Is Your Landlord Absent, Missing, Dead Or Just Lazy

Whatever word you or the Law chooses the fact is that you need something from your Landlord but cannot contact them.

You may need to extend your lease so that you can sell, remortgage or equity release your property. You may want to buy your freehold or there could be some repairing or insuring obligation that the landlord is failing to provide.

Or you may wish to buy a leasehold property but are told that there is an absentee landlord or that the freeholder is missing.

In each case you cannot move forward if the landlord or freeholder cannot be found or seems to be ignoring you……but there is legislation that can help in every case.

We first set out the law and then explain the processes involved.

The Law To Protect Leaseholder’s Rights

The Act also gives a majority of qualifying leaseholders the right to acquire the freehold of their building, on certain grounds which are all generally fault based e.g. if the landlord is in breach of their obligations relating to the repair or maintenance of the building.

If the landlord is “missing” they are normally going to be in breach of these obligations.

The Court has the power to make a compulsory acquisition order which can be followed by a vesting order. Whilst fault must be proved on the part of the landlord, the benefit of using the Landlord and Tenant Act 1987 instead of the Leasehold Reform Housing and Urban Development Act 1993 is the premium payable for the freehold is generally less.

The premium payable under the 1987 Act is a market premium which is determined by a surveyor appointed by the President of the Upper Tribunal. This is an extremely useful piece of legislation particularly if the leases have less than 80 years left to run, and may save leaseholders a considerable sum of money.

Lease Extensions

The Leasehold Reform Housing and Urban Development Act 1993 gives qualifying long leaseholders a statutory right to extend their lease by 90 years at a peppercorn ground rent. The process is begun by the service of a claim notice.

But if the landlord is missing this becomes problematic. However the Act itself provides a solution to this stumbling block. The leaseholder can apply to the Court for a vesting order.

The Court has the power to grant an order which vests a new lease in the leaseholder which overcomes the problem of having to serve a claim notice on the landlord. The premium is then decided by the First Tier Tribunal.

Collective Enfranchisement

The Act also gives a majority of qualifying long leaseholders the right to acquire the freehold (and any intermediate leases) of their building. This process is also begun by serving a claim notice on the landlord, which again is problematic if the landlord is missing.

But again, the Court has the power to make a vesting order which will vest the freehold title in a purchaser nominated by the leaseholders for this purpose (the nominee purchaser). The premium is decided by the First Tier Tribunal.

Right to Manage

The Commonhold and Leasehold Reform Act 2002 gives a majority of qualifying long leaseholders the right to acquire the management obligations relating to their building without having to prove fault on the part of the landlord.

The process starts with the obligation to serve a claim notice on the landlord which obviously is not possible if the landlord is missing.

But the Act provides a mechanism for the leaseholders to make an application to the First Tier Tribunal for an order that their Right to Manage company is entitled to acquire the management. This can be done even where the landlord is missing.

What You Have To Do to Solve The Missing Landlord Problem

The first thing you have to do is prove that the landlord or freeholder is really missing i.e. that you have taken all reasonable steps to trace them and communicate with them.

A lot of the time, the so-called ‘missing’ landlord is not really missing and can be found, either by investigation, advertising or by searches of the electoral roll or similar. If this is successful then the claim can proceed in the usual way.

In a similar way, if the freehold is held by someone who is an undischarged bankrupt, or if it is in the name of a company in liquidation or administration then it may be possible to serve a notice on the trustee in bankruptcy, or the liquidator or administrator of the company.

If the Freehold Title is registered at HM Land Registry then a search will give you the last address of the registered proprietor.

Where a probate search shows the freeholder has died, then if there is a will the executors (or administrators if they died intestate) will be obliged to deal with the claim and in the case of a complete intestacy (there are no beneficiaries), the treasury solicitors’ office may be able to deal with the estate to effect a sale through its ‘bona vacantia’ department.

If the freehold was held by a company and the company has been struck off or dissolved, then once again the Crown, (via the Treasury Solicitor’s department) may be able to arrange the sale of the interest.

If you are paying a ground rent or a service charge then ask the person who it is being paid to.

You may have to employ a tracing agent and put adverts in the local paper and the statutory notice in the London Gazette.

Every step taken must be recorded so that it can be explained in a witness statement to convince the Court that the freeholder is truly missing and that your real application can proceed.

So you will appreciate that this is not a quick process and neither is it a rubber stamp process. The Court will dismiss it if you have not proved that you have tried very hard to locate the missing landlord.

What Is The Process And How Long Will It Take

When you have exhausted the obvious routes to locate the Freeholder and prepared your witness statement you then apply to the County Court. It has the power to fulfil the function of the Landlord in the Landlord’s absence and make a “vesting” order, which will transfer the freehold to you.

The application will be supported by a witness statement which includes any other relevant documentation (e.g. your lease etc) that proves that the preliminary requirements set out above are satisfied.

The Court will then list the hearing. Be aware that it might be listed several months after the application is lodged. The District Judge will require a draft order to be lodged in Court prior to the hearing.

The First Hearing

You do not have to attend the hearing if you do not want to, although it might be necessary if the case is particularly complex or any issues arise that are not dealt with in your initial witness statement. In any event, it is unlikely that you will have to formally give evidence.

You are required to prove you have the right to acquire the freehold or extend your lease and satisfy all enquiries which might be made by a prudent conveyancer attempting to trace the missing landlord. If the District Judge agrees that you are entitled to the freehold or lease extension, he will make further directions in respect of the valuation of the price to be paid into Court and such further steps as he considers necessary to attempt to trace the Landlord.

Following the Court’s Directions and Preparing for the Second Hearing

1 Advertisement

The Court may require you to take further steps to trace the landlord.  This may include an advertisement or whatever else the Court thinks proper in the circumstances.

Provided that you have already made all reasonable enquiries, the only requirement is (usually) that advertisements are inserted in specified newspapers circulating in the locality where the property in question is situated and also in any other locality where there is some possibility of the landlord being traced.

2 Ascertainment of sum to be paid into Court

The price to be paid for the freehold or lease extension comprises the purchase price for the freehold or premium for the lease extension together with unpaid rent due up to the date of the conveyance or lease extension deed.

The Court directs that this is to be determined by the First Tier Tribunal

Second Hearing

Once again, the District Judge will require a draft order to be lodged in Court prior to the hearing along with the draft deed of transfer or Lease Extension.  The Court will either approve the documents or make suggested amendments, and will nominate a District Judge to execute the transfer in the place of the absent Landlord.

Completion

The final stage is completion. This is the execution of the transfer or deed of Lease Extension following the payment of the purchase price into Court, in accordance with the order.

When the payment into Court has been made, the designated District Judge will execute the engrossed transfer or deed and hand it over to the applicant.

You will then have to register it at HM Land Registry.

Costs

The Court cannot order your costs to be paid out of the amount to be paid into Court, and so you must bear your own costs.

The amount determined by the First Tier Tribunal for the purchase of the Freehold or the premium for the Lease Extension will depend on your lease. This will be different for each application.

The Court Fees, any advertising, search fees, valuation fees and Land Registry fees will also have to be funded whether you do it yourself or someone does it for you.

So no one can give you a definitive answer but the sensible approach would be to first find out what the likely cost of the freehold or lease extension will be.

Should You Buy a Leasehold Property When There Is An Absentee Landlord?

Some folk are told that this is not a problem and it can be sorted by taking out some sort of Missing Landlord Indemnity Policy.

That may be sufficient to satisfy a lender on the property but it fails to address the real and long term problem. One day the lease will run out and to avoid that you need to extend the lease or buy the freehold. The insurance policy will not do that for you.

Instead you can use the problem to your advantage.

Lets say the cost of the lease extension or freehold is £X and the costs for going through the Missing Landlord process above is £Y.

So you invite the Vendor to reduce the asking price to reflect that you are going to have to spend £X + Y. They may reduce it by the whole amount or offer a large contribution. Then you decide whether to go ahead.