How to sell Freehold for late brothers estate?

by Readers Question

10:42 AM, 29th January 2015
About 4 years ago

How to sell Freehold for late brothers estate?

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How to sell Freehold for late brothers estate?

MY deceased brother’s estate has a Grade 2 listed property converted into 4 separate flats all mortgaged. There are no shared parts except the garden  and all flats have separate entries.

We wish to start selling off the flats, but the only information we have is that the flat freehold was in my brothers building company name. The flats have leases of 99 years from the 1/3/2003.

Would it be best when all flats are sold to create a new freehold and then offer to sell 25% share to each flat, or give a ground rent of say £100 per year and a charge of £350 per year of repairs and sell freehold at auction.

As the property is Grade 2 the repairs would be expensive .

Many thanks

Kathyfreehold



Comments

Neal Craven

11:41 AM, 30th January 2015
About 4 years ago

Bit Confused

Does the estate own the freehold and all 4 leases?

When you say create a new freehold, do you mean create a new company (SPV) to own the freehold reversion?

If the leases are all in place the rent and repairing liability will already in place unless you control the whole in which case you could probably merge the freehold and leasehold interest (scrap the old leases ) and start again.

Assuming you don’t want to hang on to the freehold reversion it probably needs to be in a SPV and the options are either the shares are sold or transferred to the individual flat owners, possibly on completion of the last lease (you can only do this if you are starting again with new leases or of the original leases specify this) or if there is no existing structure in place you could sell the reversion to an investor.

John Walker

11:49 AM, 30th January 2015
About 4 years ago

Hi Kathy,
I have a friend who owns a freehold flat in London, purchased without a proper management structure in place This is causing problems as one freeholder refuses to pay his contribution towards repairs, insurance, etc. My advice would be to set up a management structure with each flat providing one representative to a management team, then sell the flats freehold with conditions to abide by decisions of the team.

John

Neal Craven

12:07 PM, 30th January 2015
About 4 years ago

As far as I am aware you cannot own the freehold of an upstairs flat. What you can do is own a leasehold flat and at the same time own a share of the freehold in the whole property, usually by way of shares in the company that owns the freehold, but they are two separate things.

MoodyMolls

15:22 PM, 30th January 2015
About 4 years ago

Hi

Thanks for the replies

Yes the estate owns the freehold and leases

Yes I was thinking along the lines of creating a new company for the freehold and selling 25% to each flat or marketing the flats higher to cover the 25% share of management company.

Neal Craven

15:27 PM, 30th January 2015
About 4 years ago

Reply to the comment left by "KATHY MILLER" at "30/01/2015 - 15:22":

Sounds like a plan, are the existing leases up to the job or do you need to start again, don’t really understand why the leases are already in place unless it was something to do with the mortgages. If you are restructuring and the shares are going with the flats the rent can be a peppercorn, if the freehold is going to be sold separately the rents want to be as high as possible (without impacting value) to enhance the value of the reversion. You can also look at rent reviews.

MoodyMolls

16:13 PM, 30th January 2015
About 4 years ago

Hi Neal

I think we might have to draw up new leases as we cant find the original ones but we can see on mortgages that each flat had a 99 year lease set up in 2003

Yes the leases will have been put in place to enable mortgages for each flat.

Neal Craven

16:41 PM, 30th January 2015
About 4 years ago

Have you tried land Reg. Do you know which solicitor will have done the leases. If there are mortgages in place you will not be able to scrap the leases. In fact if there are Mortgages in place the lender will hold the leases as their security.

MoodyMolls

17:21 PM, 30th January 2015
About 4 years ago

Thanks for that ,so we should be able to request the leases from lenders?

Neal Craven

17:22 PM, 30th January 2015
About 4 years ago

I have no experience but I cant see why not, I guess they have already been informed of the death

MoodyMolls

17:28 PM, 30th January 2015
About 4 years ago

Yes they know, I will try that, but as we own the freehold then surely we can make amendments to lease as in extend terms ?

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