Absent Landlord

introduction

If you are a leaseholder and your landlord cannot be found, you may still be able to exercise your statutory rights, such as extending your lease or purchasing the freehold of your property.

The legislation has accounted for this particular situation so that it does not prevent leaseholders from doing so.

For example, you can still:-

  • Extend your lease under the Leasehold Reform Housing and Urban Development Act 1993;
  • Purchase the Freehold collectively by way of Collective Enfranchisement under the Leasehold Reform Housing and Urban Development Act 1993;
  • Purchase the Freehold of a House under the Leasehold Reform Act 1967
  • Exercise Compulsory Purchase under the Landlord and Tenant Act 1987
  • Exercise the Right to Manage under the Commonhold and Leasehold Reform Act 2002.
  • Apply for the Appointment of a Manager by the Tribunal under the Landlord and Tenant Act 1987
How Is this achieved?

Essentially if the Landlord needs to carry out some activity to grant you what you asking for (such as granting the new lease), then this will be achieved with the assistance of the County Court, via something known as a "vesting order". This will effectively allow the Court to take the place of the Landlord in the carrying out of that function.

In the case where there is a sum of money payable to the Landlord in exchange for the claimed asset, then this money is paid into Court instead.

It then remains open of the Landlord to claim such money directly from the County Court should he ever return.

What is the effect of a vesting order?

A Vesting Order is an Order made by Court that enables property to be transferred without a conveyance. As the name implies, the property effectively "vests" into the name of the recipient.

In the case of Absent Landlord proceedings, the Freehold title for the purposes of the application vests into the Court, thereby allowing the Court to either transfer that Property (such as under Enfranchisement law) under the powers of the vesting order, or grant a new lease, (such as in the case of a lease extension under the same 1993 Act legislation).

Vesting Orders can also arise in situations where Freehold property is disclaimed, which can occur when for example a Freehold Company goes into insolvency. In such a case the Crown has particular rights to sell the property, or disclaim it. The Crown estate will often attempt to sell the Freehold property to the Leaseholders whose leases are subject to the freehold. This subject is somewhat different than the subject matter of this page, an article on this subject matter will follow in due course.

How long does a vesting order take?

The process involves applying the County Court who will need to verify that the Landlord is indeed absent.

Then providing they are convinced of this (and that the applicant leaseholder(s) have taken sufficient reasonable steps to attempt locating the missing Landlord, then the Court will usually transfer the case to either the First-tier Tribunal (in the case of 1993 Act claims), or the Upper Tribunal (in the case of 1987 Act claims) to determine the terms.

Once those terms have been determined, the case will be transferred back to the County Court which will make the Vesting Order and provide for the stages for the payment of the monies (into the Court Funds Office) and upon the provision of the receipt, the Court Distinct Judge will execute the Lease or Transfer, as the case my be.

This entire process takes approximately 8 to 12 months largely due to the procedural time frames of both the County Court and Tribunals.

how is the price established?

When extending the lease or purchasing the Freehold, there is a usually a degree of Negotiation involved between the Leaseholder and the Landlord (usually by their respective Surveyors involved), however this process is different when a Landlord is absent, since there is nobody to negotiate against.

Instead the law requires that an application is made to the First-tier Tribunal (or Upper Tribunal in the case of Compulsory Purchase under the Landlord and Tenant Act 1987).  The Tribunal will require the Leaseholder to present the Tribunal with a Surveyor Report that has been created impartially to assist the Tribunal in deciding what the ultimately price should be.

The process is slightly different in the case of Compulsory Purchase under the Landlord and Tenant Act 1987, as the Upper Tribunal will specifically nominate their chosen Surveyor.

What are the pros and cons compared to the usual process?

Even though the Tribunal is determining what should be the reasonable price (known as the "Premium"), the ultimate price is typically more favourable to the Leaseholder than if the Landlord were not absent to argue in favour of an inflated Premium.

It can be reasoned that the Leaseholder has incurred costs unnecessarily as a result of the Landlord's absent. As such, the costs that have been incurred by the leaseholder should be claimable against the Landlord, and offset against the Purchase price payable to the Court.

Whereas we estimate that the average process takes approximately 6 months to complete, in an Absent Landlord process, due to the Court and Tribunal average timespans to deal with proceedings, this is estimated at approximately 12 months in total.

 

ConClusion

Do not be deterred from exercising your rights in an Absentee Landlord situation.

leaseholders can achieve outcomes through the Absent Landlord procedures, and many of the costs involved can me mitigated.

However it is advisable that leaseholders appoint Solicitors that are familiar with the subject matter.
Contact us to be put in touch with specialists who can help.

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Disclaimer: the contents of this site do not constitute legal advice and should not be relied upon as a substitute for legal counsel
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