Implications of the Enfranchisement Notice
The first piece of legal paperwork which you will come across when trying to buy the freehold of your block of flats is the Section 13 Notice, or Enfranchisement Notice. You are required by law to issue this notice, but there is no standard legal format. It is therefore definitely worthwhile getting a legal specialist on board to draft this Notice for you.
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What has to be included in the Section 13?
Legally, certain key pieces of information have to be included on the Notice. These include:
· Name and address of the named purchaser ( known as “the nominee purchaser” – often a company set up by the participating leaseholders specifically for this purpose)
· Full details of the property concerned – including any “appurtenant property” (see below)
· The price the leaseholders are offering for the freehold
· Names, addresses and signatures of all the leaseholders participating in the freehold right to buy process.
Please note, your solicitor will have to be particularly careful with this last particular requirement when dealing with larger blocks. Recently we dealt with a block of 152 flats where we acted for 95 separate leaseholders – we had to take significant care that the notice contained accurate details of each and every one of those leaseholders, and that each and every one of those signed the notice
Issuing the Notice also sets in motion a series of deadlines which both parties must stick to in order to keep the freehold purchase on track.
Your Freehold Purchase – Problems with the Section 13 Notice
Drafting the Enfranchisement Notice is something for an experienced solicitor. A surprising number of attempts to buy the freehold fall apart at this stage if the Notice is not valid.
If this happens, leaseholders have to wait a full year until they can start the process again by issuing another Notice. make sure you get expert legal advice from a solicitor with plenty of knowledge and expertise in collective enfranchisement who can help you to get the Notice right. If you do use a solicitor who is responsible for producing an invalid notice, may well have grounds for a professional negligence claim against him or her.
There are also several legal loopholes which canny freeholders might exploit to get the notice declared invalid, and an experienced freehold purchase solicitor will also help you avoid these. Our specialist leasehold team also represents freeholders. That means that we are well aware of what to look out for.
Invalid Enfranchisement Notices
If your freeholder wants the Section 13 Notice to be declared invalid, they must make an application to the County Court. In these circumstances, while the Court application is being considered, the freehold purchase is halted. Leaseholders cannot move onto the next step until the County Court has issued its decision.
Even if the freeholder accepts that the Notice itself is properly drafted and valid, the freeholder will probably serve is known as “a Counter Notice” on the leaseholders.
This is a legal response to the Enfranchisement Notice and should contain a counter offer – the freeholder’s alternative suggested price for selling the freehold.
However yet again, sticking to the strict deadline is essential. If the freeholder doesn’t serve the Counter Notice by the deadline specified in the Enfranchisement Notice (usually two calendar months), the freeholder is legally obliged to sell the freehold do those participating leaseholders at the price stated in their original Enfranchisement Notice.
For this reason, most sensible an experienced freeholders get specialist legal advice immediately. They know that getting the Counter Offer wrong could cost them financially.
Should we just make a very cheap offer to the freeholder?
The tactic of offering a rock bottom price to the freeholder in the hope that the freeholder doesn’t respond is a gamble which doesn’t often pay off.
Why? Your freeholder is well within their rights to have the Section 13 Notice declared invalid if the County Court thinks the price you are offering is unrealistically low.
That’s yet another reason why it essential to make sure you get valuation advice from a surveyor specialising in enfranchisement premium valuation.
Counter Notices and Very High Demands
If the price being demanded by the freeholder in their counter offer is considered too high, the leaseholders also have a right to challenge it.
At this stage, normally the freeholder and leaseholders will try to negotiate a mutually acceptable price – with the assistance of their respective surveyors and solicitors. Fortunately, in the vast majority of cases, an acceptable compromise is possible.
However, if not, that will involve an application to the First-Tier Property Tribunal for a decision on the right level of premium for buying your freehold. The tribunal can also be asked to rule on whether or not the freeholder’s legal and valuation costs are reasonable – because leaseholders are obliged to pay those reasonable costs in any statutory enfranchisement application.
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Should additional areas be included in our Enfranchisement Notice?
When leaseholders are going through the process of buying the freehold of their block, they have the opportunity to also buy any garages, gardens or additional property.
This is something which should be considered when preparing the documents to make a legal offer to buy the freehold. Additional areas could cover things such as pathways, parking spaces, forecourts or walkways, and are legally referred to as “appurtenant property”.
If as part of the freehold purchase you wish to buy this appurtenant property, then you have to state this clearly in the Section 13 Notice.
Does a garage form part of the lease?
When undertaking a freehold purchase, leaseholders have the legal right to get the freeholder to sell the garage, if the lease of the flat includes it. The garage and flat are said to be tied and linked, and if the leaseholder wants to buy the garage too as part of their enfranchisement, then the freeholder is obliged to sell it.
If however the flat and the garage are not legally linked but the same person holds the lease for both, then again the leaseholder is legally entitled to buy the freehold of the garage as well as that of the flat should they wish to do so. Remember also that the leaseholder doesn’t even need to buy the freehold of their flat or take part in a collective enfranchisement to buy the freehold of the garage as it considered to be completely separate.
Appurtenant property – ensuring the Section 13 Notice is correct
When the Enfranchisement Notice is being prepared, it is important to make sure that, where appropriate,not only the details of the flat are included. It’s also essential that you include any additional or appurtenant property.
The first section of the notice should cover the block of flats itself, and the second should cover the appurtenant property of any garages, parking spaces, pathways or outbuildings which are to be bought as part of the freehold purchase.
If these other areas are not put into the original Enfranchisement Notice, the freeholder is legally allowed to assume that any offer made is purely for the block of flats and that the leaseholders do not wish to purchase the appurtenant property.
If the leaseholders do wish to purchase garages, outbuildings or other areas, then this has to be explicitly stated.
Your Freehold Purchase – the need for Specialist Legal and Valuation Advice
The collective enfranchisement process can be challenging, especially when your freeholder’s legal team tries all the tricks in the book of exploiting technicalities and loopholes to throw a spanner in the works. That’s sadly not unusual.
It’s therefore really important that you instruct a solicitor with plenty of regular experience in managing freehold purchase and lease extension projects.
Very few solicitors specialise in this area. Our five strong leasehold team does nothing but this and right to manage work, dealing with around 500 cases every year.
So, by instructing us, you can be sure that you got a genuine specialist on your side.
Need help with drafting a Freehold Purchase Section 13 Notice? Contact our specialists today
Buying your Freehold is complex. You will need expert legal advice. Our specialist team can help you wherever or block is situated in England and Wales.
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