Shared Freehold – Inadvertently took on the company director role?

Shared Freehold – Inadvertently took on the company director role?

5:00 AM, 2nd May 2022, About 4 weeks ago 7

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Hello, I have inherited my fathers semi detached house that forms part of a four block. There is two blocks and they all own the freehold shared eight ways. However, they all have individual leases, the lease on our now inherited house has a 936 years left on the lease.

My father was the company director and it was just ran as a dormant account and the files annually sorted with companies house. Each owner has paid a £1 share and there is no property management in place and no payments received from the other owners.

My father put me as the company director as he had terminal cancer and it was causing him anxiety worrying about it, so I inadvertently took on the role and filed the accounts last October so they are up to date.

We sold the property under offer, but they pulled out because they weren’t happy with the way the company was set up with the shared freehold as there is no insurance set up for the communal areas (shared car park) and there never has been insurance since it was built in 1984.

They wanted us to pay for the freehold to be changed which would be very lengthy and costly ( many thousands of pounds to do so) and most of the other owners aren’t interested and happy with the way things currently are.

If any future repairs were required the eight freeholders would pay their share towards it. My solicitor has said it may happen with the next potential buyers, it all depends on how deep they look into the freehold etc. as it could put off a lender giving a mortgage on the properties.

Has anyone got any useful advice, please?

Many Thanks



by Elisabeth Gordon

8:37 AM, 3rd May 2022, About 4 weeks ago

Most interesting. I await replies.

by David Price

9:14 AM, 3rd May 2022, About 4 weeks ago

Withiut sight of both the freehold and leashold titles it is very difficult to comment.

by Judith Wordsworth

9:21 AM, 3rd May 2022, About 4 weeks ago

Why not draft a document ie. deed, that states each freeholder is obligated to pay their 1/8th share for upkeep of communal areas and which will be demanded on x date annually. I’d make the date the same as the ground rent date. Date it and All sign it with each Freeholder signature 3rd party witnessed.
Shouldn’t cost very much and actually simple to draft.
But check your lease as there may well be a clause referring to Landlords (ie Freeholders) obligations.

As leaseholders the block buildings insurance should cover communal areas I would have thought.
Interesting that you say your solicitor says next buyer solicitors may not notice! Hence why I do my own conveyancing lol

by Kate Mellor

9:33 AM, 3rd May 2022, About 4 weeks ago

The freehold company should be insuring the block as a whole and each leaseholder should be billed for their share. This then provides cover for all the communal space as well as the individually leased areas. It’s common in these sorts of situations that individuals just get on with their own thing as regards insurance, but it’s not correct and can cause problems. I’d suggest you do some research on freeholders responsibilities and obligations and look to rectify the issues. Whilst it will be an effort to undertake, it’s necessary. You need to examine the wording of the current leases and take advice as to whether the terms are sufficient to meet the needs if they were properly enforced and if so enforce them. You are the director and things need to be done right to protect each of the leaseholders from their own naivety. You may find the leasehold advisory service helpful, they can perhaps highlight the risks of not changing the setup so you can use that information to convince the other leaseholders of the dangers of their current situation. what happens for example if a guest/member of the public were to be badly injured or killed on an uninsured common area? if your current solicitor is looking to charge an excessive amount to carry out the work you should shop around. I believe a lease can be amended by an additional agreement being drawn up and registered at HMLR. It really shouldn’t cost many thousands of pounds. We’ve done it quite cheaply in the past using a small local solicitor.

by Blodwyn

14:20 PM, 3rd May 2022, About 4 weeks ago

I am a retired (non-conveyancing) solicitor and find the solicitor's comment "My solicitor has said it may happen with the next potential buyers, it all depends on how deep they look into the freehold etc." wholly unacceptable but sadly true from my former practice in professional negligence and disciplinary (SDT) work. That solicitor seems a negligence claim in waiting?
Ask Property118 for a recommendation depending on your location.

by charles stevens

6:29 AM, 27th May 2022, About 2 days ago

Have you looked into the Company at all? I may be wrong but, from what you have said and without having looked at any documentation, that the likelihood is that the Company was set up by the original developer and they would normally have required each flat owner to hold a share in the freehold company.

No doubt each of the leases will state that (a) the Company is under an obligation to insure the common parts etc regardless of what has actually been happening; and (b) that the owners of each of these flats have to contribute towards the insurance etc; (c) the leases will also likely contain forfeiture clauses allowing you to take forfeiture action if the tenants do not make the payments due under the leases within 14/21 days normally.

This is not a lost cause by any stretch and, to be honest, is not even that difficult to get sorted you just need a bit of time and be happy to ruffle a few feathers if the other flat owners do object to doing things correctly - but as you are selling you may not care!

If you want some help with this respond with your email and i will contact you to discuss. You may just want me to review the leases and give you a POA and let you carry it out (which is fine) or alternatively you may say can you just deal with it which is also fine. Either way, its unlikely to cost thousands of pounds and i will tell you why, if the leases do (as i think) require the flat owners to contribute towards the Company's expenditure, the first thing we will be doing is sending a letter to each tenant telling them what needs to be done and pointing out that if they don't do it the Company will incur more and more legal costs and they will be liable for a % of that under the terms of their lease and failure to pay when demanded will result in forfeiture proceeds!

Honestly, i wouldn't worry about this at all it really is not that difficult...i do agree with Blodwyn may need a new lawyer.

Hope this helps, Charles

by Crossed_Swords

20:05 PM, 27th May 2022, About A day ago

It is not impossible (although unusual and not very practical) that each property has taken out their own insurance which should if properly declared cover the communal areas. I have a property set up just like this, and have never had an issue with sales and purchases. We now join forces and insure as a block but we previously each had our own. Presumably your house in insured so ring your insurance company/broker and ask. No need to get involved with the leases at all (although you probably should find out what they say) just if necessary combine the insurances which can be done as each one is renewed by any decent broker.

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