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What to do when you have an Absentee Freeholder

Andrew Boast

03/09/2018

When owning or buying a leasehold property, finding you have an absentee landlord can be concerning as it raises a number of questions such as:

Who is responsible to manage the communal parts of the property (both inside and out)?
Who do you pay your service charges and ground rent to?
How do you extend your lease or purchase the freehold?

A leaseholder can apply to the county court with a vesting order so that to if the freeholder is absent and the leaseholder is eligible, then the court will step in and take over the responsibility of the freeholder. In this article we explain the process of what you need to do if you have an absent landlord for the purposes of extending your lease or buying the freeholder, what is the vesting order process and what are the vesting order costs. If you have served a section 42 or section 13 notice and your freeholder has failed to respond then click here to find out what to do.

We've also summarised the vesting order process in a Route to a Vesting Order diagram for ease of understanding, please click on the link or scroll down to view it.

What is the law?

Under the Trustees Act 1925: Part IV - Vesting Orders, in relation to the freeholder's obligation to send a counter notice, it states:

"...(vi)Where a trustee jointly or solely entitled to or possessed of any interest in land, or entitled to a contingent right therein, has been required, by or on behalf of a person entitled to require a conveyance of the land or interest or a release of the right, to convey the land or interest or to release the right, and has wilfully refused or neglected to convey the land or interest or release the right for twenty-eight days after the date of the requirement "

"...the court may make an order (in this Act called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct"

Do you need help with a vesting order?

Our solicitor specialises in vesting orders, offers a fixed fee and covers the whole of England. These are the services we can help you with:

Vesting order for an absentee freeholder
Lease extension (section 42 and conveyancing)
Purchase of freehold (section 13 notice and conveyancing)
(if required) RICS valuers to calculate premium payable to the Freeholder

Call us for a quote today on 0333 344 3234 (local call charges apply) or click below to get a quote.

Get a Vesting Order Quote*

* Fixed Fee – Specialist Vesting Order Solicitor – National Coverage

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What is the vesting order process?

The following is a step by step guide on the vesting order process.

Check you are eligible

It is important to first confirm you are eligible to either extend your lease or purchase the freehold because only eligible leaseholders can serve a vesting order. Check your eligibility here:

* You can only apply for a vesting order if you are using the statutory route to extend your lease or buy the freehold.

Make reasonable efforts to find your freeholder

A leaseholder must take all reasonable steps to locate the absentee landowner. A court would expect you to have:

written to the last known address of the Freeholder (you can find the freeholder's address details on the title documents of the freehold. Click here to download - Search Property Ownership Information
attend the freeholder's last known address with a witness and attempt to make contact with the freeholder; and
appoint a 'People Finder' to locate the freeholder

While this may on the surface seem excessive, it is the leaseholder’s responsibility to demonstrate that they have made all reasonable efforts to locate the freeholder and that they have had no success. You should continue your efforts to find the freeholder for a period of 3 to 6 months to demonstrate you have made all reasonable efforts to locate the freeholder.

Apply for a vesting order

You should instruct a qualified solicitor who specialises in collective enfranchisement to handle your vesting order application. The solicitor confirms your eligibility and reviews what attempts have been made to get in contact with the freeholder. The solicitor will also make an attempt to contact the freeholder. If your solicitor is unsuccessful they will move forward with an application to the county court to obtain a vesting order to allow for the lease extension or purchase of freehold to proceed.

The court will make a decision on whether to grant the order, and if they do then they will take over the responsibility of the landlord in the granting of a new lease or the purchase of the freehold. In very lay terms, the power of the freeholder is vested in the court.

The court will usually refer the case to the Tribunal to determine the premium to pay for the extended lease or to buy the freehold. Click on the following article to find out more about how to calculate the Lease Extension Valuation Premium or Purchase of Freehold Premium.

The leaseholder would then need to pay to the court the premium, any sums outstanding to the landlord and any other fees the Tribunal requires to be paid in connection with the grant of the new lease. These funds are then held by the court on behalf of the absentee landlord until such date as they can be found.

However, be warned: if the landlord can be traced at any time during the proceedings, the Vesting Order can be withdrawn and the leaseholder would have to follow the usual channels to obtain the lease extension. Hence you must be certain that you have exhausted all means of trying to locate the landlord before applying for a vesting order.

We can help you draft a vesting order application and have representation at court. Call us on 0333 344 3234 (local call charges apply).

No freeholder? Who can you serve the section 42 notice on to extend your lease?

Having completed a lease extension valuation by a RICS surveyor you’ll then instruct a solicitor to serve a Section 42 Notice on your freeholder. The section 42 notice starts the process to extend your lease by 90 years for a peppercorn rent (no rent). The freeholder has 2 months to respond with a section 45 counter notice. This formal lease extension process is governed by the Leasehold Reform, Housing and Urban Development Act 1993.

Many leaseholders have little or no contact with their landlord, other than to pay for your ground rent or service charges; even then you might only work with the managing agent instead of the actual freeholder.

If you do not know the address of the freeholder then you cannot serve the freeholder with a section 42 notice. You must first attempt to make contact with the freeholder using the methods set out above and then after this you make an application to court for a vesting order. If successful the court will take over the responsibility of the freeholder and you serve the section 42 notice on the court (not the freeholder).

The process is very similar regarding Collective Enfranchisement

If you are looking to buy your freehold regardless of whether you intend to use the informal or formal route you have to locate the freeholder. If you cannot, then the directions above apply, leading to the vesting order.

The court, similar to a lease extension case, would normally rule in favour of the premium present in your Initial Notice in the absence of the freeholder.

To find out more, click on Collective Enfranchisement Process.

How much does a vesting order cost?

An undefended vesting order for an absentee freeholder costs in the region of £1,620 INC VAT plus the third party costs listed below. For a defended claim the solicitor and counsel costs could be more to handle the work required for replying to the Freeholder's reasons for not serving the Section 45 in time. It is worth noting that if you are successful at court then counsel will ask for a costs order and if granted this is deducted from the premium payable (in essence the freeholder pays your costs).

Third party disbursements (costs)
Court Application Fee	£300 Estimated - Court fees vary depending on the court
Counsel's fees Your solicitor instructs Counsel to represent you at court	£720 INC VAT Estimated - Based on an undefended claim