Compulsory Acquisition of the Freehold
The route of compulsory acquisition can be used where the freeholder is in consistent breach of its management obligations over a period of time. It comes under s33 of the Landlord and Tenant Act 1987 and it’s criteria is that:
- There are two or more flats;
- Leaseholders who own more than two flats in the development are not included,
- Two thirds of the flats are owned by qualifying tenants;
- The required majority of the qualifying tenants make the application.
The right does not apply if:
- Less than half the flats in the block are let on long leases (which are not business leases);
- There is a resident landlor
However before we took this route and as my local authority had been involved with our block on a number of different issues, I asked what they could do as the only people we could realistically approach were the family solicitors. We were hoping that if they failed to respond we could apply to the LVT (now the FTT) to enforce our request to purchase. If we did get a response and the offer was rejected we would at the very least actually discover who our freeholder was because the Land Registry showed it as still being owned by our (assumed deceased) freeholder.They responded by issuing a Notice to the family solicitor under s16 of the Local Government (Miscellaneous Provisions) Act 1976 which was a legal notice intended to obtain particulars of persons interested in land. The law required the notice recipient to comply with the request and failure to do so constituted an offence.
Unfortunately, whilst the family solicitor replied he stated that ‘the s16 notice did not apply to him’. What this meant was that when the local authority considers that it ought to have information connected with any land, it can a) serve notice on the the occupier of the land, b) any person who has an interest in the land either as freeholder, mortgagee or lessee or who directly or indirectly receives rent for the land, and c) any person who, in pursuance of an agreement between himself and a person interested in the land, is authorised to manage the land or to arrange for the letting of it. He said he did not fall within any of those categories.
The response was unsurprising but it did not however detract from the fact that we DID have the legal right under s3 of the Landlord and Tenant Act 1985 (duty to inform tenant of assignment of landlord’s interest) to expect that someone would have sent us a notice advising us of any change of freeholder.
As a result I rang the Law Society to ask for advice regarding the solicitors response to the notice and was advised that he was under no obligation to provide the information to any third party (us) unless instructed to do so by his own clients (i.e. family members of the freeholder).
I passed this information back to the council but reminded them that we did not receive official notification of our freeholder’s death. It only came up in a conversation I’d had with the former buildings insurer a few years previously. Whilst I had tracked him down to an address in Pakistan I still could not get concrete proof of whether he was alive or dead. Nor did I find out why there was such secrecy surrounding the issue. Nevertheless if we wanted to pursue compulsory acquisition of the freehold we still had to prove that we had made every attempt to find him. This meant:
- A notice of claim being served on the freeholder’s last known address or the same notice served in the London Gazette or a local paper;
- A request sent to the court to dispense with the serving of a notice;
- The Land Registry searched to make sure that the freeholder no longer owns his last known address, has moved to an unknown address or the services of an Enquiry Agent has been engaged;
- Witness statements provided confirming that a visit to the Freeholder’s last known address yielded no forwarding address, or;
- An absent freeholder title indemnity policy that a recent purchaser of a flat may have taken as a condition of securing the mortgage.
- Witness statements confirming that a visit to the freeholder’s last known address did not provided a forwarding address.
As we could not serve a preliminary notice ahead of applying to the court our managing agent made a request for that part of the requirements be dispensed with. An application was then made for a Vesting Order under the Leasehold Reform, Housing & Urban Development Act 1993 to the County Court, on a CPR Part 8 application form which required us to satisfy the court that all reasonable steps to locate the freeholder had failed as per the above.
Our case was proved and the Court issued a judgment setting out that a) we could acquire the freehold with funds to be ‘vested’ in the Court and b) deferring the case to the FTT for determination of a ‘reasonable’ premium.
There is currently £10 waiting for our ‘absent’ freeholder should he return from the dead!