Sale of Freehold without Freeholders approval?

by Readers Question

17:04 PM, 29th June 2017
About 4 years ago

Sale of Freehold without Freeholders approval?

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Sale of Freehold without Freeholders approval?

I would appreciate your assistance on helping resolve the following issue. I do believe we will need to take professional legal advice and would welcome recommendations on who could help.

A management Company was set up to buy the freehold of a block of 6 flats in 1999. Four owners of the flats purchased 100% of the Freehold, each owning 25%. The other two owners declined.

A company was incorporated to set up the ownership and shareholding. The day to day Facilities Management of the block of flats was assigned at their request to one of the Shareholders (Shareholder A) . They were responsible for producing accounts settling bills and ensuring all legal compliance was taken care of.

To cut a long story short, shareholder A decided to sell a 1/6 share of the freehold when one of the two flats that did not buy the original shareholding was sold.

The agreement to sell a share of the freehold was not discussed or approved with all of the other shareholders. A consideration was paid which was considerably lower than what would be considered market value. A board meeting to seek approval or authority for the sale was never called.

Hence My question is what is the legal standing of the sale, a share certificate has been issued again signed by Shareholder A the monies have been paid to Shareholder A who claims the money has been used in paying for Facilities management services. Which could be true but as they have never kept proper records its very difficult to tell.

Can Shareholder A act on behalf of all the other shareholders without their consent or have they merely sold a portion of their shareholding and the others are intact?

Many thanks



Ian Narbeth

10:41 AM, 25th July 2017
About 4 years ago

Reply to the comment left by "Neil Patel" at "25/07/2017 - 10:24":

With respect, you need to take professional advice, show all the paperwork to a qualified solicitor and provide follow-up information to him or her. The position you are in is not straightforward and you are very unlikely to get a definitive answer from this forum (including from me). It is very dangerous to act on incomplete advice.

On a general point (and with the caveat that I have not seen any papers and do not accept responsibility) it is likely that the two non-participants (a) cannot compel the 4 participants to let them acquire a share in the freehold and (b) will have to pay the freeholder a substantial premium to extend their leases in future.


9:59 AM, 30th July 2017
About 4 years ago

Hi Neil, on a development near me the freehold went to the Crown due to filing not being done correctly so a new lease, company etc was formed a few years ago. There are over 100 dwellings on the site. Those flat owners who could, paid their share and acquired a share in the new freehold. Those that couldn't, didn't but those flats are having their share acquired as each one is sold paid for by the purchaser. This would seem the proper way to do it and would not require your consent as you would then actually only have one sixth per flat already. You would need the original documentation and if possible speak to the solicitors involved. I will find out how the money was paid in the first place. Life is much simpler if everyone has a share, why would you not want that? Do they pay ground rent? As to their rights I will find that out also. If you wish to discuss further my email is above.


12:48 PM, 19th July 2020
About 10 months ago

Reply to the comment left by Puzzler at 30/07/2017 - 09:59
Will all the directors, owners of share of freehold, can be at fault for two directors to sign and issue share certificate ???


19:16 PM, 19th July 2020
About 10 months ago

Sorry I don't understand your question?

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