THE ENFRANCHISEMENT NOTICE – WHAT IT MEANS AND WHAT THE FREEHOLDER’S OPTIONS ARE
The Enfranchisement Notice – what is it?
The Enfranchisement Notice [often referred to as a Section42 notice] is the first piece of legal documentation you will have to deal with on your journey towards buying the freehold of your block of flats. It’s also the most important.
The notice is required by law, although there is no prescribed form to be used. This is just one of a number of reasons why specialist legal advice is highly recommended.
What should the Notice contain?
Certain information must be included in the notice;
· the name and address of the nominee purchaser
· the property being enfranchised
· the offer price for buying the freehold
· the names, signatures and addresses of all of the residents and participants in the enfranchisement process [in particular the notice cannot be signed by a Power of Attorney, lawyer or any other person, or it will be declared invalid – see below].
Provided all of this information is supplied properly, the Enfranchisement Notice should be deemed legal and official. This also begins the series of legal deadlines which must be adhered to by both parties in order to keep the whole lease enfranchisement process on track.
Getting the right signatures on the notice
It is a legal requirement that all of the participating residents sign the Enfranchisement Notice and Participation Agreement personally. This must NOT be done by another person on behalf of them, even a person with legal power of attorney. The personal signature of every participant resident must be obtained or the Enfranchisement Notice can be declared invalid in court by the landlord and your entire collective enfranchisement effort will end immediately.
This is by far one of the easiest mistakes you can make. Why?
Because what counts as as a participant resident can differ from what you’d imagine.
If, for example, a flat is owned by more than one person, then each individual must sign both documents personally. The documents should not be dated, though. The documents are best emailed to all participants with a cover notice to show them what will be arriving and to invite any questions or queries. The documents should then be sent by registered mail with a reminder that they cannot be altered and must personally be signed by the residents themselves. By having them sent by registered mail the organiser should be able to track the documents being sent from one participant to the next, and both documents should always be sent together.
This is yet another reason why you need a specialist solicitor when it comes to buying the freehold of your block.
Getting the Enfranchisement Notice wrong
Legal advice should be sought in drawing up an Enfranchisement Notice as a great number of enfranchisement attempts fall at the first hurdle because the Enfranchisement Notice is deemed to be invalid. If this happens, you will have to wait a full calendar year before beginning the whole process again – so you should seek the advice of the relatively few solicitors who really understand collective enfranchisement who can help you to draw up an Enfranchisement Notice.
There are a number of loopholes which some freeholders use in order to declare the notice invalid and great care should be taken to avoid these.
Declaring the invoice Enfranchisement Notice invalid
Should your freeholder wish to declare your Enfranchisement Notice invalid, he or she must make a claim at the County Court against the nominee purchaser, asking the court to declare the notice invalid. At this point, the whole enfranchisement process is put on hold and you cannot proceed to the third phase without the issue being resolved and the County Court providing their decision.
What is a counter notice?
Alternatively, if the freeholder except that the notice is OK, they may serve a Counter Notice. This is an official reply to the Enfranchisement Notice and it will often include a counter offer – where the freeholder offers a reduced figure which he would accept to sell the freehold. If this Counter Notice is not served by the deadline identified in the Enfranchisement Notice (usually two months), the leaseholders are legally entitled to buy the freehold at the offer price they initially made in the Enfranchisement Notice. That’s why virtually all freeholders make sure they have a specialist solicitor on board – they usually understand the risk of getting the Counter Notice wrong.
Tactics – is it worth offering the freeholder a rock bottom price?
It’s worth noting that offering an unrealistically low price for the freehold in the hope that your freeholder may not respond is not recommended. Why? He or she could have the notice declared invalid if the offer price is deemed unreasonably low by the County Court.
Counter notice – what happens if the counter offer is ludicrously high?
If a counter offer is received and is unrealistically high, the leaseholders also have a right to challenge this. This cannot be done through the County Court, though, nor can it be declared invalid. The matter must be passed to the Leasehold Valuation Tribunal or LVT [recently re-named as the First-Tier tribunal – Property Chamber (Residential Property)] asking for a hearing to be held to decide the correct valuation of the freehold purchase. The freeholder may also declare that they consider the claim to be invalid based on it not meeting the basic qualifying criteria – in which case he or she must state the reasons for their belief that those looking to exercise their right to enfranchise do not meet these criteria.
Enfranchisement is complicated – that’s why you need specialist advice
The whole process of buying the freehold to your block can be quite tricky especially if the legal team representing your freeholder tries to exploit loopholes or legal technicalities to stop your Enfranchisement Notice dead in its tracks. It is for this reason, amongst many others, that it is highly recommended that you seek the advice of a solicitor who specialises in collective enfranchisement and leasehold extensions.
Without the law right legal advice, you could find yourself with a big legal bills and the enfranchisement process over before it’s even begun – which isn’t a risk worth taking.
Don’t risk drafting your own enfranchisement notice – Call our specialists today
For specialist legal advice on buying the freehold of your block, contact our specialist team now.
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