Freeholder demands ground rent on flat I sold four months ago?
3 years ago | 15 comments
Implications of a bankrupt freeholder?
12:03 AM, 14th March 2023, 3 years ago
11
Hello, does any one know the implications for myself and 4 fellow leaseholders of the freeholder of our lease being declared bankrupt and his affairs now being under administration by insolvency agents?
Our buildings insurance is up for renewal in April. We have a management company, initially instructed by the freeholder, but they have not been able to get his agreement to go ahead with next year’s service charge – or, for that matter, to accept the ground rent.
Any idea what happens next?
Or what to do?
All the leaseholders have our own landlord insurance (not structural) – what are the implications if the building itself is not insured?
Thank you,
Simon
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Member Since February 2020 - Comments: 194
11:55 AM, 14th March 2023, About 3 years ago
Have you considered getting together with the other leaseholders and buying out the freehold from the receivers?
Member Since July 2013 - Comments: 1997 - Articles: 21
12:25 PM, 14th March 2023, About 3 years ago
If the building is not insured then potential catastrophe if there is a fire or other serious damage!
I assume that a trustee in bankruptcy has been appointed.
If the insurance is not renewed the freeholder would be in breach of the covenant to insure and liable in damages but that is worthless to the leaseholders.
I suggest you and the other leaseholders notify the trustee that you are happy for him to arrange insurance (and you will pay the premium) but that if he does not promptly confirm he will do so you will insure. You should be prepared to do this as the trustee may not be bothered. You should look into insurance now, preferably with the same insurers. You all have an “insurable interest”. It can take some time as insurers may have questions and require additional information.
If three or four of you can co-operate, you should also collectively offer to buy the freehold.
Priority one is to make sure insurance is in place at all times.
Member Since January 2015 - Comments: 1438 - Articles: 1
4:17 PM, 14th March 2023, About 3 years ago
The Official Receivers are obligated to insure the building and other Freeholder obligations.
Likely they will just renew with the existing insurer but in the meantime get some quotes to forward to the OR.
If Leaseholders qualify you will be given first right of refusal to purchase the Freehold.
Talk to the other Leaseholders asap as you will need funds to buy.
You then will be in control of your service and maintenance charges, can forgo ground rents etc etc
Member Since July 2013 - Comments: 754
12:43 PM, 15th March 2023, About 3 years ago
Reply to the comment left by Judith Wordsworth at 14/03/2023 – 16:17
The OP and fellow leaseholders SHOULD get first refusal to acquire the freehold, not necessarily WILL do. It does happen, through ignorance/haste or other reasons that sometimes this does not happen.
I suggest the OP checks the provisions of S5 of the Landlord and Tenant Act 1987 (Right of First Refusal) and contacts the Administrators to alert and seek assurance from them that their interest should not be ignored.
Member Since March 2023 - Comments: 5
12:56 PM, 15th March 2023, About 3 years ago
Reply to the comment left by Smartermind at 14/03/2023 – 11:55
Thank you, yes definitely
Member Since March 2023 - Comments: 5
12:56 PM, 15th March 2023, About 3 years ago
Reply to the comment left by Smartermind at 14/03/2023 – 11:55
Thank you, yes definitely
Member Since March 2023 - Comments: 5
12:57 PM, 15th March 2023, About 3 years ago
Reply to the comment left by Ian Narbeth at 14/03/2023 – 12:25
Absolutely, thank you
Member Since March 2023 - Comments: 5
12:58 PM, 15th March 2023, About 3 years ago
Reply to the comment left by Judith Wordsworth at 14/03/2023 – 16:17
That’s good to know, thanks
Member Since March 2023 - Comments: 5
12:58 PM, 15th March 2023, About 3 years ago
Reply to the comment left by Freda Blogs at 15/03/2023 – 12:43
Thank you, will do
Member Since November 2013 - Comments: 67
9:48 PM, 15th March 2023, About 3 years ago
We own a flat in a small block. The freeholder went bankrupt, the receivers stepped in and the freehold reverted to the crown as bona vacantia. The crown has no obligation to comply with the terms of the lease. No service charge, no opportunity to extend and no insurance. We were advised to insure the property ourselves and we eventually purchased the freehold from the crown as a collective. Hope this helps.