Q
The developer of our site has sold the freehold to anonymous beneficial interests hiding behind a company registered offshore. We were not offered the freehold or aware that it was for sale. Surely, we should have been offered the freehold? And isn’t it a criminal offence if a landlord transfers the ownership of a freehold without offering it to the leaseholders?
A
There are all kinds of ways the developer can legally dispose of the freehold interest without having to deal with you pesky tenants. The law on the Right of First Refusal is full of loopholes.
A common trick is to have the freehold in a shell company, which has to have been associated with the parent company for two years, and just the company to a third party ground rent speculator. Because there was a transfer of shares, rather than a transfer of the property itself, you cannot rely on the 1987 Act to bring a claim.
The Right of First Refusal also won’t help you if the non-residential parts of your building add up to more than 50%, so you may be doomed if you’re on a mixed-use site with a lot of commercial space.
Although it was made a criminal offence not to comply with the Right of First Refusal in 1996, there has yet to be a single conviction for the crime.
That’s not to say landlords haven’t got into trouble with the courts: https://www.leaseholdknowledge.com/right-of-first-refusal
The beauty of the Right of First Refusal is that the time-period for serving a purchase notice only kicks in when leaseholders become aware of the potential breach, so it’s never too late. We have examples here of leaseholders reversing transactions made over ten years prior, with the courts compelling landlords to leave the land and part with their freeholds at a price advantageous to the tenants:
