Bona vacantia (Latin for ‘ownerless goods’) refers to property that is considered ownerless, which by law passes to the Crown. The Treasury Solicitor who acts for the Crown often collects assets and land of those who no longer own it – a common example of this can be seen with dissolved companies which own land. Once the company has been dissolved, the land becomes property owned by the Crown – unless land has already been sold or transferred prior to the dissolution.
Want to know more about buying your freehold? Call our specialist solicitors on FREEPHONE 0800 1404544 for FREE initial phone advice – with no strings attached.
What type of assets can be bona vacantia?
A range of assets can fall to the Crown by operation of bona vacantia. These include:
– Property and land in England and Wales
– Intellectual Property, such as trademarks
– Shares held in an active company
– Cash held in bank accounts
How does a bona vacantia freehold affect leasehold flats in the block?
It can be a really major problem. If you live in a flat or a leasehold house, you will have a lease of that property for a set number of years – the lease term. If your freeholder encounters issues such as bankruptcy or insolvency if it is owned by a company, you may find that you no longer have a freeholder – as the freehold title will have reverted to the Crown.
You may have issues if this occurs. In particular this situation can cause problems when trying to sell or remortgage a home if the freehold is bona vacantia. Mortgage companies can especially become nervous about this.
There is a further issue in that the Crown will not take on the responsibilities and obligations of the freeholder which are contained in the leases. They will own, but not manage, the title. This can cause real problems as freeholders of blocks are normally responsible for the repair and maintenance of the structural parts of the building, along with insuring the same. As a result, this can leave leaseholders exposed, because the block cannot continue to be uninsured with no responsibility for upkeep and maintenance.
What’s the solution? Normally a number of the leaseholders and the block will need to band together to jointly buy the freehold and take over the responsibilities of block management.
The importance of specialist solicitors
Most property lawyers rarely come deal with clients exercising the right to buy their freehold (a process known as leasehold enfranchisement). Even fewer will have come across Bona Vacantia. To be frank, many will not have even heard of it !
That’s why we are the only solicitors are recommended for this kind of work by the HomeOwners Alliance – the leading organisation representing Britain’s 17 million homeowners.
What happens if we simply can’t track down the freeholder?
In that case, unless the freehold has already been taken over by the Crown, there is a quite different process for buying your freehold –
Click here to read about difficulties with missing freeholders and the solution – the Vesting Order
Can I purchase my bona vacantia freehold?
If you are the owner of a leasehold flat or house, where the freehold company is the landlord and that freehold company has recently been dissolved, you can make an application which will be sent to the Bona Vacantia Division, a government department.
In fact, the Bona Vacantia Division publishes on the UK government’s own website a list of all such “unclaimed estates”. That list is updated daily. You can find it at https://www.gov.uk/government/statistical-data-sets/unclaimed-estates-list. The list is a long one – at any one time listing around 8000 properties.
There is a separate database of Bona Vacantia Dissolved Companies on the same government website which you will find at https://www.gov.uk/government/publications/bona-vacantia-dissolved-companies-bvc1
Do I have the automatic right to buy a bona vacantia freehold?
No, you cannot force the Crown to sell the freehold to you in this way. But in reality, the Crown is usually more than happy to transfer ownership of the freehold to those owning some or all of the leases on the block. There is usually no reason whatsoever for the Crown to retain ownership
Buying a bona vacantia freehold can be done both solely (commonly where the property is just a leasehold house) or jointly (where there are a number of different leaseholders in a block of flats).
If the other leaseholders agree to participate with buying the freehold, you can jointly incorporate a limited company (where each flat will own a share of the same) in order to create a vehicle to purchase the freehold. Alternatively, depending on the number of people involved, you can jointly purchase the freehold title in your joint names.
If the other leaseholders do not wish to participate, they simply need to confirm this during the application process, so that the leaseholders who do wish to proceed can continue with the purchase.
The application will need to set out certain information including the details of the now dissolved company, a list of the participating and non-participating leaseholders, and as well as providing title documentation for the flats involved.
How much will I pay for the freehold title?
1. Legal Fees
You will need to consider the total costs that you and your fellow leaseholders will be responsible for if you decide to make the application to purchase the title from the Crown.
The first cost will of course be your own legal fees associated with the purchase of the freehold. The leaseholders will need to pay for both their own legal fees, along with the legal fees of the Crown.
2. The Freehold title
The price of the freehold title is normally valued by considering the value of the flats, any unexpired term on the leases comprising the freehold, and the ground rents payable by each leaseholder.
3. Valuation fees
If the value of the freehold is over £250k, or the leases have less than 80 years unexpired, a district valuer will need to be instructed to assess the value of the same and recommend a price.
If the value is below this threshold, the normal procedure is for the combined ground rents of the freehold to be multiplied by 15 and then using that figure as the purchase price.
How can the risk of bona vacantia be avoided?
When exercising the right to buy the freehold (a process known as leasehold enfranchisement) and forming a company in order to purchase the freehold, leaseholders should be aware of the risks of bona vacantia.
If the company incorporated becomes insolvent or is dissolved, the title may again pass back to the Crown.
Because of this, it is important to receive advice on company matters to ensure that when a company is incorporated, it is managed properly to avoid such risks.
How can a company be dissolved?
Dissolving a company will occur when a limited company is closed down by removing its name from the Registrar of Companies held at Companies House. Once removed, the company legally no longer exists. A company can be dissolved in two ways:
1. the Registrar of Companies has the power to strike off a company if they fail to comply with its legal obligations under company law legislation. It is not an unusual occurrence for a company to be dissolved for administrative failings, such as failing to file their annual return.
2. a company can be voluntary dissolved by its members, after it has liquidated all of its assets and distributed the same to its members and creditors. For this method, only land which has not been dealt with as part of the liquidation will become bona vacantia.
Can a company be restored?
It is possible for a dissolved company to be restored onto the register. An application must be made within 6 years of its original dissolution. This application must be made by either a director or shareholder of the now-dissolved company.
If the 6-year period lapses, you will need to get a court order to get the company restored.
If the company owned land, such as a freehold title, they would also need to contact the Crown to obtain a waiver letter from them as part of their application for restoration. If accepted this will result in the freehold reverting back to the company.
If a company owning a freehold is restored, they would then be legally obligated under the existing leases to carry out their obligations under the leases, as discussed above.