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Disclaiming Property

Under Section 656 of the Companies Act 1985 (as amended by Section 178-182 of the Insolvency Act 1986) the Treasury Solicitor has the power to disclaim assets which are vested in the Crown. The Treasury Solicitor will as a matter of policy disclaim onerous property (such as commercial leases at a rack rent, and any land used in common, such as private roads, service yards, amenity land, or the common parts of an estate or flats, property subject to onerous covenants or other potential liabilities, property which is contaminated or has buildings, trees, or other items thereon which are in a dangerous state and condition, property subject to negative equity, or property where there are competing interests) and property which is of limited value (under £500), or where it would not be costs effective to attempt a sale. This is not an exhaustive list, but represents the most common situations where disclaimer is appropriate.

Before a Disclaimer can be effected, however, it must be established that the land was vested in the company at the time it was dissolved. In a case of land with a registered title, this can be proved by providing up-to-date Office Copy Entries, showing the dissolved company as the registered proprietor. In the case of land with an unregistered title, it will be necessary to trace all the original title deeds, culminating with the conveyance to the dissolved company (for freeholds) or the original lease, and all subsequent Deeds of Assignments and other assurances, culminating in an Assignment to the dissolved company (for leaseholds)

Once it has been established that the company has been dissolved, and that this is a matter with which the Treasury Solicitor can deal with, and that the land is vested in the Crown as bona vacantia, before a Disclaimer can be effected the usual practice is firstly to write to the former members and officers of the company, if the dissolution occurred less than one year before the Treasury Solicitor was notified of matter, to ascertain whether there is any likelihood of the company being restored to the Register. If the company is restored to the Register, then the land would automatically revest in the restored company. In that situation the Treasury Solicitor would have no further interest in the matter.

In the case of leaseholds, if the landlord has forfeited the lease (whether by physical re-entry or service of a writ) before the dissolution of a company, then there will be no lease to vest in the Crown as bona vacantia. The right to relief from forfeiture may however so vest. If the lease is forfeited after dissolution, then that part of the term which continued after dissolution but before forfeiture will vest in the Crown as bona vacantia together with the right to relief from forfeiture.

If the landlord re-entered the premises before the company was dissolved, this may be construed as a surrender of the lease by operation of law. If the company voluntarily gave up possession of the premises to the landlord, with the intention on the part of both the landlord and the tenant that the lease should be surrendered, that would be sufficient to operate as a surrender by implication. In that situation, then again, there would be no interest to vest in the Crown as bona vacantia.

If eventually the question of Disclaimer falls to be decided by the Treasury Solicitor, the following information and documents must be produced in the case of leaseholds:

  • A copy of the Counterpart Lease, and (if the title to the lease was registered) up-to-date Office Copy Entries of the Register. If the title is unregistered, and if the dissolved company was not the original lessee, copies of all relevant Licences to Assign, Assignments, and Notices of Assignment, necessary to establish that the lease was vested in the dissolved company at the time of its dissolution.
  • The full name, company number (if appropriate), and the current address or registered office of the landlord.
  • The amount of the current rent payable under the Lease, and (if appropriate) the date of the last rent review. Are there any arrears to date in respect of rent or service charge or other outgoings? If so, please provide full details. If the rent is paid up-to-date, who is paying the rent?
  • Apart from rent and outgoings, are there any other breaches of covenant alleged by the landlord? If so, please provide full details.
  • Has the property been kept in repair? If not, a copy of any outstanding Schedule of Dilapidations which has been served by the landlord, or which the landlord is considering serving, must be provided.
  • A copy of any sub-leases, licences, mortgages, or any other matters of title effecting the property of which you are aware.
  • Copies of any outstanding Notices served by the landlord under Section 146 of the Law of Property Act 1925, or any other formal notices which have been served.
  • The full name and address (if known) of any persons who are known to be in actual occupation of the property at the present time, and details of the current rents payable. To whom are these rents being paid at present?

In the case of freeholds;

  • Up-to-date Office Copy Entries in respect of the title, or if the title is unregistered, a copy of the conveyance of the freehold interest to the company, and
  • The full name and address (if known) of any persons who are known to be in actual occupation of the property

The Treasury Solicitor does not undertake management responsibilities in respect of bona vacantia properties, and does not insure such properties. Accordingly you should immediately take your own independent advice regarding the insurance and management of the property.

The Crown will not accept liability under any of the covenants on the part of the tenant contained in a lease vested in it as bona vacantia. If the Crown is requested to dispose of any interest vested in it, it will not do so unless the Treasury Solicitor is satisfied that the Crown is fully protected from any claims in respect of that liability by a suitable and satisfactory form of release from the landlord in the form set out in Clause 4 of our Deed of Release. Even in such a case, the Crown will not usually agree in the case of a commercial lease at a rack rent.

Please complete our company restoration form to enquire about restoring your company.