Sale of Freehold Reversions
It is not the usual practice of the Treasury Solicitor to take possession of bona vacantia land. Further, the Treasury Solicitor does not manage or insure bona vacantia land. Accordingly, tenants should take independent advice regarding the insurance and management of the property.
Although not bound to do so, it is the usual practice of the Treasury Solicitor to offer to sell freehold reversions to all direct tenants jointly, or to management companies of which they are all members. The price (subject to contract) in the cases of freeholds subject to leases with terms of at least 60 years unexpired is the higher of ten times the total of the annual ground rents or £500. All other freehold reversions will be sold for their market prices.
Please note that the Treasury Solicitor will not enquire into or claim arrears of ground rents, service charges or other outgoings and such arrears will not be collected by or on behalf of the Treasury Solicitor on completion. This is, however, a purely personal concession given by the Treasury Solicitor on behalf of the Crown and does not affect the rights of any future owner of the freehold to demand payment of any outstanding arrears.
Before the Treasury Solicitor can consider a sale, it must be established that the land was owned by the company at the time when it was dissolved. In the case of property with a registered title, this can be proved by producing office copy entries of the title (obtainable from the relevant District Land Registry) showing the company as the registered proprietor. In the case of property with an unregistered title, it is necessary to trace the original title deeds, ending with a conveyance to the dissolved company.
Registered land. In most cases, the Treasury Solicitor will not hold the Land Certificate and it will be for the purchasing lessees to locate this document. The Land Registry can usually assist by advising when, and to whom, the Land Certificate was last issued. If the Land Certificate cannot be traced then, in some cases, the Treasury Solicitor has the power to provide a Certificate of Loss which should enable the purchasing lessees to obtain a new Land Certificate at their own expense after purchase. Further details of the circumstances in which a Certificate of Loss can be provided can be obtained from the Treasury Solicitor. Once the Land Registration Act 2002 comes into force on 13 October 2003 Land and Charge Certificates will no longer be necessary. Accordingly, the Treasury Solicitor will no longer provide Certificates of Loss.
In the case of unregistered land, the Treasury Solicitor will only agree to consider a sale if sufficient evidence is deduced to establish to her satisfaction that the property was vested in the company at the date of dissolution. This will normally mean production of the original title deeds.
In order to proceed with a purchase of a freehold subject to long leases which have at least 60 years unexpired please provide the following information.
- The number of flats in the building and which (if any) are currently vacant.
- Copies of all of the long leases and, if they have been registered at H M Land Registry, office copy entries in relation to all of the leasehold titles. If the leases are all in the same form a copy of only one is required.
- The full names and addresses of all the current lessees.
- Office copy entries in relation to the freehold title (if registered).
- The amount of the current rent payable (unless apparent from the copy documents already provided).
In order to proceed with a purchase of a freehold subject to long leases which have less than 60 years unexpired please provide the following information in addition to that requested in paragraph 11.
- Details of any under leases.
- Details of any arrears of rent and other outgoings.
- Details of any other breaches of covenant of which the tenants are aware. Please provide copies of any Schedules of Dilapidation of which any party to the lease is aware.
- Copies of any notices served by either the former landlord (the dissolved company) or the long lessees.
If a freehold is subject to a mortgage or other charge then it will have to be discharged prior to a sale. It is for the purchasing tenants to enquire of the mortgagee the amount, if any, remaining due under the charge and the basis on which the mortgagee is prepared to release the mortgage. In practice, it may prove difficult or impossible to remove a charge within the period that the Treasury Solicitor has to effect a sale. In such circumstances, it is likely that the Treasury Solicitor will disclaim the freehold.
The policy of the Treasury Solicitor is to sell to all tenants who wish to buy jointly. If one or more tenants do not wish to buy then the usual practice is to sell to those tenants who do wish to buy. Before doing so, the Treasury Solicitor’s usual practice will be to write to those tenants who have not previously indicated in writing their attitude to the proposed sale. The letter to those tenants will: (i) notify them that the freehold has vested in the Crown as bona vacantia and that the Treasury Solicitor is considering selling it to the tenants jointly; (ii) ask them whether they wish to join in a purchase; and (iii) indicate that if nothing is received from them within 21 days of the date of the letter then the Treasury Solicitor may proceed with a sale without further notice.
Although the Treasury Solicitor will consider objections to a proposed sale, no tenant has the right or power to veto a proposed sale.
If one or more tenants do wish to acquire the freehold interest and intend to set up a management company for this purpose, they must produce before completion evidence of the incorporation of the new company and evidence that all of the tenants who are acquiring the freehold are shareholders in it.
In view of the circumstances whereby title became vested in the Crown, the Treasury Solicitor will be unable to transfer the property with either full or limited title guarantee.
The Treasury Solicitor has a statutory power under section 656 of the Companies Act 1985 to disclaim the Crown’s title to property which has vested as bona vacantia. However, she only has a period of 12 months from the date on which the vesting of the property came to her notice in which to make an effective disclaimer. This period may in certain circumstances be reduced to 3 months: see section 656(3)(b). It is not the practice of the Treasury Solicitor to wait until the last minute before deciding whether or not to disclaim. Accordingly, if an offer is made to sell the property, completion of the sale should take place well before the expiry of the relevant disclaimer period.
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