Please advice. Absentee landlord/freeholder!

foxie2011

I seem to run into places that always, ALWAYS have something 'nice' in store, when you dig deep enough...

I would really appreciate an opinion from a conveyancing solicitor or similar who knows reliably about these things.

There is this flat for sale which is part of a house divided into 3 flats. The owner has lived there since mid-90s and the landlord has always been absent during this time. In 1998 the three leaseholders set up a management company to manage the building and they have kept meticulous records at least since then showing that it has been impossible to contact the landlord. There is no ground rent and no service charge and each pays (only) for the repairs that concerns them directly. (I'm not sure if this is good or bad...)

The vendor has been advised by their solicitor that the freehold could be transferred to the three flat-owners names very easily and this process would cost just £800. Is this correct?

Now; I don't understand this subject well enough so please explain what would I be stepping into by getting involved, should I run a mile or is this a good opportunity?

And what if the freehold issue doesn't get solved (one of the flat-owners would resist etc) and it remains a leasehold and the lease gets shorter and shorter; with an absentee landlord it's impossible to renew?

mart.vader

You should get advice from Leaseadvice dot org.

Richard_Webster

I do find the figure of £800 difficult to believe because you would have go through the collective enfranchisement procedure at the LVT which involves presenting evidence as to the value of the freehold and then when eventually an order is made, paying the amount - which could be several thousand pounds, into court in case the freeholder ever showed up and claimed the money.

Also even before you start as you have to serve the freeholder with the notice of application, whihc you can't do so you ahev to make aa separate application to court to dispense with serving the notice.

A possibility is that the freeholder company could claim adverse possession against the absentee freeholder and the work involved with that might be £800 or so. If it had been collecting ground rent then it would have a reasonable case. However OP says that service charges aren't collected, so I'm not sure what basis of adverse possession there would be. generally when a property is leased you can't be in physical possession but you can collect rents from the lessees, so payment of rent to the company would be evidence that the lessees accepted that the company was the freeholder so as to dispossess the paper freeholder. If no rent has been paid I'm not sure what the case is here.

I would be interested to hear how the solicitors were proposing to deal with it.

foxie2011

Thanks for replying. I will keep adding to this thread as and when I get more information. The estate agent dismisses my worries and says that since 1996 two out of the three flats in the building have been sold twice and none of these buyers have been worried about absentee landlords...

Maybe I do worry unnecessarily. But I just don't want to make a bad investment

Richard_Webster

Whilst the existence of the management company might be called a "comfort factor" for a potential buyer it has no legal standing and any of the three lessees could refuse to do what the company wants so it relies on the lessees behaving sensibly and reasonably.

Such flats do change hands with indemnity policies provided but not all lenders will accept them and they can change their policies on these matters. If one lessee decided not to carry out repairs to his part of the building and you couldn't make him do so then the other flats might be difficult to sell simply because of the condition of the building.

Once that happened indemnity insurance would be almost impossible to obtain. Those selling at a greatly reduced price as a result would be able to claim on their policies (if they had them and they covered this contingency). Anyone without the right indemnity policies would be stuck and would have to take the hit without the possibility of any recompense.

foxie2011

Thanks RW. The estate agent's view seems to be that since there is this management company in place all is well.

Yeah, I feel that when you have to rely on other people's sensibility, reasonability, reliability and good will and there is nothing else to force them to do what they are supposed to, then you stand on thin ice and I feel wary.

We shall see.