At the Court of Appeal the court has dismissed and appeal relating to wrongly served section 125 Notices in relation to a ‘right to buy’ transaction (Nessa -v- London Borough of Tower Hamlets). Section 125 provides that once the right of the secure tenant to exercise the provisions for purchase the Landlord must then serve a notice within a period after such proof stating amongst other things the purchase price at which the landlord is willing to sell. The facts state that four such notices were served on the tenant split into two parts (one and three, two and four). The Local authority attempted to rely on the correct notices two and four whereas the tenants were relying on notices one and three. The difference in price was approximately £50,000.00.
At the court of first instance, the court held that
(1) the authority had no power to amend the original and incorrect notices; but
(2) could not sell at that market value as this would amount to ultra vires act (it seems ludicrous that a local authority could rely on its own negligence to run an unltra vires defence)
This court held that the tenant could not proceed on notices one and three and that three and four applied.
Each party appealed the decision. the tenant arguing that (2) was wrong and the Local Authority arguing that (1) was wrong.
The Court of appeal held that it could imply into the section 125 notice a power to amend or correct given the detailed information that was to be included.
It is of concern to property practitioners that they cannot rely on notices served in these matters. Reliance on the notice must always be to the detriment of the tenant as they will make an application for a mortgage in mosts cases where the purchase price must be stated accurately.
The potential for a further notice to be served within the timeframe to completion puts the tenant and the tenant’s conveyancer at a disadvantage as they must always look out for a new notice.
If there is one thing that the local authority should get right above all others in the notice is the purchase price. Why should the local authority be able to remedy its error when any practitioner will agree that the various notice regimes are a potential minefield of negligence. One has to ask what makes local authorities different?