Freehold right of refusal

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    Freehold right of refusal

    Hello all,

    I've got myself in a bit of a pickle and I'm really hoping for your advice.

    I'm selling a flat in a building that contains 1 other flat. It's a conversion.
    When I bought mine, it came with the freehold for the building and the leases were 999 years on their creation some years ago.

    I didn't know about the right of refusal and unfortunately it went under my solicitor's radar. The flat went on the market and under offer almost immediately. It was vacant and the buyers asked if they could move in and rent it while the sale went through. This they have duly done and are very commited to the purchase.

    Unfortunately 2 months in, the leasehold owners of the other flat have pointed out that we should have offered them the freehold and are really pretty cross.

    My solicitor is consulting someone in his firm who is more expert in freehold/leasehold law and has yet to get back to me with a plan or answers to my questions.

    So in the meantime I've been reading up on the lease website to try and understand what we need to do. I know I need to send a section 5a and give the tenants 2 months to respond either way.

    I was wondering whether anyone has a template of the section 5a form and whether you feel I could fill it out and send it myself?

    I think I'm right in that you can set the price and it's non negotiable? But that if refused then this is the price the freehold must be sold for if sold during the next 12 mths?

    If refused, would it be possible to incorporate the price into the flat sale? The property was previously to be sold at a price that included the freehold. So for example, we set the freehold price at £20,000 and it's refused. Can we then put the flat (inc freehold) up for sale for £145,000 and separate the prices within that figure. Meaning the freehold at £10,000 and the leasehold property at £125,000?

    Thanks for all and any help!

    #2
    Your solicitor is a nonce. There is no legal obligation to serve section 5 on the other lessee.
    Also very surprised that he agreed to your buyer renting the flat.
    Best get the sale over and done with and get out asap

    Comment


      #3
      Hi Section20z,

      thanks for your reply. Can I ask why you feel there's no legal obligation to offer them first refusal? Everything I've read so far points to it being necessary..... Would be very happy indeed if I don't need to do it!

      Comment


        #4
        If there are two flats in the block including yours, you do not need to serve a Section 5 Notice for the following reasons

        1) You have decided not to sell collectively, so it is impossible for the other flat (who feels aggrieved) to represent more than 50%

        2) A section 5 notice is validly served if served on all but 1 when there are less than 10 units. Therefore, it can be explained why the other flats who feel aggrieved was not served with a notice





        Comment


          #5
          Originally posted by Section20z View Post
          Your solicitor is a nonce.
          There are better adjectives you could use

          Comment


            #6
            That's a noun.
            There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

            Comment


              #7
              Sgclacy, thank you! I've reread the advice on the lease website and I obviously totally missed the significance of the qualifying tenants needing to make up more than 50%.

              I'm still waiting for my solicitor to get back to me and confirm, but I did call him this morning and run the above past him. I hoping we'll be in the clear and able to continue with the sale.

              Thank you again
              Tulsie

              Comment


                #8
                Originally posted by doobrey View Post
                That's a noun.
                Yup, adjective would be something like noncey surely

                Comment


                  #9
                  Your buyer might want to consider separating the freehold from the leasehold title post-purchase and offering the other leaseholder the chance to buy 50% of the freehold. There will not be much value in the freehold given the length of the leases and in a building with just two flats it makes sense for the freehold to be owned jointly.

                  Comment


                    #10
                    Originally posted by vmart View Post
                    Your buyer might want to consider separating the freehold from the leasehold title post-purchase and offering the other leaseholder the chance to buy 50% of the freehold. There will not be much value in the freehold given the length of the leases and in a building with just two flats it makes sense for the freehold to be owned jointly.
                    Yes that would make sense.
                    Can I take it then from your reply that you too consider there is no requirement in this instance to offer RFR?

                    To clarify, I'm not resident in the property, nor have I been. It's always been rented out.
                    However, as sgclacy and the lease website says that for a premises to have the requirement of RFR then:
                    • more than 50% of the flats in the premises must be held by ‘qualifying tenants’.
                    Surely in this case there can't be more than 50% qualifying tenants?

                    Still no response from my actual solicitor... Sigh. I'm starting to agree with section20z!

                    Comment


                      #11
                      In ur situation, since it is only 2 flats, both leaseholders need to participate in RFR. The 50% requirement does not apply. If u check the LEASE website, I believe this is captured there.

                      Comment


                        #12
                        Others have answered your question. FYI, it is also true that where there are only two units both would need to participate if they wanted to buy the freehold. This does not apply to your situation as one of the two unit holders (you) own the freehold. Go to the lease website and use the lease extension calculator to obtain a ball-park figure as to the value of the freehold. NB: it does not take account of rising ground rents and details cannot be used in Court since it is not intended to replace a professional valuation. In your case, however, my belief is, it will suffice as you (or your buyer) will negotiate on an informal basis especially since the other unit holder cannot force the sale of the freehold.

                        Comment


                          #13
                          The free guide to RFR can be downloaded from LEASE website :

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

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