Long leaseholders often have the misconception that if they buy a long lease, paying several hundreds of thousands of pounds (and in many cases much more), they cannot lose it. A recent case has said differently.
Recent Case Study
In the case of Gibbs v. Lakeside Developments Limited  EWCA civ 2074, Mrs Gibbs lost her interest in a long leasehold flat as a result of £1,500 worth of arrears.
Mrs Gibbs had a 999 year lease of a flat in Whitechapel, London but had lived in Hong Kong since 1990. The flat was generally unoccupied after that. Despite this she still had an obligation to pay ground rent, service charges, insurance premiums and other sums due under the lease.
Mrs Gibbs failed to make the payments due under her lease so her landlord issued proceedings against her. In her absence the landlord obtained a Default Judgment for £1,410.62 in relation to unpaid ground rent and insurance premiums. As a result of that Default Judgment, her landlord forfeited her long lease and took back possession of the flat.
In June 2011, the landlord put the flat on the market and Mrs Gibbs became aware soon after that her flat had been repossessed. In October 2011, Mrs Gibbs issued a claim asking for the Possession Order to be set aside and/or Relief from Forfeiture. In December 2011, the landlord granted a new long leasehold of the flat for a premium of around £125,000.
By the time Mrs Gibbs’ claim came to trial she was only claiming the proceeds of sale (less the sums she owed the landlord). Her claim was dismissed because the property had been sold pursuant to a Court Order. Mrs Gibbs then lost her appeal to the Court of Appeal.
The case is a timely reminder that a valuable asset can be easily lost if the long leaseholder does not comply with their obligations under the lease.
Should you have any questions then please feel free to contact Tracey Taylor (firstname.lastname@example.org) or call our Commercial Litigation team on 01582 731161.