Anybody bought the freehold of a flat and formed a limited company to do so?

[Notquitegrownup]

I could do with some advice if you have.

Quick bump, then I'll try again tomorrow.

What do you want to know?

My father was offered the opportunity to buy the freehold of his flat some years ago. He was advised to steer clear of it as it is a multi-occupancy building and much more complicated than purchasing the freehold of a house for example. The chap in the flat above bought it, forming a limited company and said he regretted it but I don't know why. Sorry I can't be more helpful.

Sorry, went to bed. V interesting to hear of your father's experience Zoggs. We are in the same position of having been advised by our solicitors that it was quite straightforward and now discovering that we had no idea what was involved. Managing a company seems to require quite a lot of knowledge of company law, and H & S law - something our collection of very ordinary folk just don't have.

MrV. - just wondering how people manage to know what they are expected to know and do . . .

Sorry I can't add much. My father and the other leaseholder(s) were given first refusal when the freehold was up for sale. The chap who bought it (and regretted it) eventually sold his flat and the freehold with it. The present owner also owns the house next door and I think he regrets the whole thing - poor rental market and responsibility of being the freeholder in terms of legal and practical issues. Good luck.

Very small group of flats, all own shared freehold via company - don't know about setting up problems, as I moved in after it had been done, but it means we're not waiting on someone else to decide on repairs, issues, etc - however, it means we have to rely on one of the owners who's good at money matters and bits and pieces. We pay them a small fee out of the management fee that we all pay into an account, in recognition of the work they do. All in all, glad that I'm in this set-up rather than external leasehold and management company (but small group, remember!).

Thanks Pombear. That's reassuring. We are a small group too, but lack that one person who knows what they are doing. If we could just get a handle on what we need to do, we would probably feel more positive too.

We have done this. We paid the solicitors to set up the company when we bought the freehold. We have to file annual returns with Companies House and HMRC, neither of which is very complicated IMO, as long as you have all the information to hand. You need to have somebody who can keep financial records and pay the bills.

For us it has been much better than having to deal with the previous managing agents who were incompetent/greedy. We are definitely paying less than we did before for repairs, insurance, etc.

Don't be put off, it is all fairly easy. How many flats are there in the freehold? Here are a few more tips:

Do get a solicitor to form the company and deal with the purchase of the freehold.

Do look at the guidance available from Companies House about annual returns etc.

Do get someone who knows what they are doing to help you with the accounts for a while: it is much easier to copy what works elsewhere than work everything out from scratch.

Do get the company to pay for Directors and Officers insurance (just an example, there are other insurers) - this will pay the legal fees if anyone decides to 'have a go' at you as a Director.

Do act responsibly with regard to others Health and Safety: this is all the law requires you to do.

Do NOT employ anyone - even a casual cleaner for the staircase (use a contract cleaning company, or do it yourself) - otherwise Health and Safety law does kick in with additional responsibilities.

Look at the Federation of Private Residents' Associations which provides support to Residents Management Companies too.

Finally, consider paying a managing agent to do everything for you.

We bought the freehold of the building which had 8 flats in it. However a management company (operated by the 8 flats) was aleady responsible for the maintenance. Get a solicitor to sort it out for you.

A local accountant did the accounts for us for about 300 pounds as long as we did a basic income and expenditure report.

Make sure you file all the accounts and annual returns. We didn't file accounts at first and were struck off. All our assets (including bank accounts and freehold), reverted to the crown and we had to pay a fortune to get them back so that people's flats could be sold.

We also employed a managing agent at one point. They were useless!

Ooh thank you both. This is helpful advice. I had found out a lot of bit, but it's good to know that we haven't missed anything too major.

MrV - we do have to employ someone to clean out the guttering at the moment - 3 flights up so fairly risky. The advice I have found is to check out the person's H & S record, by taking up references; to do a risk assessment ourselves and to discuss it with him; to monitor the work and to be prepared to stop the work if anything looks amiss. Does that sound as if I am on the right lines (The other directors are mostly elderly folk and not interested in H & S - agh!)

SM - our solicitor was a nightmare. We met to discuss the implications but were badly uninformed. The company was incorporated but we were not informed until 10 months later! We have just found in the Memo and Arts that the Company Formation guy has retained one share of our company and are trying to find out what this involves.

I think that we are getting there - I feel a bit less panicked - but your advice is hugely appreciated.

I am sorry, I cannot give you advice on Health and Safety. I will restate the advice I have already given:

Do NOT employ anyone - even a casual cleaner for the gutters (use a specialist like Dynorod) - otherwise the 119 pages of the Health and Safety At Work Act, the Management of Health and Safety At Work Regulations, the need for employers liability insurance and a whole load of other things kick in with additional responsibilities.

Hi there, i am a corporate solicitor so may be able to help a bit ... let me know if you want some help with the mem & arts.

Hello M2I - thank you so much.

We are amending our Memo and Arts to correct one specific paragraph - the object of the company - which we felt was unclear in the original version.

Five quick questions! 1) The cover currently states our name, company number, the fact that we are a company Limited by shares and the date of incorporation, along with our solicitors details. When we do the amended version, should I add a line stating "Amended by Special Resolution on (date)" on the cover, so that it is clear that this is an amended version?

Our Company Secretary - a dear elderly lady who does get a little confused - has found that she has already reclaimed (on advice of our solicitor) the share retained by the Company Formation person whom I referred to below. Should I know take out the paragraph at the end of the Memo stating that he has retained a share in the company?

He dated the Memo on the day of incorporation. Should I change that date to the date of Special Resolution?

Does the new Memo and Arts have to be bound in any special way?

Am I asking the right questions (and should I be doing this at all! I seems mad that I am trying to amend a legal document that our solicitor got wrong, rather than insisting that they should do it!)

Thank you. (Thank you, thank you, thank you!)

Hi,

1. Yes.
2. How did the company secretary reclaim the share? ie do you mean that there was a stock transfer form and the company formations agent has properly signed this and it's been properly transferred? I'm not sure without seeing the wording - the para may read that [ ] shall retain a share until an event such as all the other shares being allotted?
3. Not really important - if you put in the 'amended by special resolution on [date] at the top then make sure you file the special resolution which will of course show any new bits you've put in or bits you've removed.
4. No don't worry about binding at all just ensure that the new version goes to companies house and also that everything is recorded in the statutory books.

To be honest I would absolutely insist that the solicitor did it if I were you - is the solicitor a property solicitor by any chance?? It has been known for them to dabble in corporate documents and it invariably ends in a mess, you could always try and insist that they pass it to a member of their corporate team - either way I would be telling them to do it not doing it yourself!
Let me know if I can help!
Vicky

I would act on Vicky's advice or, more to the point, employ Vicky. She will be able to tell you whether you need to change the Mem and Arts - the Objects Clause usually states that the company is a general trading company which should be OK in your circumstances - if it ain't broke, don't fix it!

I also agree with her comments about some solicitors dabbling in other specialist areas of law and then getting it wrong! Don't forget, the new Act - the Companies Act 2006 is being introduced piecemeal so it might be worth downloading a copy from www.opsi.gov.uk and look at the contents page as I do think you're undertaking a needless task!

Finally, to the original author of the enquiry, I found www.buythefreehold.com and www.extendthelease.com useful for an inexpensive valuation and general information on lease extensions and freehold purchases.

I hope this helps.

Hi Mummy2Isla, if you are still around.

I have now confirmed that the share was reclaimed from the company's formation agent using a proper stock transfer form which he signed. (The original memo and arts states that he had retained a share, but not with any conditions or untils.) So it appears that he is not a shareholder any more. Would you be inclined therefore to get the paragraph from the original memo and arts removed, as it appears to contradict what has happened.

Hello Valman. It seems that your post has arrived on the wrong thread - though your links to extending the lease documents are helpful, cause that is next on our list of things to do!

Notquitegrownup, my message was in reponse to Vicky's offer to help you. Vicky is mummy2isla! I suggested you take her advice as she appears to know what she's talking about. From what I've read, many solicitors do not!

Have you spoken with Companies House as you might be able to make a simple amendment without the need of a solicitor. If it is complicated or you feel you require professional help, I would suggest you speak with mummy2isla.

Good to know that www.buythefreehold.com and www.extendthelease.com helped somebody else too! It saved me a lot of money.

We bought our freehold (took about ten tortusous years though) but didn't in the end do the comapny thing, although we did intend to. They are a very good thing if set up right. We had a nightmare tracking down our original freeholders, and buying the freehold so that we could actually sell our flat. I'd not buy a flat again unless it was all set up properly.