Share of Freehold or just Share of Management Company?

7sefton

The flat I am buying comes with a share in the Property Management Company that looks after the building and grounds.

This Property Management Company also owns the Freehold of the land.

Does this automatically make the property a share of freehold (because I own a share in the company that owns the freehold), or just an ordinary leaseholder with the benefit of having a say in how the building is managed?

Thanks!

G_M

the property is not "a share of freehold" - it is you who will own two things:


* a lease for X years for the flat, plus

* a share in the company that owns the freehold

As a shareholder in the company, yes you will get a say in how it manages the building. You will also benefit from receiving (some of) the ground rent which each leaseholder probobly has to pay the freeholder.

In you capacity as leaseholder, you'll have to pay this.
In your capacity as shareholder, you receive a share of the income.

Richard_Webster

G_M has given a good explanation.

You ask

Does this automatically make the property a share of freehold

?

That suggests that you think that "share of freehold" is some special legal status. It isn't. It is a loose term for a situation where the individual lessees of flats also together directly or indirectly own the freehold. The extent to which an individual lessee has a say will vary in practice.

So where there are no more than four flats and each flat owner (call them A, B, C& D)is named on the freehold title each of them can effectively prevent a transfer of the freehold. So if D wants to sell, he has to get A,B,and C to join the transfer of the freehold to his buyer P. If one of the other three has disappeared (after repossession of his leasehold flat perhaps) or is obstinate, unless there is a deed of trust which regualtes what should happen na sale of a leasehold flat, the recalcitrant one cannot be compelled to do anything. Different if a company owns the freehold. Missing or difficult people can generally be ignored.

Just because a flat is "share of freehold" doesn't mean that everything is wonderful and it is always better than having an outside landlord freeholder. In the majority of cases it is better, but nobody should jump to concusions without asking questions.

Go and tallk to other flta owners anout their experiences. You may find ina smallblock the other flats all seem to be tenated and the tenants don't know the flat lessees so they will be difficult to get hold off if a decision has to be made about spending money on work to the building.

Fred in Flat 3 may run everything and the old ladies in flats 1& 2 think he is wonderful (or don't really understand when he tells them things.) You are buying flat 4 - you need to find out wheehter what Fred has been doing is sensible- is he avoiding doing anything about some major work that will doing soon?

If you find out that in say a 4 flat situation that the leasehold flats belong to A,B, C & X and the freehold belongs to A,B.C, & D then you have a problem - I would walk away and let the others sort out the mess. D probably had has flat repossessed but the lender could only repossess the leasehold and had no power over the freehold so they could only sell the leasehold. Now A,B, & C are powerless to transfer their "shares of freehold" without going through the tedious and relatively expensive enfranchisement procedure involving paying D's share of the value into court to await his claiming it - if he ever finds out he has a claim!

Is there a big management company that charges them lots for everything and has ridiculous admin fees? If the lessees own the company that owns the freehold then they can call an AGM and apppoint their own manager. Trouble is that it usually has to get pretty bad before enough flat owners are worked up enough to do anything.