Under the old procedure, if a registerable lease (or underlease) was being granted out of a title that was subject to a registered charge, then the LR would always ask for evidence of the consent of the chargee. This was whether or not the chargee had also registered a restriction. In practice, chargees would often give a ‘global consent’ to leases that met certain criteria, but the LR would still require a specific consent for each lease. Now, however, the new practice means that the LR will agree to register a lease (or underlease) with title absolute, even if the interest out of which it is granted is charged (and even if there is no evidence of the chargee’s consent – unless, of course, the chargee also registered a restriction). Normally, a standard entry will be entered on the register of the lease (or underlease) saying that it is ‘subject to any right that may have arisen by reason of the absence of the chargee’s consent’. However, that entry will not be made if: (i) the chargee actually consented; or (ii) the grant of the lease was within s99 LPA 1925 (ie a lease for up to 50 years with the best rent and without a premium); or (iii) the grant of the lease was expressly authorised by the chargee (eg a global consent).

An excellent note from Allen & Overy summarises the practical consequences of these changes:

• make sure that global consents are set out in the charge or other documents incorporated in the charge;
• where the charge (or a document incorporated in the charge – such as a loan agreement or facility letter) does give global consent, then the borrower/owner should send a copy of it to the LR and state which clause gives him power to grant the lease. It is helpful to confirm in a covering letter that the lease falls within the global consent and thus the chargee’s express consent is not required;
• if the document giving global consent is not already at the LR (eg the loan agreement or facility letter), the lender or the borrower may want to keep its terms confidential. If so, consider making an application for the relevant parts to be exempted (under the Exempt Information Document provisions).

Source: Allen & Overy. © Practical Lawyer