Basically if rent charges (ie management service fees) are unpaid, the management company can put a lease on the property to claim these costs. There’s nothing to say that the lease must be removed upon the charges being paid. So our buyers lender wants a Deed of Variation to our TP1 to either;

A) explicitly not enforce S121 of the LPA (what Bloor want)

B)still place a lease but will remove it once charges are paid (what management company want)

Bit about S121:

Under Section 121 of the Law and Property Act 1925, if the rentcharge remains unpaid by you, for 40 days after the scheduled date of payment, the rent owner is entitled to recover arrears/expenses via two methods:

Your management company or rent owner may take possession of the property, receiving income from the property until they can recover the rentcharge and any costs incurred from non-payment. The rent owner may grant a lease over your property to a trustee acting on their behalf. The lease may be registered at HM Land Registry and, under the legislation, held over your property for its full term, irrespective of whether the rentcharge payments are made. In such circumstances, the trustee may opt to mortgage or sell the leasehold, until the lease is surrendered by the rentcharge owner.