CA33030 - IBA: Relevant interest: Merger of leasehold interest

CAA01/S289

An interest that is the relevant interest stays the relevant interest if a subordinate interest is granted out of it or by the person entitled to it acquiring the interest that is reversionary on it. Where that happens the interest into which the leasehold interest is merged becomes the relevant interest.

Example Cole owns the freehold of a factory, which he leases to Clayton. Clayton then subleases the factory to Knowles who builds an extension. The relevant interest for the factory extension is Knowles's sublease of the factory from Clayton. If Knowles:

• surrenders his sublease to Clayton, Clayton's lease becomes the relevant interest for the factory extension; or
• acquires the lease of the factory from Clayton, that lease becomes the relevant interest for the factory extension.