Sale of Freehold
There are two main ways in which a freeholder can sell their freehold interest. They have the option of a private sale, or sale by public auction. In either situation, the freeholder must first offer the property to all qualifying leaseholders before selling to anybody else. The freeholder is required to serve a legal notice known as Right of First Refusal and this is provided by Part 1 of the Landlord and Tenant Act 1987.
There are two types of notices. The first is a Section 5a and this is used when choosing to sell by simple contract to the open market. The other option is to serve a Section 5b notice which is used when notifying the tenants of your decision to sell by Public Auction.
Why sell your freehold? There are many situations where you may have inherited a freehold or may have acquired a freehold with a property purchase and you may not want the responsibility of management which comes with it. You may need to release equity for the purpose of raising funds for other investment opportunities or you may just need to raise funds for a special occasion.
Some freeholders struggle with the role and responsibility that comes with owning a freehold. You can be faced with management and maintenance issues as you have the continued task of organising and arranging the repair and upkeep of the building and its communal areas and you may also have to deal with non-paying leaseholders. You could face various disputes and you need to be aware that there is the administration factor that comes with insuring the building and keeping up to date accounts for any reserve funds and service charges.
In the event you wish to sell your freehold, the selling process is very straight-forward and involves a few key points. The first stage is to establish the value of the freehold in order to attract prospective buyers. If there are qualifying tenants the next step is to serve the relevant Section 5 notices in order to offer the Right of First Refusal as required by law. The qualifying tenants may accept the offer but if they are not interested you will need to attract offers from the open market.
Once a buyer is found, the seller will then need to instruct their solicitor to release paperwork to the buyer’s solicitor. They may also be required to provide further information depending on enquiries raised by the buyer’s solicitor. The buyer may need to sign a contract and transfer documents and may need to pay a deposit in order to exchange. The solicitors do all the work and will notify you of the date that contracts can be exchanged and they will then set a date for completion, which is sometimes the same day as contracts are exchanged.
Prior to exchange, the buyer’s solicitor will send the funds required to the seller’s solicitor. On completion, the seller’s solicitor will release the funds to the seller minus any legal costs. The buyer’s solicitor will then submit the new registration paperwork to Land Registry for the title to be updated with the details of the new owner.
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Sell Your Freehold
Selling your freehold doesn’t have to be a hard process like some purchasers make it. The main thing, when selling your freehold to Freehold Sale, is that you get a fair price for your freehold, professional service and no more stress.
So if you have a freehold of 1 or 2 properties or a large portfolio then contact us today and start the process.
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