Freehold resigned from Management Company having not filed since 2005!

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    Freehold resigned from Management Company having not filed since 2005!

    Hi there,
    Looking for some advice please based on the experiences in the group.
    The two freeholders of the property of which I am one of the leaseholders resigned from the management company for the property. We just learned they have not filed any returns since 2005!
    The management company is now without directors and whilst the 4 leaseholders are willing to take over the management, we are concerned around liability/penalties for not having filed, and having to bring everything in order.
    What are our options? Are we able to get the freehold attached to the company transferred to a new company we set up? Do we have to take on the existing company and all that comes with that? Does getting a Right to Manage option help us (I read about that on the www so not sure if that is even a thing)? So far the advice we've been given is to take over the company, pay a solicitor and accountant a fair chunk of cash to resolve it, but this isn't sitting right and I wonder if there are other options we have not been advised on that absolves us of the ownership of the existing company whilst being able to grant the freehold to the new one so all the leaseholders can take over the management of the property.
    Appreciate any advice that can be given.
    Thanks
    JBT

    #2
    Hi,

    What is the current overview for the management company at Companies House?

    Comment


      #3
      Sounds like you should steer clear of the management company minefield and go down the RTM or collective enfranchisement routes.

      Comment


        #4
        Hi. You say there is a limited company that holds the freehold and the company now has no directors and hasn't filed since 2005?

        Where are the service charges?

        If a freehold company is dissolved, ‘bona vacantia’ rules kick in and the freehold and any assets pass to the Crown. The company bank account is frozen and any balances transfer to the Crown. I assume the client trust account for the service charges is held safe.

        So goes the freehold interest too, and the Crown won't take on the liabilities or maintain or insure the land as I understand things.

        Is this an RMC where the four lessees are members/shareholders in the company? If the company hasn't yet gone under, you could elect new directors but who knows what fines are stacked up by now.

        If the company does sink, the original members could buy back the freehold via the Treasury Solicitors.

        If the lesees are not members of the freehold company, you aren't liable for its debts and fines. Just rudderless victims.

        Two thirds can I believe apply to County Court for a vesting order under LRHUDA 1993. If you get the vesting order, you ask a Tribunal to establish the fee to pay the Court for the freehold to be registered on the LR in the name of your new company.

        If it was possible to own the freehold and get there without all those penalties, personally I'd go that route as RTM is a legal dog's dinner (after years trying to make one work properly).
        Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.

        Comment


          #5
          Thanks for the feedback. Company status is active. All previous directors resigned. No service charges have been asked for years. The questions being asked are very interesting and it would seem the directors have done absolutely nothing over the last 15 years to put anything in place for the leaseholders. It is a property with 4 flats that used to be owned by all the directors and they sold them off one by one. So all the leaseholders have no interest or shares in the company. It looks like a case of the previous owners doing the minimal possible to meet their obligations so their is no client trust.

          Comment


            #6
            Originally posted by JBT89 View Post
            Thanks for the feedback. Company status is active.
            It hardly seems likely a company would be active having not filed accounts with Companies house for 15 years.

            Comment


              #7
              I hear you Andrew however that is the status as it stands at companies house. It would appear the directors previously looked to have it struck off but had to re-instate it in 2006/2007.

              Comment


                #8
                No filings means automatic strike off.

                Comment


                  #9
                  Originally posted by JBT89 View Post
                  ...Company status is active. All previous directors resigned. No service charges have been asked for years. ... It is a property with 4 flats that used to be owned by all the directors and they sold them off one by one. So all the leaseholders have no interest or shares in the company.
                  No idea sefl how automatic the strike off is for non-filing. Suppose possible CH just missed a small residential management company? Assume you have actually confirmed status on CH website?

                  Interested in line "4 flats used to be owned by ALL the directors and they sold them off..."

                  Do you mean all 4 flat owners originally were directors? This suggests a freehold RMC where all flats held a share as members and all were once directors.

                  You mention TWO 'freeholders' and none are current leaseholders. If the four sold off one by one, who are the two remaining coves who abandoned ship?

                  It may all be academic, but is this a company limited by share or limited by guarantee? Just trying to understand who the members might be still, whoever the directors may not be no more, do you see.

                  If by guarantee, each sale would lose one member unless the new owner joined. Usually no point staying a director even if, as in RTM companies, directors do not have to be current leaseholders.

                  If by share, the articles must say if shares are/must be assigned on sale? Or whether sellers can hold onto their directorship while not being a current member?

                  Or maybe folk just plumb forgot about their shares by the time they came to sell? This is leasehold and anything can happen.

                  The articles would surely lay out how to qualify as a member? And who can be directors.

                  It's all worth knowing as it affects your options. The fine currently is maximum £1500 a pop for late filing. Total failure is a dawn fire squad unless they slept in at the barracks.
                  Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.

                  Comment


                    #10
                    Originally posted by JBT89 View Post
                    Thanks for the feedback. Company status is active. All previous directors resigned. No service charges have been asked for years. The questions being asked are very interesting and it would seem the directors have done absolutely nothing over the last 15 years to put anything in place for the leaseholders. It is a property with 4 flats that used to be owned by all the directors and they sold them off one by one. So all the leaseholders have no interest or shares in the company. It looks like a case of the previous owners doing the minimal possible to meet their obligations so their is no client trust.
                    Hi,

                    So at CH there are no current officers showing under the 'people' tab with 'filter officers' ticked.

                    Also on the 'overview' tab nothing is shown as overdue? Confirmation statement or Annual accounts.

                    Are there any 'First Gazette Notices'?

                    There should be a Confirmation statement filed that would/should show any movement of shares, if it contains no updates look back at earlier filings.

                    CH would start compulsory strike-off action if the Confirmation statement was not filed. (Well they did in our case).

                    Lastly if no SC collected who is paying for the building insurance, is it the individual leaseholders?

                    Comment


                      #11
                      We had this at our block. The freeholders had previously also owned flats and were the directors of the management company. They sold the flats and resigned from the management company but they still owned the freehold.

                      It's the management company that is responsible for taking out the insurance etc, not the freeholders. (According to our leases.)

                      Can't you just start a new management company under RTM rules, rather than trying to retrieve the old company and paying all the late filing fines etc?

                      Comment

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