I have received a Section 13 Notice. What should I do?
This is a question which many Freeholders ask, and it can be challenging to understand what your next steps should be.
In this article, Leasehold Property Expert Niki Adkins, outlines what a Section 13 notice is and what steps you should take.
What is a Section 13 notice?
A Section 13 notice is a notice that a group of residential flat owners serve on the freeholder of their building to force the freeholder to sell the freehold to them.
This is a right given to flat owners in buildings that qualify under the Leasehold Reform, Housing & Urban Development Act 1993 (“the 1993 Act”). This process is known as ‘enfranchisement’.
What is the Section 13 process?
In the Section 13 notice, the flat owners will usually make an offer for the freehold and that offer is usually lower than they expect to pay, as they will allow themselves scope for negotiation.
The freeholder will then obtain their own valuation advice and make a higher counter-offer.
The parties then go into negotiations and hopefully reach agreement somewhere in between.
What should I do when I receive a Section 13 notice?
If you receive a Section 13 notice you will need to obtain advice from a specialist lawyer and valuer as soon as possible.
There is a strict timetable and deadline for a freeholder’s response that kicks in as soon as a Section 13 notice has been served. There are detrimental consequences for a freeholder if certain arrangements are not made before this deadline.
You can contact a member of our specialist Leasehold Property Team on 01202 499255, who will be happy to guide you through the process.
What is a Section 13 charge?
If a Section 13 notice is served, the freeholder is entitled to charge a premium/price for the freehold in accordance with the calculation set in the 1993 Act. This price will be different for every building and will depend on a number of things, including:
- The length of the flat leases,
- The ground rents payable under those leases and,
- The value of the flats themselves.
Can I refuse a Section 13 notice?
There are very limited circumstances in which a freeholder can refuse a Section 13 notice.
In short, if the building and the flat owners meet the ‘enfranchisement’ criteria set in the 1993 Act, a freeholder cannot refuse to sell the freehold and would be best-advised to instruct a specialist lawyer and valuation as soon as possible to ensure that their interests are protected as best as they can be in the circumstances.
If you have received a Section 13 notice and want to insure your interests are protected as best as they can be, contact a member of our specialist Leasehold Property Team on 01202 499255.
You can read our article about collective enfranchisement here.
How long does a Section 13 tribunal take?
In most circumstances, Tribunal proceedings can take anywhere between 6-12 months from application to conclusion.
If the terms of the transaction (i.e. the price and wording of the legal documentation) cannot be agreed between the freeholder and the flat owners during negotiations, either party can ask the First-tier Tribunal to determine what those terms should be.
Who pays the professional costs in an enfranchisement transaction ?
The 1993 Act provides that the flat owners will pay their own professional fees, and that of the freeholder – this would include both legal and valuation fees, but those fees must be reasonable.
Leasehold Specialists
Our residential leasehold experts have a wealth of experience handling a wide variety of leasehold cases. If you have any questions after reading this article, call us on 01202 499255 or fill in the form, and one of our approachable team will be in touch to arrange your free meeting.
We offer all new clients a free initial chat with one of our bright Leasehold Property experts.
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