Freeholder Ceased Trading - various queries

[Tony P]

The Freeholder (a Ltd Company) of our block of flats has written to the RTM Company saying they have “ceased trading”. The individual Leaseholders have been told nothing.

The Freeholder owns a third of the flats and is in arrears to the RTM for Service Charges on its flats. The flats are still occupied by Tenants, presumably on ASTs.

This raises the following matters, possibly others, –

1.I know the Law says a Freehold sale must first be offered to Leaseholders. Would this apply to a transfer of the Freehold to another Company in these circumstances, even if under the same or similar shareholder ownership?

2. What is the situation of any Ground Rent obligation of Lease flats – the Freeholder has not demanded them for many years.

3. There is nothing on file at Companies House, according to WebCheck, about the ceasing of trade. Should there be?

4. The RTM was about to commence action for Service Charge recovery (Letters Before Legal Action were sent shortly before the ‘ceased trading’ letter. What should the RTM be doing about this now?

5. Should we (as the RTM and as individual Leaseholders) be doing anything further to protect or enhance our position and Rights?

All replies appreciated. Thanks.

[leaseholdanswers]

1: Issue a money claim now

2: Issue a money claim NOW

3: Once you have done 1 and 2 then you can look at the rest.

Your biggest and only real worry is that your RTM is at risk of insolvency if the 33% contributions are not paid in full, or at all.

The letter might be a precursor to them winding up the company which with 3 flats paying rent seems odd.

There are a number of steps you can take to verify what they are doing, and limit their ability to sell the flats without cleaning the charges but you need legal advice now from someone who has direct sight of all the records leases and information.

It's not something you can DIY.






1.I know the Law says a Freehold sale must first be offered to Leaseholders. Would this apply to a transfer of the Freehold to another Company in these circumstances, even if under the same or similar shareholder ownership?

Transfer to an associated company is exempt, but they cannot leave the debt to the RTM with that company, again something that can be influenced, as above.

2. What is the situation of any Ground Rent obligation of Lease flats – the Freeholder has not demanded them for many years.

Leaseholder's are liable for 6 years worth.

3. There is nothing on file at Companies House, according to WebCheck, about the ceasing of trade. Should there be?

We don't know what they mean, and whatver it does mean, if it is notifiable, it will take time for CH to update.

4. The RTM was about to commence action for Service Charge recovery (Letters Before Legal Action were sent shortly before the ‘ceased trading’ letter. What should the RTM be doing about this now?

See above.

5. Should we (as the RTM and as individual Leaseholders) be doing anything further to protect or enhance our position and Rights?

Get detailed legal advice no as it is outside the scope of DIY and a forum.

[Gordon999]

Google search for a "solicitor + service charge arrears" to help your RTM to claim the SC arrears.

Buy a copy of the freehold title from Land Registry Online to check recent change of ownership.

[Gordon999]

Google search for a "solicitor + service charge arrears" to help your RTM to claim the SC arrears.

Buy a copy of the freehold title from Land Registry Online to check recent change of ownership.

Just had a re-think. HMRC treats ownership of BTL properties ( i.e one third of flats in Building ) as a "property rental business" with rent income collected from tenants and outgoings such as "service charges". These are all reportable as income and expenses in annual accounts filing required by Companies House. So this company hasn't ceased trading.