Share of freehold

pred02

Hi,

We recently got an offer on our 2 bed maisonette. Me and the downstairs neighbour bought a share of freehold in 2016 and extended out leases to 999 years We setup a LLC to own there freehold but no managing agent.

The leases of the two flats are quite straightforward, upstairs maisonette is responsible tor everything above ground floor inc. roof and downstairs for everything on lower ground including DPC.

The joint responsibilities include arranging for block of flats insurance and arranging for accounting firm to file accounts to companies house. Every couple of years maybe a fence needs to be replaced, we agree and split costs.

Last year there was a leak from upstairs, I arranged for plumber and paid for it and we (as freeholders) split payment for the ceiling to be painted. (Was like £150 so cheaper than claim on building insurance).

I have been mostly dealing with above as other owner is living abroad, but we haven’t had any issues.

Now that I am selling the flat, want to understand how much detail to disclose as I know solicitors pole around the more info given. Besides the LLC and leases which govern two flats we haven’t formalised anything.

I have a track record for everything - accounts, receipts and even communications agreeing with the other freeholder. Happy to be fully transparent, but with solicitors the more info you give the more they poke around.

Other freeholder is aware I am selling, and ofc the managing going forward would need to be agreed.

Thanks

DullGreyGuy

You just need to answer the questions honestly and accurately, ideally you need to consider yourself as a leaseholder and as the shareholder of the freeholder separately. For example you state:

pred02 said:

 I arranged for plumber and paid for it and we (as freeholders) split payment for the ceiling to be painted.

You are not a freeholder, you are a shareholder in the freeholder so if the freeholder paid for the repairs where did that money come from? Is there a directors loan to the company? Did it have working capital from somewhere it used? 

In the normal run of things then you as leaseholders would have paid the freeholder the cost of the repairs to the freeholder (the LTD)

eddddy

I think you might be overthinking this.

The buyer's solicitor will want to see an LPE1 form from the freeholder - take a look at this example:
https://www.lease-advice.org/files/2022/01/LPE1-form.pdf


Personally, I think it might be helpful to have a chat with the buyer (either directly or via the estate agent), before sending the LPE1.  Explain that as there's only 2 flats, you manage things informally between you, and it works really well.

(Then if the buyer's solicitor reports issues to the buyer about the accounts, record keeping etc, the buyer might be less concerned.)

pred02 said:

Last year there was a leak from upstairs, I arranged for plumber and paid for it and we (as freeholders) split payment for the ceiling to be painted. (Was like £150 so cheaper than claim on building insurance).

FWIW, it's extremely unlikely that it was the freeholder's responsibility to repaint the ceiling (unless the freehold company's negligence had caused the leak).

So a better description might be...

"We are nice friendly neighbours who get on well with each other. For example, when the downstairs neighbour had to repaint their ceiling following a leak, the upstairs neighbour chipped in with half the cost - as a gesture of goodwill."

(So, for example, the invoice for painting the ceiling shouldn't really appear in the Freehold company's accounts. Only work that the freeholder was responsible for should appear in those accounts.)

But TBH, I wouldn't bother mentioning friendly neighbourly gestures like that to the buyer's solicitor. 

pred02

Thanks all. I spoke with agent and she will explain to buyers.