Shared Freehold. Wanting to sell but being 'blackmailed'.

Richard_Webster

The basic problem with a shared freehold which so many people don't realise when they buy is that you are beholden to someone else.

OP's friend may be able to do something about it but it will be expensive and take time - involving persuading the court that the freehold is held on an implied trust for the lessees for the time being of the flats and that the trust includes a liability to transfer the "share" to a new lessee. If the court was prepared to order that the transfer of the share of freehold should happen then the other lessee's issues about multiple occupation etc would be irrelevant.

(In fact in the real world if they did move people in to multiply occupy it would still be expensive to do anything about it and potential buyers would then really be put off.)

Think thousands of pounds and no certainty of success.

Shared freeholds are thought of as wonderful with no downsides. You've just spotted one of the downsides.

propertyman

Richard is it perhaps a licence to assign issue not simply a transfer of joint ownership?

Richard_Webster

Richard is it perhaps a licence to assign issue not simply a transfer of joint ownership?

It could be that as well, but most flat leases don't require a licence to assign so I was guessing it was the transfer of the freehold that was the issue - that's what I have heard of happening lots of times. The co-freeholder (or one of them) has some issue with the person selling the flat and uses it as a threat - I'll only sign over the freehold to your buyer if you agree X.

If a licence to assign is required then they could threaten to withhold that as well. Of course a licence to assign cannot be unreasonably withheld, but by the time they have had the argument over that, the buyer has walked, so in practice, unless the seller is prepared to litigate a freeholder can unreasonably wthhold a licence to assign. Even if they did litigate, a lot of potential buyers knowing that had happened wouldn't want to be in a building with an unreasonable freeholder so would walk anyway.

propertyman

Richard_Webster wrote: »

It could be that as well, but most flat leases don't require a licence to assign so I was guessing it was the transfer of the freehold that was the issue - that's what I have heard of happening lots of times. The co-freeholder (or one of them) has some issue with the person selling the flat and uses it as a threat - I'll only sign over the freehold to your buyer if you agree X.

A licence is less common I agree but the older mansion block flats which we deal with are littered with them ( he smiles rolling around in cash from the fees ) and certain infamous landlord/agents ensure that they are put into newer leases in order to generate them income.

Can I add that Richards explanation underlines the importance of anyone entering into a purchase of or acquiring the freehold, that either the companies articles or if it is on a joint basis in your names, that some form of agreement is in place, so that either adequately deal with these issues of sales and disputes with a clear procedure and criteria and arbitration clauses, to avoid the need to litigate..