21st July 2018
We are currently going through the paperwork on a deal we have placed. There is an imposed time pressure by the seller. This particular deal is being ‘turned’ by a party, which is not unusual in property circles in London.
Many dealers, rather than going through the expense of completing a deal, and the hassle which goes with sorting out any issues, would rather sell it on to a known party. I say known because this kind of deal cannot be put on the market.
This particular deal requires an ‘insider’ to execute for the following reasons. Firstly, the deal needs to be done in cash. Secondly, there are issues surrounding the deal which even some lawyers would be in unfamiliar territory with. Thirdly, it needs to be done discreetly, without alerting the original seller of the deal you’re doing with the intermediary.
The main issue with this deal is that the ownership of the freehold has reverted back to The Crown.
All the word freehold means, is the land is free of a hold, i.e. not a lease. It will surprise most people to hear that the ultimate owner of all land, is not the person or cooperate entity which owns the freehold title. English Land Law has, since feudal times, been based on a system of tenure. A freeholder is NOT an absolute owner, but a tenant in fee simple holding, in most cases directly from the sovereign, as lord paramount of all land within the realm.
Fee simple is defined as an interest in land that, being the broadest property interest allowed by law. So, in short, the title is not absolute. Absolute title, in most cases, belongs to The Crown, or properly known as The Crown Estate or Escheat.
When property becomes lost, as it does time to time, it becomes known as bona vacantia, which means lost property.
This situation arises when, for example, a person dies without leaving any dependents, or if a company which owns a freehold becomes dissolved.
In our case, the company which owns the freehold did not file the necessary returns and this led to the company being struck off; and the asset, which is the freehold of land where the flat is, ended up passing to The Crown or in Escheat.
In doing a deal like this it is paramount the right lawyer is appointed. Someone who knows the terrain; not just from an academic viewpoint but someone who has had experience of having been in this framework.
Not all the lawyers I spoke to knew what this word Escheat even meant. In the end we believe we have got the right person on the case.
In the UK we have a very open system of land ownership, one can see the ownership of any property they wish from the Land Registry, and see how much was paid for it, and when and whom it is owned by, unless of course it was a company owning the asset which was sold.
Prices in a block of flats or a street can easily be ascertained. This means a lot of the times in order to get a deal, it will mean to look for the ‘problem’ properties. The problems disappear once you start to unravel the issues. This requires having the right team around you to advise you.