Some blocks of flats may have what is termed an ‘absent freeholder’. In such cases the word ‘absent’ means that every attempt has been made to trace them but they have not been found. Freeholders can disappear for any number of reasons and what all this means is in reality is that they cannot carry out their own covenants within the lease, i.e. maintaining and repairing the common areas, placing buildings insurance and collecting ground rent.
It also used to mean that certain leaseholder rights could not be used but legislation has produced mechanisms which allowed a building having no freeholder to be overcome.
Taking our block as an example, when we wanted to acquire the freehold by compulsory acquisition we had to prove that we had made every legally recognised attempt to find our freeholder (once he had been released from prison).
- A notice of claim being served on his 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 he 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.
An application was then made for a Vesting Order under s26(1) of the Leasehold Reform, Housing & Urban Development Act 1993 (applications where relevant landlord can’t be found) to the County Court, on a CPR Part 8 application form.
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 which they decided was £10!
The same legislation has also made provisions by allowing leaseholders who want to collectively enfranchise to make a formal application, again on a CPR Part 8 application form to the Court for a Vesting Order under s26(1) of the Leasehold Reform, Housing & Urban Development Act 1993.
This will allow for the transfer of the freehold title when the freehold value has been determined by the First Tier Tribunal and the payment received by the Court. The Court will then designate someone to sign a transfer of the title in place of the missing freeholder. The land registry will then register the transfer of the freehold title to enable leaseholders to start managing the building.
If there is a head landlord present but the freeholder is missing, the court can order that the head landlord take on the role of Reversioner and deal with the claim in the usual way.