Have your tenants served you with a legal notice wanting to buy your freehold (section 13 Notice) ?
If you have received one of these notices, want to know what to do if you do, or you are a tenant wanting to know how you might be able to buy your freehold, then please read on ..
Tenants have a statutory right to purchase the freehold, or collectively enfranchise as it is known, under Section 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”).
In order to exercise this right, under the Act certain conditions must be met in respect of the building and the tenants. If the building and the participating tenants meet the conditions, the first step is to send what is called a Section 13 Notice to the Landlord.
What must a Section 13 Notice include?
The notice must be given (served) correctly on the relevant persons and contain specific information in order for it to be valid such as: –
- Details of the property to be acquired, including a plan;
- A statement of the grounds on which the premises qualify for the right;
- Details of any leasehold interests to be acquired;
- The price proposed to be paid for the freehold;
- Full names and address of all the qualifying tenants and details of their leases;
- Name and address of the nominee purchaser; and,
- The date for a counter notice to be served (this is where a landlord would set out objections to the Freehold being sold and it must be served at least two months after service of the Section 13 Notice).
What happens if a Landlord receives a Section 13 Notice?
Upon receipt of a Section 13 Notice, the clock starts ticking immediately in terms of the requests that can be made of the tenant.
There is a specific time for you to respond to a Section 13 Notice by way of a counter notice. Failure to respond to serve a counter notice by the date specified could result in the tenants being able to purchase the freehold for the price and on the terms they proposed in their notice.
Landlords should therefore seek legal advice on the tenant’s Section 13 Notice as soon as possible. The notice will need to be reviewed to ensure it is valid and, if it is, a surveyor will need to be instructed to value the freehold on your behalf so a counter notice can be served in time with your counter offer.
Tenants should similarly also seek legal advice, not least to ensure they follow the correct legal formalities.
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