Buying freehold from a limited company

Petermaxwell

I want to purchase a flat in a building under leasehold that consists of only 3 apartments in total. Besides, the seller is willing to sell the freehold of the entire property to me and I am interested in this sales. The freehold belongs to a limited company and the seller is the sole director of the company, which he owns all shares inside that company.

In order to purchase the freehold, I will have to buy that limited company (Seller ‘s solicitor says this is called company acquisition). After the transection, I will be the sole director of the limited company and therefore have the freehold (Note it is the entire freehold, not share of freehold)

Just wondering if this kind of transection is common and if there is anything that I should be aware of. Although I have assigned a solicitor to work on the case, I would still love to get some insights from you lots. Thanks.

P.S I asked the seller if he can sell the freehold directly to me under my name, instead of selling me the company, but the seller said it is relatively complicated as the freehold is already ’attached’ to the company and it is hard to change.

davidmcn

The risk of buying a company, rather than just the property it owns, is that you also acquire any liabilities which the company has. Probably not an issue if all it has ever done is own the freehold, but you'd generally want indemnities from the seller. Your solicitor should guide you through it. 

AdrianC

Once you own the company that owns the freehold, you can then transfer the freehold from the company to you, and dissolve the company, should you so wish.

The only real differences are that it's easier to sell shares to the other leaseholders, but you need to do annual companies house returns.

eddddy

AdrianC said:

Once you own the company that owns the freehold, you can then transfer the freehold from the company to you, and dissolve the company, should you so wish.

You need to be careful - that might trigger a 'Right of First Refusal' for the leaseholders.

TBH, it sounds like an anomaly that selling a freehold usually triggers a 'Right of First Refusal', but if a company owns the freehold, selling the company doesn't trigger it.  (I guess you should double check that with your solicitor.)