Freehold Sale / First Refusal Query

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    Freehold Sale / First Refusal Query

    Our freehold was previously for sale, an offer accepted and we were offered first refusal, we decided not to purchase the freehold, this sale has fallen through we understand. I wanted to ask the following.

    1. If a new offer is accepted with a different buyer will be be offered first refusal again? Even if the selling price is identical?
    2. When the freehold was for sale originally, we had not enacted the right to manage, which we have now acquired. Does this make a difference to the situation? i.e. is the freehold now a different product etc?
    3. We have been told that acquiring the rtm has a detrimental effect on the freehold value, I am unsure of this? How would one value this if it does have an effect?

    Thanks

    Jazzy



    #2
    1. The RFR rules are in a free guide which you can download from www.lease-advice.org.

    2. The freehold title give legal ownership of the property to the title holder and remains the same.

    3. The lease contract gives the freeholder a legal right to demand annual ground rent and annual service charge contributions and charge fees for performing duties in the lease, all paid by the leaseholder for 99 or 125 years depending on the length of the lease.

    4. When a RTM ( right to manage company) is set up by the leaseholders, the RTM company takes over the administration of the service charge account and other duties under the lease from the freeholder who is left only the collecting annual ground rent and proceedings of forfeiture. So the freeholder has only the ground rent income.

    5. If your leaseholders can raise the funds to purchase the freehold title, you can make a offer at 5-10% lower than previous offer.

    Comment


      #3
      Originally posted by Gordon999 View Post
      1. The RFR rules are in a free guide which you can download from www.lease-advice.org.

      2. The freehold title give legal ownership of the property to the title holder and remains the same.

      3. The lease contract gives the freeholder a legal right to demand annual ground rent and annual service charge contributions and charge fees for performing duties in the lease, all paid by the leaseholder for 99 or 125 years depending on the length of the lease.

      4. When a RTM ( right to manage company) is set up by the leaseholders, the RTM company takes over the administration of the service charge account and other duties under the lease from the freeholder who is left only the collecting annual ground rent and proceedings of forfeiture. So the freeholder has only the ground rent income.

      5. If your leaseholders can raise the funds to purchase the freehold title, you can make a offer at 5-10% lower than previous offer.
      Thanks Gordon, i should have clarified that it's the freehold for our building, we don't currently own it. My main query is that the previous sale which we didn't as leaseholders act upon the first refusal, does this have to be repeated with a new sale?

      Comment


        #4
        See procedures in section 5 of free guide :

        https://www.lease-advice.org/advice-...first-refusal/

        I think freeholder has to sell at the price declared or withdraw for one year ???

        Comment


          #5
          The sale probably fell through when you decided to set up the RTM Company. You should qualify for the right to buy the freehold and if you cannot reach agreement with the freeholder, you can apply to the FTT to set a price.

          Comment


            #6
            Originally posted by Gordon999 View Post
            See procedures in section 5 of free guide :

            https://www.lease-advice.org/advice-...first-refusal/

            I think freeholder has to sell at the price declared or withdraw for one year ???
            If the lessees accept and then the landlord withdraws before completion he has to wait a year

            If he is greeted with silence he can offer again within a year at a lower price

            Comment


              #7
              Originally posted by eagle2 View Post
              The sale probably fell through when you decided to set up the RTM Company. You should qualify for the right to buy the freehold and if you cannot reach agreement with the freeholder, you can apply to the FTT to set a price.
              We carried out the RTM because we do no want to purchase the freehold.

              It would be useful to understand what ‘damage’ the RTM can do to the value of the freehold.

              We’ll likely wait for another right to first refusal offer or collectively franchise at a latter date.


              Comment


                #8
                Originally posted by sgclacy View Post

                If the lessees accept and then the landlord withdraws before completion he has to wait a year

                If he is greeted with silence he can offer again within a year at a lower price
                I’m confused, if another buyer was prepared to pay the same amount we wouldn’t as the leaseholders be offered a first right to refusal? But the freeholder can’t sell it for less? Or more?

                Comment


                  #9
                  Jazzy ,

                  I can see you are confused if leaseholders decline to accept RFR for the right to buy the freehold title of your block of fltas.

                  Comment


                    #10
                    Originally posted by sgclacy View Post

                    If the lessees accept and then the landlord withdraws before completion he has to wait a year

                    If he is greeted with silence he can offer again within a year at a lower price
                    This is incorrect.
                    The freeholder cannot* sell at a better price, or with more favourable conditions, within a year regardless of whether or not the leaseholders accept the offer, accept but then withdraw, or don't respond at all. This is to prevent the freeholder offering the leaseholders the 'opportunity' to buy the freehold at a ridiculous price that they will obviously refuse, and then selling it much cheaper.



                    *Technically they can sell at a lower price, but if they don't first offer the leaseholders the chance to buy at that price the leaseholders have the right to force the new buyer to sell them the freehold at the purchase price.

                    Comment


                      #11
                      Originally posted by jazzythumper View Post

                      We carried out the RTM because we do no want to purchase the freehold.

                      It would be useful to understand what ‘damage’ the RTM can do to the value of the freehold.

                      We’ll likely wait for another right to first refusal offer or collectively franchise at a latter date.

                      The RTM Company results in the freeholder losing all the "perks" of receiving commission and backhanders from nominating contractors so the value of the freehold interest can only be based now on the right to collect ground rent and the price to be paid becomes a mathematical exercise of the current value of future ground rent income only.

                      Comment

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