Nightmare Situation - Freehold Restriction!

[Jimmye]

I personally own a property (not owned through a company) with no mortgage, which I am trying to sell. It’s a converted house - I own the downstairs flat and the other freeholder owns the upstairs flat. We both own a share of the freehold (joint tenants) i.e. we are not tenants in common.

The owner of the flat upstairs is going through a messy divorce, therefore his soon-to-be ex-wife has put a restriction / freezing order on the freehold of the entire property (without my prior consent or knowledge) as she was concerned he would sell the flat and do a runner before the divorce was settled. I’ve had a couple of buyers drop out of the sale of the property previously as the other freeholder is refusing to sign the TR1 form, which would provide his consent for me to transfer my share of freehold to the buyer. He is refusing to sign this form because he is worried he would be breaching the restriction / freezing order put in my place by his wife.

I’ve been in touch with his wife’s solicitor (they were the ones who put the restriction in place) and she told me the restriction will be lifted once the divorce is settled, however there is no way of saying for sure how long this will take. The final hearing for the divorce was supposed to take place last week, but it has now been postponed to next year because they couldn’t find a judge!

If I changed my ownership of the property to a 50/50 ‘tenants in common’ agreement, which I believe i can do without the other freeholder’s permission, then would he still be required to sign the TR1 form for me to be able to sell my share of the freehold?

I’ve looked into selling the leasehold only but this isn’t a viable option due to the CGT implications if I wanted to buy another property (which I do).

I’d be very grateful if anyone has any advice they could offer on how I could sell my property before the divorce is settled and the restriction is lifted.

[dslippy]

A mess.
A restriction can only be applied on the explicit consent of the registered proprietor.
What on earth are you doing with a joint tenancy? I must assume yiou are referring to a joint tenancy of the legal estate alone.
Your freehold is worth very little - nominal. The value is in the leasehold title.
Something seems to have gone awry.
Get a solicitor to check the title and tell you what is going on. He also needs to explain to you how all this works. You do not seem to understand it properly.
HMLR need to explain how you have a restriction without your consent.
Best of luck.

[Jimmye]

Thanks for your reply.

By joint tenancy I meant that we each own 50% of the freehold, apologies if that wasn’t clear.

Looking at the TR1 form under the ‘Declaration of trust’ section, the freehold title was transferred to me when I bought the property under the “they are to hold the property on trust” option.

I have contacted HMLR to ask how the restriction could have been put in place without my consent but haven’t received a response yet.

What is it exactly you don’t think I understand?

[dslippy]

You cannot sell the freehold without the leasehold.
Assuming long-ish leases, the leasehold interest is 99%+ OF THE VALUE, AND THE FREEHOLD IS NOT WORTH ANYTHING.

As to the feehold, the legal title is held by two of you as joint tenants, but the beneficial interests are under a tenancy in common.
You will face the same CGT problems whatever you sell.
(Sorry, typing with only one hand)

[Jimmye]

Thanks but I was already aware that the leasehold is where all of the equity is, hence my idea of selling the leasehold only. It is for this reason too that I think the restriction should have been placed on the leasehold of the other flat, not on the freehold of the entire property (including mine)!

I believe it is possible to sell only the leasehold and retain the freehold. However if i did that and wanted to buy another property then it would be deemed a second property and I’d have to pay a higher rate of CGT when I eventually sell the freehold.

Do you think there’s any way around this other than applying to HMLR to have the restriction lifted, or waiting for it to be lifted as a result of the divorce settlement?

[dslippy]

Challenge the entry of the restriction without your consent.

[dslippy]

Talk to the solicitors acting for ther neighbour's wife. Tell them they are adequately protected by a restriction on the leasehold interest.
Tell them the restriction is registered unlawfully, that its continud presence is causing you dame and that you must consider legal action.