Purchased co. owns f/r (block of flats); 9 flats repossessed

[hbhomes]

This is an interesting/complex situation.....opinions sought!

We have purchased the shares of a Company that owns the freehold to a block of 12 flats, of which 3 have been newly created on the ground floor and hence no leases have yet been created for these 3 units, although we are in the process of doing this. These 3 flats belong to us.

The remaining 9 flats plus the 3 new flats need to contribute to exterior delapidations which is running into over £200,000. S20 notices were served last year on the leaseholders who were 3 connected parties. So a notice of intent to carry out major works was served, followed by the statement of estimates. Finally a contractor was chosen and a notice of reasons for awarding the contract (although we did not have to, as the cheapest was chosen) was also sent out. Everything fine up to now......

Within the lease it states that a third of the monies in relation to these works can be invoiced and requested up front. Invoices and request have been sent out. No response. It turns out that due to the credit crunch all 9 leasehold properties are in the throws of repossession, with one being sold on and the others about to follow suit.

1) Can I assume that the notices are still all served correctly or do we need to go through the whole process again?
2) Can I now demand payment from the mortgagees/receivers for this initial payment?
3) Do I have to wait until all of the units are resold, which in theory may take some time?
4) One of the flats have gones ahead and resold without the input from the freeholder (I assume as they got a cheap price and wanted/needed to complete; are these buyers now on the hook for these monies?

A slightly unusal situation, but I would be interested in hearing some of the learned views from this messageboard.

Regards
D

[jeffrey]

Too complex for a full reply here, but any leasehold debts travel down the line. Anyone buying a leasehold, takes subject to V's debts in L's favour. If V is a mortgagee in possession, it will try to shun payment of defaulting mortgagor's debts; but a well-advised P won't want to take subject to them unless there is a hefty price reduction (which amounts to the same thing as V paying them to L!)

[Poppy]

Nine out of twelve flats under threat of repossession. Unreal! Is that part of the reason why the company was up for sale?

Getting any unpaid service charge and the latest notified service charge paid is not impossible. The debts remain with the property. You probably need legal assistance to ensure they are paid. In these cases, at the time of sale.

With regard to the newest lessee who has rather stupidly bought without referring to the freeholder, they'll soon realise their and their solicitor's oversight. Have you been in contact with the lessee yet?

Do any members have any suggestions to help prevent another flat being sold without reference to the freeholder? No one wants to see indebted lessees getting off scot free. :(

You need to keep a tight rein on all lessees and their mortgage lenders. Take all necessary steps to get service charge paid as quickly as possible.

I wouldn’t call it a nightmare, definitely an interesting challenge to you.

[jeffrey]

Do any members have any suggestions to help prevent another flat being sold without reference to the freeholder?
Yes. Do the leases not contemplate entry of a Restriction (registrable on each leasehold title's Proprietorship Register at HMLR) demanding, as a pre-requisite for registering any disposal, that L's written consent to registration is needed?