Acquiring the Freehold Interest from a Dissolved Company

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The situation may arise where a company is dissolved or struck of a companies register without disposing of all its assets. If one of the dissolved company’s assets includes the freehold interest in your building then this is likely to become an issue for the leaseholders.

This is because the freeholder is (subject to the terms of the individual leases) generally responsible for the repair, maintenance and insurance of the building and in some cases, the whole estate that the Building is situated in. If the freehold company is dissolved then the building is effectively ownerless and often the building will be uninsured and fall into disrepair unless the leaseholders take action to prevent this. It may also cause issues for the leaseholder if they are seeking to remortgage or sell their flat if the freeholder is not present and complying with their obligations under the lease.

The leaseholders can take informal steps to repair, maintain and insure the building however, without taking formal steps to replace the dissolved freeholder then, especially in larger buildings, they may not be able to recover the cost of doing so from the leaseholders through the service charge.

The best option for the leaseholders is therefore to take steps to jointly act together to acquire the freehold interest and formally take over the freeholder’s obligations under the leases.

What kind of Claim can the Crown deal with?

When a company is dissolved, it’s assets revert to the Crown and the Crown will appoint an agent to act on it’s behalf to deal with the disposal of the asset. The land is known as ‘Bona Vacantia’ land and the Crown will not carry out any acts of management in respect of the land. This means that the Crown will not arrange any repair, maintenance and insurance of the building but also means that they will not grant a lease extension and will often not even transfer part of the freehold title (for example, if there is a large estate they may only be willing to transfer the freehold of the whole estate instead of the freehold title to one building).

How will the Crown deal with the Claim?

The Crown will deal with the claim in different ways depending on the country the dissolved company is registered in, the area that the property is based in and how long the company has been dissolved for.

We have set out a basic summary below of how we would expect the Crown to deal with each scenario (although please note that this will depend on the specific facts of each case):-

1. If the company was registered in England and Wales and has been dissolved in the last six years, the Treasury Solicitor may write to the last known directors of the dissolved company to enquire whether they wish to restore the company to the register. If the dissolved company is restored to the register, the participating tenants can proceed to make a collective enfranchisement claim to acquire the freehold interest.
2. If the company was registered in England and Wales and has been dissolved over six years ago, the Treasury Solicitor will deal with the claim on behalf of the Crown. It is worth noting that the Treasury Solicitor can disclaim the land at any time in which case the freehold title is deemed to be extinguished and the matter will be passed to the Crown Solicitor, Burges Salmon LLP to deal with.
3. If the company was registered overseas, the matter will be dealt with by the Crown Solicitor, Burges Salmon LLP, as disclaimed land. The freehold title to the land is deemed extinguished and a new freehold title will need to be granted to the participating leaseholders.
4. If the property is within the County Palatine or the County Cornwall the Duchy of Lancaster and the Duchy of Cornwall respectively are responsible for dealing with the asset on behalf of the Crown and their solicitor, Farrer & Co, will deal with the claim.

How is the Freehold Valued?

The freehold interest will be valued by the District Valuer once instructed by the Crown’s representative and the participating leaseholders will be responsible for the District Valuer’s fees. If the participating leaseholders would prefer to have an estimate of the value of the freehold interest prior to commencing the claim, they will have to instruct a specialist valuer to provide a valuation report at the outset. We can recommend specialist valuers to assist with this aspect of the claim.

How can we assist you?

For further information about the procedure or if you would like to discuss a prospective purchase of the freehold interest from a dissolved company and/or would like to obtain a quote for our fees please do not hesitate to contact Sajel Patel on sajel@leaselaw.co.uk or 0204 511 9103 or Jade Thomas on jade@leaselaw.co.uk or 0204 511 9100.