Joint freehold-reversion-owning trustees' obstinacy

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    Joint freehold-reversion-owning trustees' obstinacy

    I am in the process of selling my flat. There are 6 in the block and the lease has 65 years to run. We own a share of the freehold by way of a trust deed with 4 named trustees who hold the feehold interest for the other 2 flats (mine being one) as beneficiaries. We cannot proceed with the sale as my buyers solicitors are requesting an assurance that a future lease extension will not be a problem. The trustees have been contacted by my solicitor on this matter and the response has been negative. We are at present still trying to negociate however I am not sure how much longer my buyer will hang on for.

    If everything goes pear shaped what is the best way to proceed from here?

    As trustees are they in breach of trust for not acting in my best interest?

    Also as trustees can they demand large sums of money from me to extend the lease?

    If I issue them with a s42 exercising my right to a lease extension and they refuse to deal with the notice, do I refer to an LVT, or go through the courts and sue for breach of trust.

    I have not discussed litigation with my solicitor at present as we are hoping not to go there, however I do find the position I am in totally ludicrious and feel as though I do not own my own property.

    Is there some sort of indemnity insurance you can have against this happening?

    Any advice would be greatly appreciated!

    #2
    1. As there are six flats, I would normally have recommended forming a mgt. co. to hold the freehold reversion. Trustees-holding is OK for a block of 2/3/4 flats but unwieldy for larger numbers.
    2. Serve Notice (s.42 of 1993 Act) to stake-out your right to extend, assuming that you have owned for >2yrs.
    3. The purchase price (premium) will be nil, given that you (or a predecessor lessee of your flat) paid one-sixth of f/r purchase price.
    4. As to breach of trust, refer to the Trust Deed which (I hope) exists and should oblige trustees to work for joint benefit of all six lessees.
    Last edited by jeffrey; 14-08-2007, 11:23 AM. Reason: typo
    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
      Hi Jeffrey

      Thanks for your prompt reply. Your comments are reasuring.

      The trust deed does exist and states that

      "the trustees hold freehold estate in the proeprty conveyed to them by the transfer on trust for the tenants and occupiers from time to time of the six flats comprised in the property as demised by the leases and to discharge the duties and exercise the powers of the landlord under the leases"

      I assume that discharging of duties would include signing lease extensions?

      Interestingly it also states

      "In the execution of these trusts the trustees need not act unanimously but may act by a descision of any two trustees"

      Would this mean only 2 signatures be required on the lease extension deed?

      Once again your advice is greatly appreciated.

      Comment


        #4
        1. No. "Discharging duties" is not the same as "exercising powers". The trustees do have to obey those covenants in leases which bind the landlord (= discharging duties) but cannot be compelled to exercise discretionary powers- that's what 'discretionary' means!
        2. However, if you have a legal right to the leasehold extension, the trustees are compellable to grant it. They are legally bound by statute, as for any other reversioner (= discharging duties).
        3. Taking decisions by majority vote is not the same as executing deeds. If f/r is in four names, all four must execute.
        Last edited by jeffrey; 19-08-2007, 12:56 PM. Reason: Wording expanded, to clarify
        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


          #5
          Many thanks Jeffrey

          However how do I physically get their signatures on the lease extension deed if they just refuse to sign?

          Comment


            #6
            Originally posted by potzerella View Post
            Many thanks Jeffrey

            However how do I physically get their signatures on the lease extension deed if they just refuse to sign?
            You would need a Court Order, unfortunately. If they then still refuse to execute the Deed:
            a. it would possibly be contempt of court; and
            b. the Court could order that:
            i. the person or people refusing be removed as a trustee (under s.25 of Trustee Act 1925); or
            ii. a Judge be authorised to execute on behalf of the person or people refusing.
            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
              Once again thank you for your prompt reply

              I hope I do not have to undertake such drastic action, however it is reasuring to know that there is a solution and I will be able to obtain a lease extension in the end!!!

              Comment

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