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Selling or buying a freehold (Section 5 Notice)

If you are a landlord and wish to dispose of a freehold the legal procedures are fairly complex.  In most cases (though there are some exceptions) you must first offer the long leaseholders what is called a "right of first refusal."  This means that before you sell to an alternative party, you must first offer the long leaseholders the opportunity to purchase the freehold.

In order to satisfy the legislative provisions, the landlord must serve a Notice subject to Section 5 of the Landlord & Tenant Act 1987.   This notice gives the option for a qualifying majority (50% plus) of the leaseholders to serve Acceptance Notices to confirm they wish to purchase upon the terms proposed in the landlord's Section 5 Notice. The landlord will specify in the Section 5 Notice the price that is required for the freehold, together with any other terms that the freeholder intends to impose upon the transfer. 

From receipt of the Section 5 Notice the leaseholders have a period of two months to serve their Acceptance Notices.  If Acceptance Notices are served within this period, the leaseholders will be free to nominate the name of the purchaser, within a second two-month period.  On the other hand if Acceptance Notices are not served within the first two-month period, the landlord will then be free to sell to a purchaser of their choice.  This could be one of the tenants, or an alternative third-party.  The only prerequisite is that the landlord cannot sell, on any lesser terms, than those proposed in the Section 5 Notice.

We regularly act on behalf of landlords selling freeholds and we will be happy to provide you with appropriate valuation and legal advice to deal with the entire process.  This will entail undertaking an initial valuation appraisal and then preparing the Section 5 Notices for service upon the leaseholders.  We can then handle all negotiations with the leaseholders or in the event that they elect not to purchase, we will market the property and sell to a third-party investor.  To finalise the matter we can organise the legal work on your behalf so that you receive the funds into your bank account as soon as possible.

We also act on behalf of leaseholders who have received Section 5 Notices who require assistance with respect to whether the purchase price proposed by the landlord is realistic.  We will in addition happily prepare Acceptance Notices on behalf of leaseholders who wish to purchase an organise the legal work so that you can acquire the freehold in the shortest space of time possible.

Whether you are a landlord wishing to sell or a leaseholder requiring advice please contact Mike Stapleton on 01702 562072 for further advice.


 
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