What to do if you have an Absentee Freeholder
03/03/2022
16,328
6 min read
An absent freehold is a term used when a leaseholder is unable to locate their freeholder. Having a missing landlord for some leaseholders may not seem like an issue because:
- there are no ground rent demands; and
- you can maintain the communal areas yourself which means no exorbitant service charges.
The reality though is that you will be faced with a problem further down the line.
Absent freeholder problems
- 1
Extending your lease
- 2
Buying the freehold
- 3
Repairing the communal areas
- 4
Selling the property
We cover off all of these problems below.
How do you prove a freeholder is absent?
Under the Leasehold Reform Act 1993 | Section 50 it states: "Before making any such order the court may require the tenant to take such further steps by way of advertisement or otherwise as the court thinks proper for the purpose of tracing the person in question."
Failing to make all reasonable attempts to find the freeholder could lead to your application to court to be rejected. To avoid this you should:
- Place 2 adverts in the local newspaper;
- Hire a search agent to find the freeholder;
- Physically attend the last known address of the freeholder; and
- Check the probate records.
You could get your court order rejected if you fail to do any of the above. Ensure you have the evidence to prove you did them.
- 1
Extending lease with absent freeholder
To start the Formal Lease Extension Process you need to serve the freeholder with a Section 42 Notice, however you can't do this when you don't know where the freeholder lives. Where you can't serve the notice of the freeholder you need to apply to the court to get a vesting order.
What is the law when a freeholder doesn't reply to your notice?
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"
- 2
Buying the freehold
What you need to do will depend on whether the freeholder is a limited company or an individual. If the freeholder is a company it very simply exists - if it is registered with companies house - or it does not. If an individual is absent you must first prove their absence.
Once the necessary steps have been taken to prove the landlord's absence, to purchase the freehold, 50% or more of the leaseholders need to serve a Section 13 Notice on the freeholder. As with a lease extension where you can't serve the notice of the freeholder you need to apply to the court to get a vesting order.
- 3
No freeholder to repair and maintain the communal areas
The value of a leasehold can be vastly effected if the communal areas of the property aren't maintained. Communal areas are set out within the leasehold and freehold title.
- 4
Absent freeholder? You should buy the property lease?
If you are considering purchasing a leasehold, from a lease owner whose freeholder is absent, seriously consider the issues which you may be buying into. It may be worth looking for another property altogether.
- Where there is an absentee freeholder, a leaseholder will have problems selling the lease. Sometimes, your buyers mortgage lender will not proceed, even where the buyer has obtained the proper indemnity insurance.
- Where a leaseholder has taken the view that they own the flat due to a long term absent freeholder, they typically make internal alterations which breach the terms of their lease. The buyer's solicitors are likely to take issue with this.
Normally a deed of variation on the lease would cover these breaches legally. However, where the freeholder is absent, a deed of variation cannot be obtained. In these cases the entire transaction is likely to fall through. - Getting Indemnity insurance won't always solve your problems, as policies aren't always acceptable and when you eventually come to sell, your new buyers will have to go through it all again, likely costing you sales or affecting your price.
- Where there is a relatively short lease you'll want to extend it when buying. As you can see from section 1 above, this is unlikely to be possible within the timeframe of your leasehold purchase.
What does absent landlord insurance policy cover?
When buying with a mortgage, if you have an absent freeholder the mortgage lender will require you to get an Absent Landlord indemnity Policy. A freeholder is absent for this policy if they are missing, unresponsive or insolvent and you are unable to obtain clear ground rent receipts at the date of purchase.
What the insurance covers you for is the risk for if the landlord or its successor reappears and makes a claim against you for unpaid obligations from your lease such as the ground rent.
Frequently Asked Questions
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.
The freehold can reappear at any time in the future.
Do you have an absentee freeholder?
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:
- RICS valuers to calculate premium payable to the Freeholder
- Vesting order for an absentee freeholder
- Lease Extension Conveyancing(section 42 and conveyancing)
- Purchase of Freehold Conveyancing
Call us for a quote today on 0333 344 3234 (local call charges apply) or click below to get a quote.
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