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month 05

Interests the company buys, holds and sells on its own account

The second of this company's two registered activities is the buying and selling of its own real estate, SIC 68100. It is not agency and it is not broking: where an interest changes hands, JAN & BAKHT LTD is a party to the transaction, and the work on this page is the work of being that party. May is the month the board sets aside for it, because an acquisition started in May can be registered and let before the autumn end dates come round.

What an interest is, on this board

An interest is a title, not a building. Two of them can sit in the same building and be entirely different things to hold. What goes on the board for each one is therefore taken from the register and the lease rather than from the particulars: the tenure, the title number, the extent of the demise, and — where it is leasehold — the term that is left to run.

Alongside those sit the restrictions, because they decide what can be done with the interest afterwards: whether alterations need consent, whether subletting is permitted at all, whether business use is excluded, and which party insures. A right of way, a parking space held under a separate title, or a shared drain all get their own line, since each one becomes somebody's repair in time.

Three documents, read in that order. The register says what is owned, the lease says on what conditions, the tenancy says who is in it. A fact taken from the wrong one of the three is the usual cause of a wrong answer later.

Acquiring: the order the work is done in

The order matters more than the speed. Each step below either confirms what the step before it assumed or stops the transaction, and nothing further down the list is paid for until the step above it has come back.

  1. Official copies of the register and the title plan read, and the lease read in full where the interest is leasehold.
  2. Searches ordered: local authority, drainage and water, environmental, and whatever the locality adds.
  3. Survey instructed, with the roof, the drains and any extension specifically scoped.
  4. Enquiries raised on what the title and the survey leave open, and answers read rather than filed.
  5. A report on title written for the file — tenure, term, consents, insurance, repairing obligations, anything outstanding.
  6. Exchange, with a completion date fixed and the apportionment date with it.
  7. Completion, keys collected, meters read the same day.
  8. Registration at HM Land Registry, and the updated register filed when it comes back.
  9. A row opened on the board: tenure, title number, term end date if it is let, and the month each certificate falls due.

Reading a lease before anything else

A leasehold interest is a contract with a clock in it. The term left to run is the first thing read, because it governs everything from lending to the eventual sale. After that come the service charge basis and how the charge is apportioned between the flats, the ground rent provisions and the mechanism by which they are reviewed, and the repairing split — what falls inside the demise, what is structure, and what is common parts.

Then the permissions: consent for alterations, consent for subletting, whether a licence is required for either, and who the notices go to. Forfeiture and re-entry are read even though nobody expects to meet them, and the insurance arrangement is read to see which party arranges it and which party pays the excess. All of that is written into one page on the file, so the answer does not have to be found twice.

Selling: the pack, and what has to be disclosed

A sale is assembled rather than announced. The pack holds the official copies, the energy certificate, and — for a leasehold — the management information: service charge accounts, the insurance schedule, the ground rent position, any consultation or planned major works, and the managing agent's details for notices.

Where the interest is let, the tenancy papers go in too, because the interest is sold subject to the tenancy: the agreement, the deposit's scheme reference, the prescribed information as served, the inventory, the current certificates and the repair history. The tenant is written to about the change in the address for service, and the deposit is either transferred within the scheme or returned and re-protected by the buyer. Nothing about the tenant's own circumstances goes in the pack.

What happens to the board when an interest changes hands

On a purchase the board gains a row, and the row immediately gains dates: the certificate anniversaries go into the diary before the keys are even tagged, because an inherited gas record can be weeks from expiring. On a sale the row is closed with a date, the keys are counted in and the tags retired, the final meter readings are filed, and the correspondence address is changed with the managing agent and the utilities.

Either way the index written in December carries the change, and the January diary is built from that index. An interest that was bought in May and never written into the index is an interest whose certificates will be missed in the following September.

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