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What happens when you own a long lease of a flat but the landlord is “missing”? How are you able to extend your lease, or buy the freehold collectively with others?
The first key fact to establish is whether the Landlord is truly “missing” within the meaning of the legislation. Landlords may be uncontactable for a number of reasons; they may have completely forgotten that they own the freehold of the block; they may have decided that they do not want to have the bother of demanding ground rent and managing the block on a daily basis and so have just left the leaseholders to ‘get on with it’; they may have died or been declared insolvent. If the Landlord is a limited company then it may have been wound up or struck off the register by Companies House. All of these reasons may explain why a leaseholder has not heard from their landlord for a number of years.
In some of the examples above, the Landlord is not regarded as truly being “missing” for enfranchisement purposes. If the Landlord has died then further investigations will need to be carried out at the District probate Registry to ascertain who the Executors of the Estate are, as a Claim could be made to them. If the Landlord has been declared bankrupt or is no longer active on the Companies House register then further enquiries will need to be made to the treasury Solicitor.
All of the above processes are started by the leaseholder serving a Notice on the Landlord. However, if the Landlord cannot be identified and/or his whereabouts are unknown then it is virtually impossible to serve a Notice.
Landlords are under a statutory duty to include their name and address for service when issuing a ground rent demand to leaseholders (section 48 of the Landlord and Tenant Act 1987) and so, in theory, it should be easy for a leaseholder to ascertain where, and to whom, they should serve a Notice. However, not all Landlords comply with this, and not all Landlords bother to serve ground rent and/or service charge demands. If the freehold title is registered the Land Registry should hold an address on file for the Landlord, but this often hasn’t been updated in years and so is out of date. Surprisingly many people are under the assumption that the Land Registry will automatically update addresses when they move. This is not the case.
If the Landlord is truly “missing” then it is important that leaseholders obtain specialist advice to manage the Claim.
The Leasehold Reform, Housing and Urban Development Act (“the 1993 Act”) gives qualifying Flat Owners a statutory right to force a lease extension and extend their lease by an additional 90 years on top of the unexpired term and reduce their ground rent to a peppercorn. The process is commenced by the Flat Owner serving a Claim Notice (also known as a “s42 Notice”) on the Landlord. If the Landlord is “missing” then it is impossible to serve a Notice.
The 1993 Act contains provisions to allow Flat Owners with missing landlords to make an application to the County Court for a Vesting Order; this will dispense with the requirement to serve a s42 Notice and, if granted, the lease will be extended by the Court. The premium can be referred to the First-Tier Tribunal (“FTT”) for a determination.
The 1993 Act gives the majority of qualifying Flat Owners the right to acquire the freehold of their block. As with lease extensions, this process is commenced by the Flat Owners serving a Notice on the Landlord which, again, is problematic if the Landlord is “missing”.
The Court has the power to make a Vesting Order which will transfer the freehold to the nominee purchaser (usually a company formed by the leaseholders to acquire the freehold). The premium can be determined by the FTT.
The above processes do not simply allow a leaseholder to skip off to Court if they have not heard from them Landlord for a few years. In order to obtain a Vesting Order the leaseholder must be able to show that they have taken all reasonable steps to locate the Landlord; this is likely to extend to instructing a tracing or enquiry agent to ascertain their whereabouts. Proper Valuations must still be obtained and the premium is required to be paid into Court who will hold it for the Landlord should he/she re-surface.
Obtaining a lease extension, or acquiring the freehold in these circumstances requires specialist knowledge of the legislative provisions. We have seen many cases where application to the Court have been rejected because they were not properly commenced and the Court is not satisfied that the Flat Owner has taken all reasonable steps.
Contact Samantha Marsh on 01329 552725 to discuss your options today if you suspect your freeholder is “missing”.