Bona Vacantia – Freehold Purchase
When a company is dissolved either through the formal liquidation process or strike off, any assets that have not been sold, transferred or dealt with by other means prior to the dissolution of the company will become ownerless goods also known as ‘Bona Vacantia’.
The Bona Vacantia assets pass to the Crown through the operation of law and are dealt with by the Treasury Solicitor as the Crown’s nominee.
If you are a leaseholder and own a leasehold flat or house where the freeholder is a company that has been dissolved, you can make an application to the Bona Vacantia Division (within the Government Legal Department) to purchase the freehold reversion of your lease. Before making the application, you should enquire with other leaseholders in your building whether they are willing to participate in the application for the freehold purchase. If they agree to participate then this can be done by either setting up a management company with the leaseholders becoming members or through a joint sale. If they do not, you can still apply but the other leaseholders will have to complete a form stating that they do not wish to participate.
The application for the freehold purchase will need to be made to the Bona Vacantia Office with jurisdiction for the area. This is based on where the registered office and the assets of the dissolved freehold company were situated. For registered offices and assets in England and Wales the application will need to be made to the BVD office in Croydon. For registered offices in the Scotland, Northern Ireland, Duchies of Lancaster or Cornwall check the BVC1 guidance on the www.gov.uk website for further details. The application will also need to include details of the dissolved company, details of all leaseholders, offer declined forms, official copies including title plan for both freehold and leasehold flats, copies of all leases, details of any dispute, details of the person collecting ground rent, property charges/mortgages, details of solicitors acting and a cheque if required.
Once the application has been made you are not only liable for your own legal fees but also become liable for the legal fees of the Crown.
The purchase price of the freehold is determined by considering:
1) the value of the flats;
2) the unexpired term;
3) the ground rents
A District Valuer will need to be instructed where the value of flats is over £250k or the leases have less than 80 years unexpired. The District Valuer will attend the property to assess the value and recommend a sale price (‘premium’). If the value of the flats is not over £250k and the leases have more than 80 years unexpired, a district valuer will not be required as the premium will be determined by combining the ground rent of all flats and multiplying it by 15. The same principles apply if there are leasehold reversions involved except that the rent due to the freeholder will be deducted when calculating the value of the freehold.
It is often possible to negotiate the premium with the other side to come to a deal. If you do not agree with the premium it may also be possible to obtain independent valuation advice and/or serving a freehold purchase notice on the Crown under the provisions of Leasehold Housing, and Urban Development Act 1993. Although, the Crown is not bound by the Leasehold Housing, and Urban Development Act 1993, they may be prepared to comply with the principles of the process.
The Crown aims to deal with these transaction within 12 months of being approached before deciding whether it should disclaim the property. The Crown is not obliged to sell to you and may decide to disclaim the asset. The notice of disclaimer of an asset will usually published in the London Gazette and a copy is sent to the Registrar of Companies. On disclaimer any leasehold title is ended, and freehold title will ‘escheat’ to the Crown Estate.
If you own a leasehold house or flat and need advice regarding the above, contact one of our specialist solicitors within the leasehold services team who may be able to assist.