What is bona vacantia?
Bona vacantia (Latin for ‘ownerless goods’) refers to land or 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 is seen with dissolved companies which own land. Once the company has been dissolved, the land becomes bona vacantia 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 Bona Vacantia 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 and 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 house or flat if the freehold is bona vacantia. Mortgage companies can be especially nervous about this. Frankly, getting a loan on any flat in this position can prove difficult.
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.
Bona Vacantia Freehold Purchase – the importance of specialist solicitors
Most property lawyers rarely deal with clients exercising the right to buy a share of their freehold (a process known as leasehold enfranchisement). Even fewer will have come across Bona Vacantia property. To be frank, many will not have even heard of it !
That’s why you need specialist solicitors. Our expert five strong leasehold team deal with nothing but lease extension, freehold purchase and the right to manage, day in day out. And we’ve helped somewhere in the region of 10,000 people like you with freehold purchase, lease extension and right to manage applications.
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 with an absent freeholder–
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. To give you an example, as at June 23, 2023, that list contained 6355 bona vacantia 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
You can also contact the Department directly on (020) 7210 4700 or by email at bvestates@governmentlegal.gov.uk.
Do I have the automatic right to buy a bona vacantia freehold?
No, you cannot force the Crown to sell the freehold to you. Unlike collective enfranchisement, there is no automatic right for leaseholders’ to buy the freehold of their block.
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. But they will normally expect to be paid for selling you that freehold
Buying a bona vacantia freehold can be done both on your own (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 dissolved 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.
FAQs
What is the meaning of bona vacantia?
Bona vacantia means ‘ownerless goods’ and is the term used when assets end up belonging to the Crown because they have no legal owner. Freehold titles regularly pass to the Crown if they were owned by an insolvent or dissolved company or an insolvent individual.
This is a problem for leaseholders as the Crown will not carry out any of the freeholder’s obligations, such as arranging buildings insurance, carrying out maintenance and collecting service charges. If a freehold has passed to the Crown, extending a lease will not be possible, which can cause major problems and seriously affect the value of a leasehold property.
It is also difficult to sell a leasehold property when the freehold is bona vacantia. Potential buyers will be warned of the problem by their conveyancer and mortgage lenders will often refuse to lend. The best solution is for the leaseholders to work together to purchase the freehold. They can then take over the flat management.”
What happens to bona vacantia property?
The Crown will either sell or disclaim a bona vacantia freehold. Disclaiming means that the freehold title is extinguished and the freehold becomes part of the Crown Estate. You should avoid this where possible, as it will cause problems for you and any fellow flat owners.
If the leaseholders want to buy the freehold, the Crown will usually sell to them once a price is agreed upon.
How long does a bona vacantia claim take?
The process of buying a bona vacantia freehold routinely takes up to a year to complete. You will usually need to go through the following steps:
• Agree with your fellow leaseholders to start the process
• Instruct a solicitor to prepare a participation agreement for leaseholders to sign, confirming that they will be part of the freehold purchase and pay a share of the agreed costs
• Instruct a surveyor to value the freehold
• Your solicitor will contact the bona vacantia division and start the purchase process
• Negotiations will take place to agree on the price to be paid
• Your solicitor will create a management company to own and manage the freehold, with the participating leaseholders as members
• The purchase is completed and your solicitor will register ownership of the freehold at the Land Registry
Can anyone claim an unclaimed estate?
To claim property or an estate from the bona vacantia division, you must show that you are entitled to receive it. This could be because you are entitled to inherit the asset or because you have reconstituted a management company and wish to claim back a freehold that passed to the Crown when the company was dissolved.
If you do not have valid grounds to claim an unclaimed estate, there may be an option to purchase it. The Crown frequently sells freeholds to leaseholders and also auctions other assets to the general public.
