On occasion, a freeholder can become uncontactable or missing over time.

For example, the freeholder might have moved abroad and lost interest in management or a deceased freeholder may have made no arrangements for a successor, leaving the building to fall into disrepair.

This raises immediate concerns such as whether the building is insured, as well as whether a service charge fund is safely held in an appropriate account. A longer term, but no less important issue is that of a leaseholder’s inability to sell or remortgage the flat, due to a short lease that needs to be extended.

Practical challenges of a missing freeholder

In the usual course of a statutory lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 (the 1993 Act), a formal s.42 claim notice is served on the landlord. In addition, the extension of the lease term is granted by Deed signed by both the landlord and tenant.

Practical problems therefore arise in serving a notice on a party that cannot be found, negotiating a premium to extend the lease and then having the Deed signed at the end of the process.

Missing landlord procedure

Thankfully, the 1993 Act caters for these circumstances and whilst the procedure requires specialist advice and is more time consuming than a standard claim, it will be possible to extend the lease term on payment of a premium and reduce the ground rent to nil, even if establishing the whereabouts of the freeholder is not possible.

In the first instance steps must be taken to contact the freeholder at their last known address and at any other address that can be found by looking at public registries or historic documents. The solicitor involved will document this process carefully, to ensure that the efforts that have been made can be readily explained to a Judge, who will ultimately decide if the case can be considered a ‘missing landlord’ case.

The solicitor will prepare a County Court claim by compiling the evidence required to prove the case and will then guide the case as necessary through the County Court and First-tier Tribunal. Given that there will be no other party to respond to the claim, the Court will scrutinise such claims very carefully and forensic preparation is therefore key.

There are then established practices for setting the premium payable. This will be proposed by an independent valuer, as there will be no freeholder to negotiate with. The leaseholder will however be guided by their own valuation advice obtained at the outset.

Once a price is determined, further work needs to be undertaken to deal with the payment of the premium and other costs by the leaseholder, along and the subsequent signing of documents and registration at the Land Registry.

These cases bear little resemblance to standard lease extension claims however the outcome will be the same; a 90-year extension of the lease term on payment of a premium and costs, with the ground rent being reduced to nil.

Potential upside

Whilst it is noted above that this process concerning ‘missing landlords’ is more involved, and therefore more expensive than a standard lease extension in terms of professional costs. A solicitor with specialist knowledge in this area may be able to use this process to the advantage of the leaseholder. Advice should be sought on whether this will be possible in each case.

If you would like to speak to one of our team members, please do get in touch on 0800 84 94 101 or complete our contact us form.

Here’s what you need to know:

Get it in writing: Many contractual disagreements happen between people (parties) who genuinely have different recollections/interpretations of the deal struck. Those disputes are often the hardest to resolve as both sides become stubborn in their righteousness and indignation at not being believed!

I have also noted, sadly, that when recalling things from memory, people (both the honourable and those less burdened by moral imperative) almost invariably tend to remember things in a way that is (to paraphrase Emperor Hirohito) not necessarily to their disadvantage. But don’t rely on deals hashed out over an extended email correspondence: the ambiguity about the terms agreed – and even whether a deal was finally struck – is always horrendous.

Get the parties right: A contract claimed to be between Crescent Farm and River Valley Winery may be unenforceable if Crescent Farm turns out to be just the address of the farmer and River Valley is just a brand name of XYZ Ltd (because neither addresses nor brands can enter into a contract).

Check compliance

  • Is everyone who needs to be licensed by the Food Standards Agency properly licensed?

Be 100% clear which grapes are being sold: specify them – both by type/variety and if relevant, location in the vineyard, or percentage of crop or whatever.

If selling grapes to more than one winery, who gets priority if there’s a shortfall?

  • Agree acceptability criteria: this covers minimum/maximum tonnage, grape type, grape quality (standards like Brix (sugar), acid, pH, MOG etc.), presence of other material (leaves, stems, insects), defects (disease, bird peck), colour, whether the grapes must/must not have been treated with any oenological product (e.g., sulphite powder), etc.
  • Duration: Are you selling one crop or is it a multi-year deal? If the latter, what is the pricing mechanism for future years? How to cope with varying annual yields?
  • Delivery: When, how and where are the grapes delivered? Who is responsible for delivery, and who unloads? Who at the winery will decide/sign off on acceptance, how and how quickly?
  • Price & payment: what, when, how, how much? Are any payments tranched? Are there payments, retentions or expenses to be deducted from the purchase price? Is payment conditional on anything (e.g., testing and acceptance)? For multi-year deals, is the continuation of the contract itself conditional or is a purchase of future crops guaranteed? If payment is delayed, is late payment interest due?
  • Title & risk: Grapes are easily damaged beyond use. When does responsibility for damage (risk) pass from grower to winery? What if a force majeure event occurs? When does ownership (title) transfer – on delivery, after acceptance or upon payment?
  • Remedies and dispute resolution: What happens if something goes wrong? Is there an obligatory, senior management discussion/mediation, or do you have arbitration or just leave it to the disgruntled party to bring a court claim? What happens if the dispute is not enough to kill the deal, e.g., a portion of the grapes delivered is unacceptable, but most are okay?

The above topics should be addressed in every contract, even if just to confirm a negative (because, at law, if a matter is not mentioned, that just allows all sides to be creative about their claimed rights and obligations on the matter in question). Do bear in mind, however, that every deal has unique characteristics, and they should be recorded as well.

Please email James O’Connell for your free Grape Sale Template Contract.

Even if you have a technical skill or vision that could form the basis of a successful business, the whole ’how to run a business’ side of things can seem quite daunting. Not surprisingly, therefore, numerous mentors offer their business experience to new entrepreneurs.

At their best, mentors can be a phenomenally useful resource. Regrettably, I often get to see those who have gone over to the dark side and used their superior knowledge of business processes to grab a slice of a promising business before their clients outgrow them. Too often, I see 20% – 40% of a business given away in return for vague mentoring ‘promises’ with few tangible outcomes and invariably no measurable ones.

At worst, dark-side mentors demand a shareholders’ agreement containing technical or arcane legal points that slyly elevate them to equal control of somebody else’s business (but leaving the original founders to do all the work and take all the risk). Clients are always shocked to find themselves in an unwanted but unbreakable partnership with a mentor because of clever legal wording.

Mentors are often in a unique position of trust. Clients assume that their mentors act, if not in their best interests, at least fair and reasonably. Learning otherwise is a huge business lesson, but it comes at one hell of a price.

So, what do you do if you have a mentor demanding not only payment but a stake in your business:

Buyer beware! It may be a fantastic offer, or it may be the start of your business imploding.
If you are already paying the mentor, then ask yourself what extra value you will get?
Put a cash value on the shares demanded. If you would reject a cash offer from an investor at that price, then the mentor’s offer had better be something truly amazing.
Make any shares conditional upon targets met.
Don’t automatically throw in a directorship with the shareholding; they are separate things.
Understand the total reward. Monthly payments and capital value of shares and dividends and director status and a say in your business?
Watch out for a ‘land-grab’. Under the guise of ‘I just want to protect my shares,’ the greedy mentor may demand to be treated as an equal ‘partner’ with the same right of veto as the owners. Again, if someone offered to buy, say, 13% of your company, would you give them all the rights of influence, disclosure and veto over crucial aspects of your business as if they had 51%? If (hopefully!) not, why would you give it to a mentor?
Make sure you can sack them if a director, and that you can buy back their shares (at fair value) if they are a shareholder.
There are many great mentors, and this article is not trying to dissuade you from using them – but equally you may encounter a mentor who sees you as an exploitable opportunity: so make sure any deal makes hard commercial sense.

Please contact James O’Connell if you need any advice.