Freehold "bona vacantia"

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    Freehold "bona vacantia"

    Been following this site for a while but never bothered to join till now as I have need of some of the advice and guidance I know this site is capable of providing

    The following is taken from a website

    When the freehold vests with the Crown, you may be able to buy it. The Crown will often sell the freehold to leaseholders at market value. At the time of writing ‘market value’ is 15 times the total ground rent for the building in question.

    In some circumstances there is however another potential complication. If the freehold company has gone into receivership and a bank has a fixed charge over the freehold (like a mortgage), they may dissolve the freeholder’s company, sending the freehold bona vacantia, and yet still retain control of the freehold title. In such circumstances, you can’t buy the freehold from the Crown because the receiver remains in control of the title via the fixed charge, yet you’ll still be without a working freeholder until the receiver chooses to sell the freehold to you (or someone else).

    The second paragraph outlines the situation I currently find myself in.

    So let the questions start!

    From the second paragraph it would appear that it is the receiver that needs to be approached to sell the freehold rather than relevant Bona Vacantia division (BVD) of the Government Legal department. Is this correct?

    Does this mean that the lender who has fixed charge over the freehold cannot stop the receiver selling the freehold if the receiver decides to so?


    It would appear that the Tenants/Owners of flats can opt to purchase the freehold of their block under the Leasehold Reform Housing and Urban Development Act 1993 (Collective Enfranchisement).

    The question is whether this still applies when the land is “bona vacantia” with a charge still existing on the land in the situation previously described?


    If the freehold can be purchased from the receiver under Collective Enfranchisement then is there is a legal obligation on the receiver and/or the company having the fixed charge over the land to sell in line with valuations under the guidance note “Apply to buy a freehold reversion (BVC4)” i.e. 15 times ground rent in our case, or can they sell at figure they want?


    Another government website has the following just to throw into the mix

    There are several important ways in which “bona vacantia“ land sales are different from other land sales. These can have important legal consequences so you should take your own independent legal advice as to how they affect you.
    1. if there is a charge or mortgage over the land it will be the responsibility of the purchaser to deal with it and to liaise with the lender to have it released
    What is meant by the need for the buyer to “arrange to have the charge or mortgage over the land released” mean. Is it “simply” having to pay some “legal costs” between the buyer and "lender who has a fixed charge over the freehold" or can the "lender who has a fixed charge over the freehold" demand additional monies above and beyond that paid to the receiver?

    Any thoughts would be gratefully received


    #2
    Normally a person buying a house with mortgage , the lender registers a charge over the property at Land Registry. If the borrowers fails to meet the monthly payments, the mortgage lender will repossess the property and sell to another buyer to recover the mortgage loan.

    If the mortgage lender has repossessed the land , then you ( together with other leaseholders in the block ) probably have to buy the land site from the Mortgage lender and NOT from bona vacantia.

    But if the Liquidator takes possession of the land under the rules of Liquidation, then you may have chance to buy the site from bona vacantia.

    So you have to get legal advice ( about liquidation ) and asking which party owns the land and if ground rent is still payable after the Freeholder has passed into liquidation.

    As leaseholders have right to purchase the freehold at 15-20 times ground rent, you need to get agreement with other leaseholders to purchase..

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