Rentcharges are interests in land held by a person who is entitled to enforce the interest if the payment of a periodic sum remains unpaid. The rent is the annual or periodic sum payable under a rentcharge and the rent owner is the person who has the benefit of the rentcharge and is entitled to receive the rent. The rent payer owns the charged freehold land which is subject to the rent charge.
The rentcharge binds the original owner and his successors in title due to the charge held over the land. There are various methods of enforcement of rentcharges if payment is not made.
Most rentcharges are usually in existence forever but they can be for a fixed term of years.
As many rentcharges were created a long time ago, the payment due can often be very small as there is no mechanism in the document creating the rentcharge for increasing this. Therefore, homeowners may overlook these payments and the implications of not making the required payments.
Enforcement can be in the form of an express right of re-entry in the deed which created the rentcharge and is exercisable following non-payment of rentcharge. Another form of enforcement is where the rentcharge owner creates a lease over the land. There is no requirement for the owner of the land with the burden of the rentcharge to be informed of the creation of the lease; therefore this may only come to light when the owner wishes to sell. This will incur a fee by the seller to discharge the lease and will add costs to the sale if the rentcharge owner is agreeable to discharge of the lease.
Legislation passed in 1977 means that no new rentcharges, with very few exceptions, can be created after 22nd August 1977 and subject to a few exceptions, existing rentcharges have a finite life. However, owners of properties burdened with rentcharges can be released from them by a number of procedures including a deed of release of rentcharge which should be registered at the Land Registry, and a procedures to redeem and apportion the rentcharge.
An owner who sells a property burdened with a rentcharge passes that burden on to the new purchasers who must abide by the promise made in the original deed to pay. The owner of a rentcharge can sell, transfer or assign the rentcharge without consent of the homeowner.