Leased flat to a limited company now dissolved – What do I do?

by Readers Question

7:14 AM, 18th November 2016
About 2 years ago

Leased flat to a limited company now dissolved – What do I do?

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Leased flat to a limited company now dissolved – What do I do?

I have leased a flat to a Limited company who are a lettings company on a 5-year lease agreement for £1000 per month. After a few months, I discovered that they have dissolved this limited company and declared it to HMRC as dormant.LTD

They have done a HMO with my property and I want to take it back. As far as I understand it, her company lease is now nul and void.

Can I enter the property and change the locks etc? and what about her tenants who are on lodgers agreements.

What is the correct process?

Many thanks

Paul

 



Comments

Neil Patterson

7:18 AM, 18th November 2016
About 2 years ago

Hi Paul,

This is not actually something I remember us running across before, but please don't do anything rash straight away before you get any advice.

I would speak to the professionals in tenant eviction to make sure you have your ducks in a row. Please see >> https://www.property118.com/tenant-eviction-2/

Robert Mellors

8:39 AM, 18th November 2016
About 2 years ago

Hi Paul

The residents cannot be on "lodger agreements" as there is no resident landlord, so they are probably on assured shorthold tenancies (in rare and specific circumstances it could be licence agreements, but this is not likely in the scenario you have described). As the occupants are assured shorthold tenants, in the event of the leasing company going bankrupt etc (no longer trading) then those tenants presumably become YOUR tenants, but you will need to check the specific provisions within your lease agreement with the company. IF, the occupants become your tenants (by default), then you will need to pursue the normal procedures for re-gaining possession, i.e. serving valid notices, taking court proceedings, etc. This will be difficult if you don't have copies of their individual tenancy agreements, or proof that all pre-conditions have been met, e.g. EPC, gas cert, deposit prescribed information, etc.

In view of the complexity of the situation, you may need a solicitor to determine what your true legal position is, whether you can end the lease with the "letting agent", and what status that leaves you and your property occupiers. This will be incredibly expensive.

Alternatively, if you can establish that the letting agent no longer has a lease with you (perhaps they will surrender it voluntarily?), then you could perhaps offer your occupants a sum of money to surrender their occupancies and move out voluntarily (do this through a formal Deed of Surrender). Even if you offered them a significant sum, it would probably still be a lot lot cheaper than going down the route of involving solicitors and serving notices and taking court proceedings etc. As much as it hurts, pay them to leave.

Then sue the letting agent for all your losses. They should have been insured for such situations, and may also be covered under one of the trade bodies regulators schemes, e.g. ARLA.

Paul McCarthy

9:02 AM, 18th November 2016
About 2 years ago

Reply to the comment left by "Robert Mellors" at "18/11/2016 - 08:39":

Thanks for the reply Robert

Some points.

The letting agent is the one who dissolved their company. My lease agreement was with this now dissolved company. So I cannot sue or take action against a now defunct/closed company...they are gone!

I don't have to get rid of the tenants, I'm happy to keep them...however, their deposits were with the dissolved company, sadly.

I could this weekend get access with keys, change locks, speak to tenants, offer them AST and see where that gets me. I mean, the old Ltd company can't take action, they're no longer, no? And what can existing tenants do if I am not evicting them? I could offer them a new contract £50 less per month on new terms... I'm sure the tenants would jump at the opportunity. I mean, they have NO contract now with anyone!!

What do you think of this route?

Gary Nock

9:06 AM, 18th November 2016
About 2 years ago

This sounds similar to a recent thread on a rent to rent scheme where the tenants and the landlord were left with each other as a result of a less than ethical third party letting agent.

If the limited company has been dissolved it does not exist in law and it is difficult to see how you could still have a contract with them.

If the tenants have an AST, or are otherwise in occupation as residential occupiers, even if it was with the dissolved company then they are more than likely protected by the Protection From Eviction Act 1977. And as Robert says above, need to be evicted through the proper processes, if indeed eviction is what you want.

The previous thread advised getting good legal advice and sitting down with the tenants -and negotiating a settlement. Either new tenancies or a "sweetheart deal" to go elsewhere.

Paul McCarthy

9:10 AM, 18th November 2016
About 2 years ago

Reply to the comment left by "Gary Nock" at "18/11/2016 - 09:06":

Perfect, that's what I thought. I think I will simply sit down with them and chat and offer new AST to all. Appreciated Gary!

Robert Mellors

9:19 AM, 18th November 2016
About 2 years ago

Reply to the comment left by "Paul McCarthy" at "18/11/2016 - 09:02":

Hi Paul

A company can still exist but be declared as "dormant", this is not the same as dissolving a company and having a "strike off" (I think that is the term when it actually stops existing, as opposed to just being dormant). If the actions of the company were unlawful or a breach of contract, then although you may not be able to sue them directly, it may be possible to sue the Directors or their insurance company (that covered them while they were trading). The exact status of the company needs to be established, as does the possible recourse to their insurer.

However, if you are happy for the occupants to stay, then as you suggest, instead of paying them to leave, just offer them a new AST at favourable terms. That way you can put it all on a correct legal footing.

In terms of the deposits, these should have been lodged with an approved deposit protection scheme, so you need to check that this was done, and if so, the tenants should be able to get their deposits back. Again, this (whether their deposits were correctly protected) is something that you will need to establish.

Simon Topple

22:31 PM, 18th November 2016
About 2 years ago

These tenants could be on lodgers agreements. They could also be on licenses or standard ASTs. Most likely is licenses or ASTs. Lodgers agreement isn't likely but you can't rule it out - R2R is the last bastion of the dodgy and ill prepared.

We have encountered similar and had to void a contract with a bad R2R er. The advice we were given was as soon as the contract was voided, the contract between the owner and the R2R er fell away leaving the tenancy existing between the owner and the tenants. Effectively crossing off the R2R was name and inserting the landlords name.

If you do attempt to regularise it, be aware you will now be open to being sued over the deposit. As much as it pains, take steps to sort this. Either allow the tenants to earn it out with a rent reduction for a set period (eg for a £500 deposit given them a £100 discount per month for five months) or just gift them the money (into the DPS or equivalent). This will be cheaper and go some way to building trust with the tenants and get them on board.

Also - be aware of the regulations as you now have a HMO. Ensure:

A) your lender and insurer allow it

B) the property isn't in an A4 area so will not get permission.

C) any HMO license is applied for if it falls into mandatory licensing

And most importantly
D) it meets the standard for multiple occupation, fire alarms, fire doors where stipulated by the local authority, etc.

Also be aware that if they are on single tenancies the detail of the Regulatory Reform Fire Safety Order comes into play so you will need fire risk assessment carried out etc.

H B

7:54 AM, 19th November 2016
About 2 years ago

I presume the tenants are unaware of this and are still paying their rent to a company account - let them know ASAP.

Nigel Roberts

8:51 AM, 19th November 2016
About 2 years ago

The commenters who have said you need legal advice are right on target.
***********************************

From your description it seems that the facts are not entirely clear here - there is a contradiction - a company that has been dissolved cannot be dormant ("sleeping") - it has ceased to exist.

So your first step is to determine whether the company still exists in law or not.

Companies House in the UK are trialling a service where you can look at every single filing, ever, free of charge.

https://beta.companieshouse.gov.uk/

If the company has not been dissolved, your contract with them still obtains although suing for any losses may be pointless (they may be a man of straw).

If the company HAS been dissolved, all contracts it had are probably automatically void from the date of strike-offf. Note that there is a difference in law between 'void', and 'voidable'.

So, you would appear to have occupants of your house without a written agreement. The law on this is complex, so get advice from a specialist housing rights solicitor (who will know all the rights the former tenants have).

So let's underline this:

See a solicitor.
-------------------

Now.

And don't try and do anything yourself before getting that advice since you may do something that later you are advised would not have been the best course of action for your interests.

And please update us.

Paul McCarthy

14:03 PM, 19th November 2016
About 2 years ago

Reply to the comment left by "Nigel Roberts" at "19/11/2016 - 08:51":

Thanks for your reply Nigel

UPDATE

The Ltd company was dissolved Dec 2015.

I entered the property today with my keys. Spoke to all tenants and explained the situation. They all understood and said they would like to stay and will start paying rent to me direct from next month. However, their contract in not with the Ltd dissolved company, it's with another of her companies!! And so deposit situation is up in the air.

The locks were replaced today, all tenants have a new set and are happy, however, they will need to get their deposits back from her

Today I found out quite a lot about her. she basically registers new Ltd companies under FALSE names and bogus id's. Signs rental agreements as a couple and then HMO's them, she has about 50 properties of which 20 are HMO's. The majority of her landlords have no idea

I also came across a Facebook complaints page about her. Interesting reading.

https://www.facebook.com/exposingAndrewHunt/

Also, found some bills in the house. She registered the council tax under MY name. And water as a single occupancy, same goes for council tax.

AND lastly. She invoiced me on 5 other properties she managed for me, and charge us VAT. Today I discovered she is not registered for VAT. Fraud? Interested to get opinions..

Had to take action. I'm not going to be ripped off

Paul

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