Selling freehold to one of two leaseholders ROFR

[UnicornHorn]

Hi, looking for some advice! I own a freehold of a block of 2 flats. Both with long lease leaseholders (130 years remaining). Leaseholders(1) has asked to buy the freehold and I would like to agree. But they do not want to share the freehold with the other leaseholder(2) and have asked me not to submit an ROFR.

Can I sell the freehold directly to the leaseholder(1) without ROFR? (The second leaseholder(2) will only buy if they can share the freehold (cheaper) with the first leaseholder(1) but leaseholder(1) does not want to share the freehold).

So basically I cannot sell unless I can sell directly to leaseholder(1) without offering the freehold to leaseholder(2).

Can I do this?
Thank you!

[Peter68]

No, not if the block meets the RFR requirements. Except from LAS:

There must be at least two flats in the building, so the right does not apply to houses occupied as one unit – but will, of course, apply to a house which has been converted into flats.There are three requirements for the premises to be subject to the RFR:

• they must contain at least two flats; and
• no more than 50% of the premises to be in non-residential use; and
• more than 50% of the flats in the premises must be held by ‘qualifying tenants’.

The building will be excluded from the RFR if more than 50% (excluding the common areas) is not in residential use, say offices or shops. The measurement excludes any common parts of the residential building, such as staircases, landings etc. The Act refers to parts of the premises occupied or intended to be occupied for non-residential purposes. A building could be excluded if it contained empty spaces which made up more than half the building which the landlord intended to use for non-residential purposes, such as storage.

The solution seems to be to offer it via RFR and then sell to Leaseholder1 on the open market when the offer notice expires

[UnicornHorn]

Thank you. Its a converted house, so 2 flats. I was hoping not to have to do an RFR but if that covers my back then that's better.

Can I just send a letter asking if they want to buy it at a set price or do I have to use a special form?

[Peter68]

I'd use a solicitor (someone who knows what they're doing) as like most leasehold and freehold law it's pretty gnarly and the notice and its service on the qualifying tenant have to be right.

The LAS guidance is gives a pretty comprehensive summary (https://www.lease-advice.org/advice-...-first-refusal) and I also got hold of a copy of the Tenants Right of First Refusal by Radevsky & Clark which helped, although it's no substitute for a good solicitor!

[UnicornHorn]

Thank you!

I saw that the advice states:

"Where there are less than 10 qualifying tenants he may serve on all but one of them. This means that, where there are only two qualifying tenants, the landlord could comply by serving the Offer Notice on only one of them."

Perfect for me!

Thanks for your help!

[Anna1985]

There is a slight problem - it is used generally in the case of missing leaseholder.

Since you are well aware where two of your leaseholders live, it is best to follow solicitor route and service section 5 notice to both leaseholders.

[Anna1985]

Ultimately, the L1 will refuse to buy with L2 and the freehold will be available on open market, you can then sell to whoever offers the higher price.

[Section20z]

You can only sell for the price on the section 5 notice.

[Neelix]

Ultimately, the L1 will refuse to buy with L2 and the freehold will be available on open market, you can then sell to whoever offers the higher price.

How can you offer the freehold to one owner but not the other - that sounds very unfair to me

[Gordon999]

How can you offer the freehold to one owner but not the other - that sounds very unfair to me

The entire freehold ownership of leasehold properties is unfair .

[Anna1985]

Section20z , the same price or more.