Right of First Refusal on f/r gift?

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    #1

    Right of First Refusal on f/r gift?

    Hi I am wanting to find out more about RFR. I am a Landlord and sublet my leasehold property. It has come to my attention that the freeholder has sold or transferred the freehold to his two sons in Feb 2008. This has only come to light as we are in the middle of an LVT for him ripping us off with Service Charges. I am awaiting the transfer deeds to see on what basis he sold, transferred or gifted the freehold. Now I am aware that in most cases where money has changed hands we have a right to obtain the freehold off the new freeholder at what ever the selling price was.I know certain criteria must be met regarding Qualifying tenants, no more than 50% of building is commercial and issues relating to the Freeholder selling to family members. I would ask that for this thread you treat it that all of this criteria is in our favour as I am certain after looking into it they are. As I don't have the transfer deeds I don't know if money has changed hands I have applied so they should appear soon. From what I can read regardless of how the sale took place we should have been given notice even if the RFR didn't apply. But I would like to know if it was a nil transfer or a gift where do we stand and is there a difference between the two? This is bearing in mind we have had no notice of the change of freehold by either party. Surely there must be some consequences for the freeholder. Any help, thoughts or case studies would be greatly appreciated.
    Thanks Jason
    Tags: deed of trust, freehold, gift, right of first refusal, transfer
    #2
    A 'gift' Transfer does not trigger RFR. Here's why [from LTA 1987, with my underlining]:

    4. Relevant disposals.

    (1) In this Part references to a relevant disposal affecting any premises to which this Part applies are references to the disposal by the landlord of any estate or interest (whether legal or equitable) in any such premises, including the disposal of any such estate or interest in any common parts of any such premises but excluding:
    (a) the grant of any tenancy under which the demised premises consist of a single flat (whether with or without any appurtenant premises); and
    (b) any of the disposals falling within subsection (2).

    (1A) [irrelevant]

    (2) The disposals referred to in subsection (1)(b) are:
    (a)-(da) [irrelevant]

    (e) a disposal by way of gift to a member of the landlord’s family or to a charity;

    (f)-(h) [irrelevant]

    (h) a disposal consisting of a transfer by two or more persons who are members of the same family either:
    (i) to fewer of their number, or
    (ii) to a different combination of members of the family (but one that includes at least one of the transferors)    ;

    (i)-(l) [irrelevant]

    (3)-(4) [irrelevant]

    (5) A person is a member of another’s family for the purposes of this section if:
    (a) that person is the spouse of that other person, or the two of them live together as husband and wife, or
    (b) that person is that other person’s parent, grandparent, child, grandchild, brother, sister, uncle, aunt, nephew or niece    .

    (6) For the purposes of subsection (5)(b):
    (a) a relationship by marriage shall be treated as a relationship by blood,
    (b) a relationship of the half-blood shall be treated as a relationship of the whole blood,
    (c) the stepchild of a person shall be treated as his child, and
    (d) an illegitimate child shall be treated as the legitimate child of his mother and reputed father.
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment

      #3
      Sorry you say the building is not 50 % commercial. The figure is 25% so are they then exempt on that ground alone if it is say 30% non residential.

      I feel sorry for his two sons; assuming you win they are going to be asking Dad for the shortfall!
      Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

      Comment

        #4
        RFR the points in question

        H Guys cheers for the response. To clarify I am aware that a gift does not trigger RFR but cant seem to find want penalty is applied to the freeholder if he gives it as a gift and doesn't notify the tenants. The RFR rules clearly state that he must still notify the tenants as must the recipient. But I can not find what happens if they dont. In all the other occasions where RFR applies the tenants can obtain the property at the price it was sold for and the Freehold gets a hefty fine.
        Also I have checked the RFR legislation and the non resident area must be less than 50% not 25% so we are save on that note.
        Does anyone know what benefit there would be not to give it as a gift but for a nominal value say £1.00. I believe that tax and inheritance maybe less if done this way but am unsure. Any help would be greatly appreciated.

        Comment

          #5
          Sorry I am being a complete idiot crossing my comment on RTE and yours. Yes of course it is 50% net of common parts.

          They are obligated to notify you but if they are correct and no RFR exists then surely it is merely an administrative problem. Without wading through the Act I certainly do not recall a penalty for a gift transaction and not notifying you of the change of the landlord.

          Are you seeking to target the landlord with fines and issues with HMRC? I only ask as I am confused at the direction of the question.
          Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

          Comment

            #6
            Originally posted by joshjason View Post
            H Guys cheers for the response. To clarify I am aware that a gift does not trigger RFR but cant seem to find want penalty is applied to the freeholder if he gives it as a gift and doesn't notify the tenants. The RFR rules clearly state that he must still notify the tenants as must the recipient. But I can not find what happens if they dont.
            As RFR does not seem to arise, the Transferor has no obligation to notify you.
            BUT the sons (Transferees) do. They or their solicitor should have sent to you:
            a. the Transferor's Letter of Authority;
            b. Notice under s.3 of LTA 1985; and
            c. Notice under s.48 of LTA 1987.
            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
            4. *- Contact info: click on my name (blue-highlight link).

            Comment

              #7
              No problem
              We believe that he has either transferred the property or in fact sold it to his sons we do not think he has done it as a gift. Our intention is to obtain the freehold at what ever price he sold it for as we believe this is our right. Of course we understand that there are a great many loopholes here and his barrister will be trying to squeeze through everyone of them. This is why I'm trying to get opioin from people like yourselves with a large degree of knowledge on the subject. I am still suprised that if it is a gift there is no penanlty for not informing us and will look deeper in to that.

              Comment

                #8
                You can contact HMLR and apply for a copy of:
                a. the register entries (which will show the price paid, if there was a price paid); and
                b. a copy of the father-to-sons Transfer.
                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                4. *- Contact info: click on my name (blue-highlight link).

                Comment

                  #9
                  Transfer of Freehold- gift-trust of deed

                  Hi All
                  Please help if you can. My freeholder transferred the property in question to his two sons in Feb 2008. Neither party has informed us to this and we have only found out during a tribunal regarding service charges. I have already found out that even though he transferred as a gift we can still obtain the Freehold at nil cost. The authority for this is Woodridge Ltd v Downie and Downie. My question is in your opinion does the fact that there is also a Deed of Trust accompanying the freehold transfer affect this outcome. I can confirm that the Land registry lists the two sons as the freeholds(landlords) from the transfer date. I know its a tricky one but any case studies that you know of will be a great help to me.
                  Last edited by joshjason; 19-05-2011, 16:39 PM. Reason: spelling

                  Comment

                    #10
                    I cannot locate any case called Woodridge Ltd v Downie and Downie
                    Do you have a full reference for it, please?
                    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                    4. *- Contact info: click on my name (blue-highlight link).

                    Comment

                      #11
                      Hi Jeffrey
                      I to had trouble getting the info so I called the respondents Barrister and asked them to email me the case which they did. At the top of it is this info Status:
                      *239 Woodridge Ltd v Downie and Downie
                      (Reference No. LRA/15/1996)
                      Lands Tribunal
                      30 June 1997
                      (1998) 76 P. & C.R. 239
                      (Mr M. St J. Hopper, F.R.I.C.S.):
                      May 7 and June 30, 1997
                      However I am happy to email you the email they sent me as I have searched high and low for some authority on this and was very pleased to find it.

                      Comment

                        #12
                        Thank you. My normal source of case-law reports is http://www.bailii.org/form/search_cases.html. However, as this is only a Lands Tribunal case, and is therefore not really a binding authority, it does not appear there.

                        So, yes- please send a copy by e-mail if possible. I'll read it and then post my thoughts on it.
                        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                        4. *- Contact info: click on my name (blue-highlight link).

                        Comment

                          #13
                          Hi jeffrey
                          As I'm new I can't send an email through the site could you send me your email address. Mine is joshjason123@hotmail.co.uk if you don't want to advertise yours.
                          Regards
                          Jason

                          Comment

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