A split reversion occurs where the reversionary title to a substation lease has been sold off to different parties or where a property owner is selling off part of its property and the part being sold off and the part being retained are subject to a substation lease. In both of these situations, there will be 2 landlords to the substation lease.
The wisest course of action is to avoid split reversions but sometimes an investor buys into it i.e. buys a property which is subject to a substation lease with the adjoining property or a property owner sells off part of its title and it is not practical to approach the substation tenant to effect a surrender and re-grant of a substation lease out of the title in which it lies.
Reversion is split but lease cannot be split
The difficulty is that the substation lease is itself not severed or split. If there is a rent payable under the substation lease then the transferor and the transferee of the split reversionary titles ought to enter into a deed of apportionment to set out how they want to apportion the rent between themselves. Such deed of apportionment will not however bind the tenant unless it has consented (the consent could be documented in the deed of apportionment with the tenant as a party).
Thinking about splitting landlord liability in a deed of apportionment
Even if there is no rent (substation leases often do not have a rent), the transferor and the transferee should consider how they will split their liability as landlord between themselves. If the lease was granted before 1 January 1996 i.e. is an "old" lease under the Landlord and Tenant (Covenants) Act 1995, then the original landlord remains liable for the landlord covenants in the substation lease notwithstanding that it will no longer own part of the reversionary title. If the lease was granted after 1 January 1996, it is a "new" lease, and the 2 landlords will be jointly and severally liable and they can apportion their liability such that as between themselves landlord 1 will not be liable for landlord 2's covenants (and vice versa) as relate to the title which it does not own. Again, it would be appropriate for the 2 landlords to document the apportionment of their liability in a deed of apportionment but this will not bind the tenant unless it has consented. Even without a rent under a substation lease, the terms of a substation lease will have to be considered in detail and decisions made as to how to deal with landlord's consent requirements, a landlord's repairing covenant, a landlord's covenant to provide services in the deed of apportionment - in fact each term of the landlord-tenant relationship.
The risk of unilateral forfeiture by 1 landlord
It is also important to note that each landlord can forfeit the tenancy insofar as it relates to the demise within its title without involving the other landlord which raises the possibility of 1 joint landlord jeopardising the interest of the other.
Takeaway (and it's not the banana split)
There are too many implications to splitting a reversionary title for me to cover here but the key is to look out for split reversions and if the reversion is being split by means of a sale of part then you should set up a deed of apportionment. You should do so even if there is no rent under the lease and even though the deed of apportionment will only apportion the landlord liabilities as between the joint landlords (unless the tenant agrees to be bound). The drafting of a deed of apportionment requires detailed consideration of the terms of the lease and how the joint landlords wish to deal with these once the reversionary title is no longer in the same ownership.
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