which is treated as included in the statement by virtue of section 32, or

(d) it is inconsistent with the articles of association of the commonhold association.

Section 32 Regulations

(1) Regulations shall make provision about the content of a commonhold community statement.

(2) The regulations may permit, require or prohibit the inclusion in a statement of—

(a) specified provision, or

(b) provision of a specified kind, for a specified purpose or about a specified matter.

(3) The regulations may—

(a) provide for a statement to be treated as including provision prescribed by or determined in accordance with the regulations;

(b) permit a statement to make provision in place of provision which would otherwise be treated as included by virtue of paragraph (a).

(4) The regulations may—

(a) make different provision for different descriptions of commonhold association or unit-holder;

(b) make different provision for different circumstances;

(c) make provision about the extent to which a commonhold community statement may make different provision for different descriptions of unit-holder or common parts.

(5) The matters to which regulations under this section may relate include, but are not limited to—

(a) the matters mentioned in sections 11, 14, 15, 20, 21, 25, 26, 27, 38, 38A , 39 and 58, and

(b) any matter for which regulations under section 37 may make provision.

Section 33 Amendment

(1) Regulations under section 32 shall require a commonhold community statement to make provision about how it can be amended.

(2) The regulations shall, in particular, make provision under section 32(3)(a) (whether or not subject to provision under section 32(3)(b)).

(3) An amendment of a commonhold community statement shall have no effect unless and until the amended statement is registered in accordance with this section.

(4) If the commonhold association makes an application under this subsection the Registrar shall arrange for an amended commonhold community statement to be kept in his custody, and referred to in the register, in place of the unamended statement.

(5) An application under subsection (4) must be accompanied by a certificate given by the directors of the commonhold association that the amended commonhold community statement satisfies the requirements of this Part.

(6) Where an amendment of a commonhold community statement redefines the extent of a commonhold unit, an application under subsection (4) must be accompanied by any consent required by section 23(1) or 24(2) (or an order of a court dispensing with consent).

(7) Where an amendment of a commonhold community statement has the effect of changing the extent of the common parts, an application under subsection (4) must be accompanied by any consent required by section 30(2) (or an order of a court dispensing with consent).

(8) Where the Registrar amends the register on an application under subsection (4) he shall make any consequential amendments to the register which he thinks appropriate.

Section 34 Constitution

(1) A commonhold association is a private company limited by guarantee—

(a) the articles of which state that an object of the company is to exercise the functions of a commonhold association in relation to specified commonhold land, and

(b) the statement of guarantee of which specifies £1 as the amount of the contribution required from each member in the event of the company being wound up.

(2) Schedule 3 (which makes provision about the constitution of a commonhold association) shall have effect.

Section 35 Duty to manage

(1) The directors of a commonhold association shall exercise their powers so as to permit or facilitate so far as possible—

(a) the exercise by each unit-holder of his rights, and

(b) the enjoyment by each unit-holder of the freehold estate in his unit.

(2) The directors of a commonhold association shall, in particular, use any right, power or procedure conferred or created by virtue of section 37 for the purpose of preventing, remedying or curtailing a failure on the part of a unit-holder to comply with a requirement or duty imposed on him by virtue of the commonhold community statement or a provision of this Part.

(3) But in respect of a particular failure on the part of a unit-holder (the “ defaulter ”) the directors of a commonhold association—

(a) need not take action if they reasonably think that inaction is in the best interests of establishing or maintaining harmonious relationships between all the unit-holders, and that it will not cause any unit-holder (other than the defaulter) significant loss or significant disadvantage, and

(b) shall have regard to the desirability of using arbitration, mediation or conciliation procedures (including referral under a scheme approved under section 42) instead of legal proceedings wherever possible.

(4) A reference in this section to a unit-holder includes a reference to a tenant of a unit.

Section 36 Voting

(1) This section applies in relation to any provision of this Part (a “ voting provision ”) which refers to the passing of a resolution by a commonhold association.

(2) A voting provision is satisfied only if every member is given an opportunity to vote in accordance with any relevant provision of the articles of association or the commonhold community statement.

(3) A vote is cast for the purposes of a voting provision whether it is cast in person or in accordance with a provision which—

(a) provides for voting by post, by proxy or in some other manner, and

(b) is contained in the articles of association or the commonhold community statement.

(4) A resolution is passed unanimously if every member who casts a vote votes in favour.

Section 37 Enforcement and compensation

(1) Regulations may make provision (including provision conferring jurisdiction on a court) about the exercise or enforcement of a right or duty imposed or conferred by or by virtue of—

(a) a commonhold community statement;

(b) the articles of a commonhold association;

(c) a provision made by or by virtue of this Part.

(2) The regulations may, in particular, make provision—

(a) requiring compensation to be paid where a right is exercised in specified cases or circumstances;

(b) requiring compensation to be paid where a duty is not complied with;

(c) enabling recovery of costs where work is carried out for the purpose of enforcing a right or duty;

(d) enabling recovery of costs where work is carried out in consequence of the failure to perform a duty;

(e) permitting a unit-holder to enforce a duty imposed on another unit-holder, on a commonhold association or on a tenant;

(f) permitting a commonhold association to enforce a duty imposed on a unit-holder or a tenant;

(g) permitting a tenant to enforce a duty imposed on another tenant, a unit-holder or a commonhold association;

(h) permitting the enforcement of terms or conditions to which a right is subject;

(i) requiring the use of a specified form of arbitration, mediation or conciliation procedure before legal proceedings may be brought.

(3) Provision about compensation made by virtue of this section shall include—

(a) provision (which may include provision conferring jurisdiction on a court) for determining the amount of compensation;

(b) provision for the payment of interest in the case of late payment.

(4) Regulations under this section shall be subject to any provision included in a commonhold community statement in accordance with regulations made by virtue of section 32(5)(b).

Section 38 Commonhold assessment

(1) A commonhold community statement must make provision—

(a) requiring the directors of the commonhold association to make an annual estimate of the income required to be raised from unit-holders to meet the expenses of the association,

(b) enabling the directors of the commonhold association to make estimates from time to time of income required to be raised from unit-holders in addition to the annual estimate,

(c) specifying the percentage of any estimate made under paragraph (a) or (b) which is to be allocated to each unit,

(d) requiring each unit-holder to make payments in respect of the percentage of any estimate which is allocated to his unit, and

(e) requiring the directors of the commonhold association to serve notices on unit-holders specifying payments required to be made by them and the date on which each payment is due.

(2) For the purpose of subsection (1)(c)—

(a) the percentages allocated by a commonhold community statement to the commonhold units must amount in aggregate to 100;

(b) a commonhold community statement may specify 0 per cent. in relation to a unit.

(3) In subsection (1)(a) “ expenses of the association ” does not include building safety expenses of the association (within the meaning of section 38A).

Section 38A Building safety assessment

(1) A commonhold community statement for a higher-risk commonhold must make provision—

(a) requiring the directors of the commonhold association to make an annual estimate of the income required to be raised from unit-holders to meet the building safety expenses of the association,

(b) enabling the directors of the commonhold association to make estimates from time to time of income required to be raised from unit-holders in addition to the annual estimate,

(c) specifying the percentage of any estimate made under paragraph (a) or (b) which is to be allocated to each unit,

(d) requiring each unit-holder to make payments in respect of the percentage of any estimate which is allocated to their unit, and

(e) requiring the directors of the commonhold association to serve notices on unit-holders specifying payments required to be made by them and the date on which each payment is due.

(2) For the purpose of subsection (1)(c)—

(a) the percentages allocated by a commonhold community statement to the commonhold units must amount in aggregate to 100;

(b) a commonhold community statement may specify 0 per cent in relation to a unit.

(3) In this section—

“ building safety expenses of the association ” means the expenses incurred by the commonhold association or special measures manager for the higher-risk building in connection with taking measures that the association or manager is required or permitted to take under Part 4 of the Building Safety Act 2022, or regulations made under that Part of that Act;

“ special measures manager ” means a person appointed under paragraph 4 of Schedule 7 to the Building Safety Act 2022.

Section 39 Reserve fund

(1) Regulations under section 32 may, in particular, require a commonhold community statement to make provision—

(a) requiring the directors of the commonhold association to establish and maintain one or more funds to finance the repair and maintenance of common parts;

(b) requiring the directors of the commonhold association to establish and maintain one or more funds to finance the repair and maintenance of commonhold units.

(2) Where a commonhold community statement provides for the establishment and maintenance of a fund in accordance with subsection (1) it must also make provision—

(a) requiring or enabling the directors of the commonhold association to set a levy from time to time,

(b) specifying the percentage of any levy set under paragraph (a) which is to be allocated to each unit,

(c) requiring each unit-holder to make payments in respect of the percentage of any levy set under paragraph (a) which is allocated to his unit, and

(d) requiring the directors of the commonhold association to serve notices on unit-holders specifying payments required to be made by them and the date on which each payment is due.

(3) For the purpose of subsection (2)(b)—

(a) the percentages allocated by a commonhold community statement to the commonhold units must amount in aggregate to 100;

(b) a commonhold community statement may specify 0 per cent. in relation to a unit.

(4) The assets of a fund established and maintained by virtue of this section shall not be used for the purpose of enforcement of any debt except a judgment debt referable to a reserve fund activity.

(5) For the purpose of subsection (4)—

(a) “ reserve fund activity ” means an activity which in accordance with the commonhold community statement can or may be financed from a fund established and maintained by virtue of this section,

(b) assets are used for the purpose of enforcement of a debt if, in particular, they are taken in execution or are made the subject of a charging order under section 1 of the Charging Orders Act 1979 (c. 53), and

(c) the reference to a judgment debt includes a reference to any interest payable on a judgment debt.

Section 40 Rectification of documents

(1) A unit-holder may apply to the court for a declaration that—

(a) the articles of association of the relevant commonhold association do not comply with regulations under paragraph 2(1) of Schedule 3;

(b) the relevant commonhold community statement does not comply with a requirement imposed by or by virtue of this Part.

(2) On granting a declaration under this section the court may make any order which appears to it to be appropriate.

(3) An order under subsection (2) may, in particular—

(a) require a director or other specified officer of a commonhold association to take steps to alter or amend a document;

(b) require a director or other specified officer of a commonhold association to take specified steps;

(c) make an award of compensation (whether or not contingent upon the occurrence or non-occurrence of a specified event) to be paid by the commonhold association to a specified person;

(d) make provision for land to cease to be commonhold land.

(4) An application under subsection (1) must be made—

(a) within the period of three months beginning with the day on which the applicant became a unit-holder,

(b) within three months of the commencement of the alleged failure to comply, or

(c) with the permission of the court.

Section 41 Enlargement

(1) This section applies to an application under section 2 if the commonhold association for the purposes of the application already exercises functions in relation to commonhold land.

(2) In this section—

(a) the application is referred to as an “ application to add land ”, and

(b) the land to which the application relates is referred to as the “ added land ”.

(3) An application to add land may not be made unless it is approved by a resolution of the commonhold association.

(4) A resolution for the purposes of subsection (3) must be passed—

(a) before the application to add land is made, and

(b) unanimously.

(5) Section 2(2) shall not apply to an application to add land; but the application must be accompanied by—

(a) the documents specified in paragraph 6 of Schedule 1,

(b) an application under section 33 for the registration of an amended commonhold community statement which makes provision for the existing commonhold and the added land, and

(c) a certificate given by the directors of the commonhold association that the application to add land satisfies Schedule 2 and subsection (3).

(6) Where sections 7 and 9 have effect following an application to add land—

(a) the references to “ the commonhold land ” in sections 7(2)(a) and (3)(d) and 9(3)(f) shall be treated as references to the added land, and

(b) the references in sections 7(2)(b) and (3)(c) and 9(3)(e) to the rights and duties conferred and imposed by the commonhold community statement shall be treated as a reference to rights and duties only in so far as they affect the added land.

(7) In the case of an application to add land where the whole of the added land is to form part of the common parts of a commonhold—

(a) section 7 shall not apply,

(b) on registration the commonhold association shall be entitled to be registered (if it is not already) as the proprietor of the freehold estate in the added land,

(c) the Registrar shall make any registration required by paragraph (b) (without an application being made), and

(d) the rights and duties conferred and imposed by the commonhold community statement shall, in so far as they affect the added land, come into force on registration.

Section 42 Ombudsman

(1) Regulations may provide that a commonhold association shall be a member of an approved ombudsman scheme.

(2) An “ approved ombudsman scheme ” is a scheme which is approved by the Secretary of State and which—

(a) provides for the appointment of one or more persons as ombudsman,

(b) provides for a person to be appointed as ombudsman only if the Secretary of State approves the appointment in advance,

(c) enables a unit-holder to refer to the ombudsman a dispute between the unit-holder and a commonhold association which is a member of the scheme,

(d) enables a commonhold association which is a member of the scheme to refer to the ombudsman a dispute between the association and a unit-holder,

(e) requires the ombudsman to investigate and determine a dispute referred to him,

(f) requires a commonhold association which is a member of the scheme to cooperate with the ombudsman in investigating or determining a dispute, and

(g) requires a commonhold association which is a member of the scheme to comply with any decision of the ombudsman (including any decision requiring the payment of money).

(3) In addition to the matters specified in subsection (2) an approved ombudsman scheme—

(a) may contain other provision, and

(b) shall contain such provision, or provision of such a kind, as may be prescribed.

(4) If a commonhold association fails to comply with regulations under subsection (1) a unit-holder may apply to the High Court for an order requiring the directors of the commonhold association to ensure that the association complies with the regulations.

(5) A reference in this section to a unit-holder includes a reference to a tenant of a unit.

Section 43 Winding-up resolution

(1) A winding-up resolution in respect of a commonhold association shall be of no effect unless—

(a) the resolution is preceded by a declaration of solvency,

(b) the commonhold association passes a termination-statement resolution before it passes the winding-up resolution, and

(c) each resolution is passed with at least 80 per cent. of the members of the association voting in favour.

(2) In this Part—

“ declaration of solvency ” means a directors’ statutory declaration made in accordance with section 89 of the Insolvency Act 1986 (c. 45),

“ termination-statement resolution ” means a resolution approving the terms of a termination statement (within the meaning of section 47), and

“ winding-up resolution ” means a resolution for voluntary winding-up within the meaning of section 84 of that Act.

Section 44 100 per cent. agreement

(1) This section applies where a commonhold association—

(a) has passed a winding-up resolution and a termination-statement resolution with 100 per cent. of the members of the association voting in favour, and

(b) has appointed a liquidator under section 91 of the Insolvency Act 1986 (c. 45).

(2) The liquidator shall make a termination application within the period of six months beginning with the day on which the winding-up resolution is passed.

(3) If the liquidator fails to make a termination application within the period specified in subsection (2) a termination application may be made by—

(a) a unit-holder, or

(b) a person falling within a class prescribed for the purposes of this subsection.

Section 45 80 per cent. agreement

(1) This section applies where a commonhold association—

(a) has passed a winding-up resolution and a termination-statement resolution with at least 80 per cent. of the members of the association voting in favour, and

(b) has appointed a liquidator under section 91 of the Insolvency Act 1986.

(2) The liquidator shall within the prescribed period apply to the court for an order determining—

(a) the terms and conditions on which a termination application may be made, and

(b) the terms of the termination statement to accompany a termination application.

(3) The liquidator shall make a termination application within the period of three months starting with the date on which an order under subsection (2) is made.

(4) If the liquidator fails to make an application under subsection (2) or (3) within the period specified in that subsection an application of the same kind may be made by—

(a) a unit-holder, or

(b) a person falling within a class prescribed for the purposes of this subsection.

Section 46 Termination application

(1) A “ termination application ” is an application to the Registrar that all the land in relation to which a particular commonhold association exercises functions should cease to be commonhold land.

(2) A termination application must be accompanied by a termination statement.

(3) On receipt of a termination application the Registrar shall note it in the register.

Section 47 Termination statement

(1) A termination statement must specify—

(a) the commonhold association’s proposals for the transfer of the commonhold land following acquisition of the freehold estate in accordance with section 49(3), and

(b) how the assets of the commonhold association will be distributed.

(2) A commonhold community statement may make provision requiring any termination statement to make arrangements—

(a) of a specified kind, or

(b) determined in a specified manner,

about the rights of unit-holders in the event of all the land to which the statement relates ceasing to be commonhold land.

(3) A termination statement must comply with a provision made by the commonhold community statement in reliance on subsection (2).

(4) Subsection (3) may be disapplied by an order of the court—

(a) generally,

(b) in respect of specified matters, or

(c) for a specified purpose.

(5) An application for an order under subsection (4) may be made by any member of the commonhold association.

Section 48 The liquidator

(1) This section applies where a termination application has been made in respect of particular commonhold land.

(2) The liquidator shall notify the Registrar of his appointment.

(3) In the case of a termination application made under section 44 the liquidator shall either—

(a) notify the Registrar that the liquidator is content with the termination statement submitted with the termination application, or

(b) apply to the court under section 112 of the Insolvency Act 1986 (c. 45) to determine the terms of the termination statement.

(4) The liquidator shall send to the Registrar a copy of a determination made by virtue of subsection (3)(b).

(5) Subsection (4) is in addition to any requirement under section 112(3) of the Insolvency Act 1986.

(6) A duty imposed on the liquidator by this section is to be performed as soon as possible.

(7) In this section a reference to the liquidator is a reference—

(a) to the person who is appointed as liquidator under section 91 of the Insolvency Act 1986, or

(b) in the case of a members’ voluntary winding up which becomes a creditors’ voluntary winding up by virtue of sections 95 and 96 of that Act, to the person acting as liquidator in accordance with section 100 of that Act.

Section 49 Termination

(1) This section applies where a termination application is made under section 44 and—

(a) a liquidator notifies the Registrar under section 48(3)(a) that he is content with a termination statement, or

(b) a determination is made under section 112 of the Insolvency Act 1986 (c. 45) by virtue of section 48(3)(b).

(2) This section also applies where a termination application is made under section 45.

(3) The commonhold association shall by virtue of this subsection be entitled to be registered as the proprietor of the freehold estate in each commonhold unit.

(4) The Registrar shall take such action as appears to him to be appropriate for the purpose of giving effect to the termination statement.