A vesting order is a legal mechanism used to transfer ownership of property or assets, particularly in cases where the original owner is absent or unresponsive.
It is commonly applied in scenarios involving lease extensions or freehold purchases when the freeholder cannot be located or is unwilling to cooperate.
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What is a vesting order?
A vesting order is a court order that transfers property ownership, often used when a freeholder is absent or uncooperative.
What is a vesting order to purchase a freehold?
A vesting order to purchase a freehold is a court order that allows leaseholders to acquire the freehold of their building when the freeholder fails to respond to a valid notice or cannot be found. The court can grant this order if:
- The leaseholders qualify to purchase the freehold
- At least two-thirds of qualifying tenants are participating
- Reasonable efforts have been made to locate the freeholder
- The terms and premium are determined by the First-tier Tribunal
Once granted, the vesting order allows the purchase to proceed without the freeholder’s involvement.
What is a vesting order for an absent freeholder?
A vesting order for an absent freeholder is a court order that allows leaseholders to extend their lease or purchase the freehold when the freeholder cannot be found. To obtain this order:
- Leaseholders must prove they have made reasonable efforts to locate the freeholder
- The court must be satisfied the leaseholders qualify for a lease extension or freehold purchase
- The terms and premium are determined by the First-tier Tribunal
- The premium is paid into court to be held for the freeholder
This order allows the lease extension or freehold acquisition to proceed legally without the freeholder’s participation.
How long does it take to get a vesting order?
The process can take several months, depending on court schedules and the complexity of the case. But on average expect a year.
The time it takes to obtain a vesting order can vary based on several factors, including the complexity of the case and the responsiveness of the involved parties. Generally, the process involves several steps:
- Eligibility Check: Determine if you are eligible to extend your lease or purchase the freehold under the Leasehold Reform Act.
- Valuation: Obtain a valuation from a RICS surveyor to estimate the cost of the lease extension or freehold purchase.
- Notice Serving: Serve the relevant notice (e.g., Section 42 for lease extensions) to the freeholder, who then has a statutory period to respond, typically two months.
If the freeholder fails to respond, you can apply to the county court for a vesting order. The court will then handle the transfer process, which may take additional time depending on court schedules and the specifics of the case
What are the benefits of a vesting order?
It allows leaseholders to extend their lease or purchase the freehold without the freeholder’s involvement, often at a lower premium
Useful Tips
- Seek Legal Advice: Given the complexity of vesting orders, it’s advisable to consult with a solicitor experienced in property law.
- Prepare Thoroughly: Ensure all necessary documentation and evidence are ready before applying to the court.
- Consider Costs: Be aware of the potential costs involved and explore options for cost recovery through the court process.
How much does a vesting order cost?
A vesting order typically involves several costs, which can vary depending on the specifics of the case. Here’s a breakdown of the potential expenses:
Legal Fees
The solicitor’s fees for handling a vesting order application can range from £750 to £1,620 (including VAT) for an undefended case. This covers the work required to prepare and submit the application to the county court.
Court Fees
The court application fee is approximately £300, though this can vary depending on the specific court.
Counsel’s Fees
If a barrister is needed to represent you in court, their fees are estimated at around £720 (including VAT) for an undefended claim.
Additional Costs
Other potential expenses may include:
- Valuation charges for obtaining a RICS valuation of the property
- Costs for tracing the freeholder (if absent)
- Advertising fees if required to serve notice in newspapers
Total Cost Estimate
For a straightforward, undefended case, the total cost of obtaining a vesting order could be around £2,000 to £3,000. However, it’s important to note that costs can increase if the case is more complex or if the freeholder contests the application.
Potential Savings
While the upfront costs may seem high, there are potential savings to consider:
- The premium for the lease extension or freehold purchase may be lower when determined by the First Tier Property Tribunal.
- You won’t need to pay the freeholder’s legal or valuation costs.
- The court may allow some of your costs to be deducted from the premium paid into court.
It’s advisable to consult with a specialist solicitor for a more accurate cost estimate based on your specific circumstances.
How long does a freeholder have to respond?
A freeholder has a statutory period of at least two months to respond to a Section 42 notice, which is served by a leaseholder seeking to extend their lease. This two-month period begins from the date the notice is given. However, the specific response deadline can be longer, depending on the date specified in the notice itself.
If the freeholder fails to respond within this timeframe, the leaseholder may apply to the county court for a vesting order, allowing the lease extension to proceed without the freeholder’s input.
What to do if the freeholder does not respond?
If a freeholder does not respond to a notice or request, here are the key steps you can take:
- Check legal requirements: Review relevant legislation to understand timeframes the freeholder is expected to respond within.
- Send a reminder notice: If the freeholder hasn’t replied within the specified timeframe, send a follow-up notice reiterating your request. Keep records of all communications.
- Seek legal advice: Consult a solicitor specialising in leasehold matters to understand your options.
- Apply to a tribunal or court: If the freeholder remains unresponsive, you may need to take legal action by applying to the relevant tribunal or court. This could involve:
- Seeking a determination of lease extension terms
- Requesting appointment of a manager
- Applying for a vesting order
- Consider alternative dispute resolution: Explore options like mediation or arbitration to facilitate negotiations without going to court.
- For lease extensions: If the freeholder fails to respond to a Section 42 notice within two months, you can apply to the county court for a vesting order to proceed without the freeholder’s input.
What happens if the freeholder reappears after a vesting order is issued?
If a freeholder reappears after a vesting order has been issued, the situation can become legally complex, but the vesting order remains in effect.
Here’s what typically happens:
- Legal Challenge: The reappearing freeholder may attempt to challenge the vesting order, arguing that they were unaware of the proceedings or had valid reasons for their absence. They might contest the validity of the order or any actions taken during their absence.
- Court Proceedings: The matter would likely go to court to resolve the dispute. Both parties would present their arguments and evidence. The court would review the circumstances, including the actions taken during the freeholder’s absence, to determine the rightful ownership or control of the property.
- Validity of Actions: The court will assess whether the actions taken during the freeholder’s absence were conducted according to legal requirements. If the court upholds the actions, the ownership or control remains with the leaseholder or entity specified in the vesting order.
- Legal Remedies: If the court finds in favour of the absent freeholder, their ownership rights may be reinstated, and any subsequent actions taken by others could be deemed void. However, if the court upholds the vesting order, the lease extension or freehold purchase remains valid.
- Premium Payment: The premium paid for the lease extension or freehold purchase is typically held by the court. If the freeholder reappears, they can claim this premium.
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