How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask F E Smith Your Own Question
F E Smith
F E Smith, Advocate
Category: Property Law
Satisfied Customers: 10259
Experience:  I have been practising for 30 years.
Type Your Property Law Question Here...
F E Smith is online now

Can a director authorise the sale of loft space in a block

Customer Question

Can a director authorise the sale of loft space in a block of 5 flats ?
Assistant: Thank you. Can you provide any more details to help us find you the right Expert?
Customer: I have a share of freehold in a block of 5 flats. One director "sold" the loft space and signed a deed of variation to add the loft into the top floor. I objected and the sum was a poultry £5k. Despite the objection and proof that the loft space could yield £200k for the freehold company. The director went ahead and sold the space. How do i get the deed of variation nulled ?
Submitted: 1 year ago.
Category: Property Law
Expert:  F E Smith replied 1 year ago.

Why are you dealing with this in isolation and what are the other flat owners doing about this?

Did he sell it to someone that he knows or did he sell it to the older of the top flat and if so, is that someone he knows?

May we have the background detail please?

Customer: replied 1 year ago.
Sold to the owner of the top floor flat. One is an absent landlord. One owner is not bothered that it has been done. There are 5 flat owners.
Expert:  F E Smith replied 1 year ago.

Why was it sold so cheaply? Does he know the owner of the top floor flat or does he have some other kind of interest in it or is he just incompetent?

Customer: replied 1 year ago.
They didn't obtain a valuation because the top floor owner said they didn't want to pay for it. I produced one from an estate agent and then they refused to accept it and said it wasn't an expert opinion so I explained the rational. It's my opinion that they are just incompetent. Only one director signed the deed and that wasn't witnessed. Though no resolution was passed or meeting arranged. Just an email.The lease plan from the land registry also shows that the foot print of the flat extends outside the original flat to include the communal stairwell. There is no mention of this anywhere in the email sent to us. This could be an oversight or done to deceive us.
Expert:  F E Smith replied 1 year ago.

The director is under a duty to act in the best interest of the shareholders. He has possibly failed to do that. As a result of this, it appears that the shareholders have possibly been disadvantaged.

The problems you face are that you seem to be the only shareholder/leaseholder who is bothered about this and hence, you would be faced with funding any litigation alone and carrying any risk of that even though the others would eventually get the benefit.

The problem with loft space is that depending on the make-up of the building, it may only be of use to the top flat unless there is separate access. There are manifold problems in selling off loft space to 3rd parties.

Whilst it can be sold for the valuation, if it’s not possible to be sold on the open market, then it really comes down to how much the management company will take for it and how much the owner of the top flat is prepared to pay.

So, whilst it may seem that he has not acted in the best interest of the shareholders that may not necessarily be so. You would need three valuations before you can even consider going to court on this and those valuations would need to take into account, the access requirements .

What the director has certainly not done is follow the correct procedure for disposal of a substantial asset by calling a Extra ordinary General Meeting for the shareholders to consider the proposal.

As such, be possible to make an application to court to set the transfer aside and if that failed, an application to make the director personally responsible for any loss.

This is certainly not a do-it-yourself job although there is no legal reason why you cannot do this and potentially, you could be looking at legal costs which could initially run into tens of thousands of pounds.

Can I clarify anything for you?

Please rate the service positive.

The thread remains open for further exchanges.

Best wishes.

Customer: replied 1 year ago.
An independant flat can be built by adding a stairwell at the back. There is such a similar extension 2 doors away. I have an offer in writing from a developer for the airspace to build a flat for between £90k-£100k.If the plot was sold for £4k is an ordinary resolution still required ?
How do i dispute the deed ? It is only signed by 1 director and is not witnessed - is that enough to approach the land registry ?
The lease plan foot print also extends to the communal hallway and stairs.
I have used the wall area to store goods for 17 years and to access the roof space for various reasons. My skylight is on that space.
Expert:  F E Smith replied 1 year ago.

It is a special resolution to dispose of a substantial asset. You cannot dispose of a substantial asset for a nominal sum and then claim it’s not substantial because it was only sold for buttons.

If there is more than one director, it should have been executed by 2 directors and the land registry should have picked up on that.

I don’t know whether it has already been registered or not.

It also appears that the lease plan is defective in any event .

It’s very difficult to imagine the layout without photographs and plans.

Customer: replied 1 year ago.
I have attached the deed.
I attached an alert at the land registry and applied for the deed - does that mean it's registered ?
I think i should write to the land registry and the mortgage company stating that it's defective and possibly illegal.
In the mean time see if that how to prevent it happening again.
Expert:  F E Smith replied 1 year ago.

You would need to apply for the Official Copy of the title and the title plan to see whether loft is now included in the demise. They cost 3 pounds each from the land registry new and get them online.

Customer: replied 1 year ago.
The attached previous deed, is the official copy.
Here are the downloaded title plans and an official copy of the old title plan.
Expert:  F E Smith replied 1 year ago.

The first document you sent is the official copy of the deed of variation, not the title.

The later documents are the title which was some reason it into parts with two title numbers

However, looking at the plan which the deed says replaces the earlier plan (clause 2.1.1) only appears to demise the third floor.

It appears that flat 2 is on the ground floor, flat 3 is on the first floor, flat 4 is on the second floor and flat 5 is on the third floor.

looking at the later plan and looking at the deed of variation plan, for some reason the later plan now includes the stairwell.

Looking at the later plan, where is the loft space?

Notwithstanding, the deed has been registered so I can’t really add anything to my earlier answer.