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tdlawyer
tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience:  11 years experience of general practice.
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Property Freehold issue. The my home is a house divided into

Resolved Question:

Property Freehold issue.
The my home is a house divided into 4 separate flats with share of freehold split 4 ways giving each owner 25% share.
The owner of flat 1 purchased flat 2 around 3 years ago and now has 50% shares.
Im concerned with how the sale took place.
Flats 3+4 where told after the event that the property has changed hands and had not been notified of the intended transaction previously.
All the solicitors letters etc that should have been sent to the board for all directors where handled in secrecy by the owner/director of flat 1.
It has come to my attention that had the sale been brought to the attention of directors 3+4 they could have possibly influenced the exchange so that they didnt become minority shareholders.
The owners of flat 1+2 are really abusing their 50% shareholding to effectively run everything their way.
Is there anything we can do
Submitted: 2 years ago.
Category: Law
Expert:  tdlawyer replied 2 years ago.
tdlawyer :

Hello, thank you for your question. My name is***** can assist with answering this.

tdlawyer :

I need to know the following please:

tdlawyer :

(a) whether there is a company formed to own the property (NB: You mention shareholdings/board, which imply a company, but I wanted to make sure)

tdlawyer :

(b) whether there was a shareholders agreement in place, and if so, does it say anything about ownership of another property within the freehold and impose any kind of conditions/restraints?

tdlawyer :

(c) whether there are restrictions in the Articles of Association of the company (if it is), or in the shareholders agreement, relating to the share transfer?

tdlawyer :

If you don't have answers to the above, then I can answer you in such a way that you know where to look/what to look for anyway, but obviously, the answers to the above would help to narrow things down.

tdlawyer :

Hi!

Customer:

(a) whether there is a company formed to own the property = YES

Customer:

(b) whether there was a shareholders agreement in place= Thats where I struggle.Where would I look to find out ?

Customer:

(c) whether there are restrictions in the Articles of Association of the company= I wouldn't know

Customer:

I think I have the Articles of Association but not sure where I would find the shareholders agreement

tdlawyer :

Okay, if you'd signed a shareholders agreement, you should know about it.

tdlawyer :

If you're not sure though, it's worth having a word with your solicitors who dealt with all this at the time for you.

tdlawyer :

In essence then, I can tell you what the position is likely to be.

tdlawyer :

I expect that there would be a requirement that the company be told about the proposed sale, as this is usually done to ensure that all service charges etc. is properly paid up before the transfer.

tdlawyer :

So the company would likely need to consent. Every case can be different of course, and this is why you need to check the agreements/articles, but what I'm mentioning here is "the norm".

tdlawyer :

If the transfer has happened without consent, then it may be possible for the company to refuse the recognise the share transfer, which means that they wouldn't own the 50% they purport to own.

Customer:

I found the articles.I can email to you

Customer:

So they should have notified us prior to sale for our consent ?

tdlawyer :

We can't use email - just have a look and see whether they contain anything about share transfers requiring the company's permission. See whether they say that they're "Table A" articles of "Model Articles"

tdlawyer :

If you can post a redacted version (with names crossed out) on here then I can have a look at them.

Customer:

When I bought my flat the solicitor had to contact the company to ensure there was no disputes and all fee etc paid.I thought it was strange neither of us was notified.

Customer:

Yes I can post.

Customer:

I can cross out names.

tdlawyer :

Okay.

Customer:

So the norm is to get our consent ? Sorry to be slow but did they need our consent to transfer shares.Because they are married I think they MAY have purchased 2nd property in the wifes name. Would that make a difference

tdlawyer :

They are likely to have needed the company's consent, which is controlled by the board of directors.

tdlawyer :

If there is a transfer of the property, then it matters not to whom it is transferred, it is still a transfer - and this is likely to require the company's consent.

Customer:

Amazing...thank you so much.Still things to be checked but at least there is hope

Customer:

Is what they done in any way illegal, seems really sneaky

tdlawyer :

It's likely to be "unlawful" which is the civl term for doing something wrong. "Illegal" is more associated with criminal acts, and this isn't likely to be a criminal act.

Customer:

Learn something new all the time.The document I found is called the Memorandum of Association is that any good to you

tdlawyer :

No, that's something slightly different.

tdlawyer :

And you do - every day you learn something new :)

tdlawyer :

Does this answer your question for today?

Customer:

Thats brilliant for today.Could you tell me how to get the documents you mentioned (I got a folder from the solicitor when I purchased the flat) Thanks

tdlawyer :

The best thing is to get them from your solicitors, because although some records (like the Articles) can be obtained from public records like Companies House, others such as the shareholders agreement (if they exist) cannot be and will be private. So best request from the solicitors in the first instance if you can.

Customer:

If I dont have a solicitor should I go back to the one I used 9 back in 2006 or can I ask any solicitor ?

tdlawyer :

You'd need to use the one you used at the time to get documents back from them.

tdlawyer :

Or you can use a new one, to write to the old one.

Customer:

Thanks.I will check whats in the folder he sent me first just in case.Wont take up any more of your time.

tdlawyer :

That's okay! If there is anything more later, just let me know. Can I just ask whether you've been happy with the service today please?

Customer:

Ps although you have answered how can I be sure to get you if I need more help ? Do you mind if I dont close this thread please.

Customer:

Thank you

tdlawyer :

All you need to do is come back to this thread - just copy the address from above and just open it as usual. You'll still be able to post to it even after we close it.

Customer:

today I have been EXTREMELY happy with service...thank you

tdlawyer :

Thank you - that's great :) Have a good weekend.

Customer:

Just one last question....If found that they dont have 50% what happens to the 25% ? Would the directors that did nothing wrong acquire the shares ?

tdlawyer :

Hi!

tdlawyer :

Sorry slow reply, had to leave but am back now.

tdlawyer :

The Company may have acquired the shares, but it's more likely that the shares would remain with the old owner still.

Customer:

The old owner ? but the original owner has sold the property and left.

Customer:

ps I found the articles of association

Customer:

Transfer of shares The instrument of transfer of a fully paid share need not be executed by or on behalf of the transferee and regulation 22 of Table A, Part 1 should be modified accordingly.

tdlawyer :

Okay. This might mean that the new owner acquires the share automatically then.

tdlawyer :

Which wouldn't be good for you, as it would mean they with two properties, they would have 50% of the shares.

Customer:

But they would have been dealing with the solicitor on behalf of the management without the knowledge of the other directors

tdlawyer :

If the shares transfer automatically, then they might not need the company's permission.

tdlawyer :

This means that a property could be sold without reference to the management company.

Customer:

So even if there are outstanding issues, services charges etc the management company are not required to confirm

tdlawyer :

That might be the case, yes, and this might just be an issue between buyer/seller of the property.

Customer:

it also says...the objects for which the company was established.....to purchase and sell for any persons freehold or other house property....,or any share or shares, interest therein,and to transact...

tdlawyer :

Yes, that's something else too.

Customer:

no idea...just sending through :-)

tdlawyer :

If they have 50% then there is little you can do other than get the other property owner on side and get a deadlock position on the board/at shareholders meetings.

Customer:

Thats whats been happening

tdlawyer :

Really, you need to resolve this by consent with regard to day to day issues that arise.

tdlawyer :

There is little you can do about it reality.

Customer:

its been us against them, so really its two votes against one.They want to merge the two flats into one and require us to agree the deed of variation.We have said only if the shares are redistributed to represent the amount of flats.

tdlawyer :

You can't be forced to agree to the change.

tdlawyer :

And I see your point - which sounds a fair and reasonable one.

tdlawyer :

Just because they have 1 bigger property doesn't mean they should have 2 votes.

tdlawyer :

I have to go again in a moment, so is there anything more you need to ask me?

Customer:

no thats fine..need to think.

Customer:

Thanks

tdlawyer :

No problem. Please remember to rate the answer for me.

Customer:

ok

tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience: 11 years experience of general practice.
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