Right to Manage and Later the Freehold!
I had already attended a number of meetings held by various leasehold organisations and the one that was the turning point for Wellington Mansions was held by the Campaign for the Abolition of Leasehold (CARL) in 2006. I had alredy been on their panel a couple of times but this time I was an audience member. I took my partner to this one and we were both impressed by the talk about buildings insurance given by guest speaker Roger Southam of managing agent Chainbow. At the end of his talk he asked the audience if they had any questions and jokingly my partner asked ‘will you come and manage our block please? He invited us to come and chat to him at the informal drinks that were held after the meeting and to our complete surprise he agreed to take us on!
To be honest it was one hell of an anti-climax after all the effort that had been put in to that point to get any help and we wished we had met him years earlier!
Everything started to happen all at once because shortly after that we finally met the criteria for the Right to Manage which Roger Southam guided us through, starting with forming the company (where my partner agreed to become one of the company Directors).
It was also agreed that as I had by far the most experience with regard to leasehold matters that I should be the link between the company and the managing agents. In order to start the management of the building we had to set up a service charge budget from scratch and one of the first things carried out was the commissioning of a Building Condition Report. It had been several years since the HHSRS survey had been carried out by the council and it was obvious that the deterioration to the building would have worsened.
Whilst the positive elements of RTM are promoted, and it certainly moved us forward, what seems to be overlooked is the particular importance of s100 (enforcement of tenant covenants) and s101 (tenant covenants: monitoring and reporting) of the Commonhold and Leasehold Reform Act 2002.
These two sections need the RTM Company to ensure no breaches of the lease are being committed and to report to the freeholder any that occur. Whilst the company gets enforcement powers to sue for debts, seek injunctions for breaches such as repairs or nuisance and gets the right of entry into a property for the compliance of covenants, it becomes decidedly complicated when a) there is no freeholder and b) flats are sublet in breach of the subletting covenant. There are also the legal issues surrounding the accessing of rented flats.
WE GET THE FREEHOLD!
It was suggested to us by Roger Southam that we might like to get the freehold, in this case through compulsory acquisition.
This is a process used where the freeholder is in consistent breach of its management obligations over time. It comes under s33 of the Landlord and Tenant Act 1987 (acquisition order where landlord cannot be found).
I was determined to make one last attempt to confirm our suspicions of the death of the former freeholder as we had not receive official notification. It only came up in a conversation I’d had with the former buildings insurer a few years before. Whilst I had tracked him down to being in prison then 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.
So I approached the council for some help. The only people left to us that we could realistically approach were the family solicitor. We were hoping that if they failed to respond we could a) apply to the LVT (now the FTT) to enforce our request to buy the freehold and b) if we got a response and the offer was rejected we would at the very least actually discover who a new freeholder might be. Checking the Land Registry showed that the freehold was showing as still being owned by our (assumed deceased) freeholder.
We also had the legal right under s3 of the Landlord and Tenant Act 1985 (duty to inform tenant of assignment of landlord’s interest) and based on that right we expected that someone would have sent us a notice advising us of any change of freeholder.
The council responded by issuing a Notice to the solicitor under s16 of the Local Government (Miscellaneous Provisions) Act 1976, a legal notice intended to get particulars of persons interested in land when the local authority considers it ought to have information connected with any land. The notice can be served on a) 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.
The law required the notice recipient to comply with the request and failure to do so constituted an offence.
Unfortunately, the reply from the solicitor stated that ‘the s16 notice did not apply to him’ as he did not fall within any of those categories, which wasn’t an unsurprising response but I contacting the Law Society to ask for further advice. They advised that the solicitor 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).
I passed this information back to the council but there was no further help they could offer based on this information.
Nevertheless if we wanted to pursue compulsory acquisition of the freehold we still had to prove that we had made every legally recognised 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 asked 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 find 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 now £10 waiting for our ‘absent’ freeholder should he return from the dead!
Whilst all this was going on, we also had a frightening number of rental probems, the first of which can be read here.