Freehold from Leasehold

Hi Ed,

I'll move your thread over to the house buying and selling board, where hopefully you will get some replies.

Pink

Ready for a long read: Here goes..... it is from a solicitor I talked to with regards purchasing the lease ....

1 The first step would be to obtain a formal valuation from a qualified valuer experienced in providing valuation advice under the Act of what they consider the price should be for the freehold and discuss what they consider the premium should be for the freehold acquisition because, you will need to have some idea of your likely financial commitment.



In order to prepare a notice to acquire the freehold, I will need copies of all leases including coloured plans and any Deeds of Variations for each participating lessee.



If the participants have the originals or copies, please ask them to supply the same (including coloured plan) with their application form. (Please note, if the originals are forwarded, once these have been coped, they will be returned to the individual participants). If they do not hold the originals we will need to apply to their solicitors, or if they have mortgages, to the relevant bank or building society for their deeds.



2[font=&quot] [/font]Once I have received the copy deeds/deeds, I will start to prepare the Initial Notice and send you a copy for your approval and once approved send the original for you to sign.



3[font=&quot] [/font]The Notice will basically set out details of the present tenancy etc of each Lessee and your requirement to purchase the Freehold.



4[font=&quot] [/font]To qualify to enfranchise the Building, half of all the flat owners must participate. At the time of serving the Notice, the writer will register a Notice against the freeholders registered title (to prevent the freeholder disposing of the property without the lessee’s knowledge). The fee to register the Notice at the Land Registry is £40.00. In respect of serving the Initial Notice, to counteract any problem in respect of serving of Notices, we will employ a process server to actually serve the addresses for service. The process server charges £50.00 plus VAT per address and £4.50 for providing a “Certificate of Service”.



5[font=&quot] [/font]After the Notice has been served on the freeholder, the freeholder will have just over two months to serve a Counter Notice. In the Counter-notice the freeholder can either reject your notice on the basis that it is legally invalid under the terms of the Legislation, or accept the notice but dispute the price, or accept the notice and the price. In my experience, what usually happens is that the freeholder accepts the Notice but rejects the price. At that point, clearly, the surveyors representing yourselves and the freeholder will begin negotiating the premium figure.



6[font=&quot] [/font]Please note, the Legislation provides that the freeholder can require a qualifying tenant who also complies with the ‘ownership’ conditions, to furnish evidence of his/her ownership, evidence of his title to the property. The evidence of title will be a copy of the lessees lease and up to date office copy entries of each lessees title and these will be applied for at a cost of £8.00 each if required.



7[font=&quot] [/font]If the surveyors cannot agree on the premium to be paid within two months of the date of the Counter-notice then an application at this stage can be made to the Leasehold Valuation Tribunal to determine the price. (Please note when the application is submitted there can be a four/five month delay in obtaining a hearing date.)



8[font=&quot] [/font]Please note that you and your co-lessees are liable for certain of the legal costs and surveyor’s costs incurred by the freeholder in dealing with the notice and you should bear this in mind when estimating what your total outlay may be. The freeholder is however responsible for his own professional costs in responding to your application to the Leasehold Valuation Tribunal. That being the case, it is usually the sensible view to make an early application to the Leasehold Valuation Tribunal after the two month period has elapsed. Please also note that if at any time your Initial Notice is deemed to have been withdrawn, as well as having to pay the freeholders solicitors and valuers costs to date, you will be unable to serve another Initial Notice for one year from the date of the deemed withdrawal.



9[font=&quot] [/font]My experience has been that an experienced valuer will normally advise that if they cannot achieve the premium they recommended would be accepted by the Tribunal, but believe they can achieve a figure slightly in excess of that, then they will advise you to go for the higher figure rather than incur the further fees involved in the Leasehold Valuation Tribunal hearing.



10[font=&quot] [/font]It is also a legal requirement of the 2002 Legislation in respect of collective enfranchisement that a private company (R.T.E Company = Right To Enfranchise) limited by guarantee is set up, with each participating tenant becoming a member.



The new legislation will commence in stages and currently the Regulations for the set up of the R.T.E. Company have not been issued. So until the latter is confirmed, we will organise for a standard “off the shelf” Company to be set up for serving the Initial Notice against current guidelines given at that time.



It will be necessary for you to provide me with three suggested names for the company, in order of preference (please note the word ‘association’ cannot be in the name). The Company will also need at least two directors and a secretary and therefore the writer will need the full names, addresses, date of births, occupations, nationality and confirmation whether the proposees are or have held any other directorships and if so what they are or were. (The current charges are approximately £220.00 plus vat to set up the Company.)



Please note when/if before completion of your freehold enfranchisement the Regulations are brought in, the Company formation may need to be amended and so there could be a further charge in this respect. The company will be called the Nominee Purchaser.



·[font=&quot] [/font]Please note if there are more than 4 names to be registered as owners of the freehold a company will need to be set up in any event. Please note, before the next phase becomes into force, if the participating qualifying tenants are in number less than 4, the Nominee Purchaser can be the tenants individual names.



·[font=&quot] [/font]I also advise you that when the second phase of the Legislation comes into force, it will also be necessary to serve a “Notice of Invitation to Participate” on any non-participating lessee prior to the serving of the Notice. The writer will keep you fully advised in respect of the changes in Legislation in this regard.



11[font=&quot] [/font]In terms of my charges, my hourly rate is £xxx per hour plus VAT. Assuming the matter reaches the Leasehold Valuation Tribunal stage, I think you should budget for 15 hours of my time up to that stage.



12[font=&quot] [/font]Once a price is agreed, be it between the surveyors direct, or by the Tribunal, then it is necessary for a Contract to be entered into with the freeholders within 2 months of Agreement being reached. At that time, a date for completion of the transaction will be fixed. There is a standard charge of £x plus VAT for dealing with the conveyancing aspects, including the approval of the Contract, preparation of transfer and requisitions and the registration of the transfer at Land Registry. Please note that the Freeholder can demand a deposit on Exchange of Contracts in the sum of £500 or 10% of the premium agreed.



13[font=&quot] [/font]If the freeholder refuses to enter into a contract, or a counter-notice is not received then applications would have to be made to the court. You will appreciate that if this action became necessary, then further costs would also be involved as a consequence of the court proceedings and your file would be passed to our litigation partner,(name witheld) who also works on an hourly rate of £xxx plus VAT.



14[font=&quot] [/font]There will also be disbursements to be paid. Land registry fees will be incurred: £8.00 per copy of lease/Deed of Variation per flat (if needed), £40.00 for registering your company as the owner of the freehold, £8.00 for obtaining office copy entries of any intermediate leasehold title and £16.00 for obtaining office copy entries of the freeholder’s and lessees’ titles when we are first instructed and subsequently just prior to serving the initial notice to ensure that there has been no transfer of the freehold interest. It will also be necessary to apply for office copy entries per flat (participating or not) at £8.00 per application. In addition, if appropriate, a fee of £9.40 is incurred for undertaking a search at Companies House to confirm the up-to-date identity of the registered office of the freehold company (if applicable) and to ensure the freehold company is not in liquidation. Please forward a copy of your last ground rent receipt.



15[font=&quot] [/font]It is by no means unusual for the total process to take up to 18 months, where the price to be paid has to be determined by the Tribunal.



Our experience in these matters has indicated that often one or more lessees may wish to dispose of their property during these proceedings. You should appreciate that the proceedings will have an impact on the sale of any flat and also the sale of a flat will have an impact on the proceedings. It is, therefore, of great importance that I am advised at the first possible opportunity of any lessee’s intention to sell, as I may then be in a better position to overcome any problems that may arise, as a consequence of such sale. Please note if this information is not forthcoming it can result in the Initial Notice being withdrawn which would mean payment of the freeholder’s legal and valuation costs thus far and the lessees would not be able to collectively enfranchise for a further year from the date of the withdrawal.



16[font=&quot] [/font]It is usual for the Lessees to duly pay for the reasonable fees in respect of the Freeholder's valuers and solicitors. This amount is usually paid with the premium to be paid for the Freehold at the end of the transaction. I reiterate that if the Initial Notice is withdrawn then it will be necessary to still pay the reasonable costs that the Freeholder's solicitors and valuers have incurred.



17[font=&quot] [/font]We do suggest that each participating qualifying tenant enter into a Participation Agreement with the Nominee Purchaser. The Agreement will confirm that the tenant will sign the Initial Notice and pay monies regarding the premium and costs and other relevant points. The draft Participation Agreement will be sent when the Notice is being prepared.



18[font=&quot] [/font]Please also confirm in writing, to your knowledge, whether any of the lessees are in arrears of service charge, ground rent and/or insurance premium and whether there has been or is currently a dispute with the Freeholder in this respect.

Ed_Stirling wrote:

Wow Meteen - "Processs (and costs) for buying a freehold" - that's brilliant!

For info - my place is a house not a flat

oh well .....

hope that there was some info tha toyu can glean from the msg.

i can provide you with a lawyers number that may be able to help - he was the one that gave me the above info ..... PM if you want it.