Bona Vacantia – what is it?
Literally defined as vacant goods, the term is given to property that is ‘ownerless’.
You may be wondering how can land and buildings become ownerless?
Property can become ownerless if an owner dies without a will and without heirs. However, in a commercial property context, it is more likely that the property was previously owned by a company which has been dissolved.
What happens to bona vacantia property?
- Passing to the Crown
In the context of assets which were held by a company, the Companies Act 2006 provides that when a company is dissolved, all property, assets and cash owned by the company automatically pass to the Crown. So if a planned dissolution of a company occurs, careful thinking is required about how these assets are dealt with ahead of any dissolution.
The assets can include both freehold and leasehold interests in land, but importantly, any liabilities do not pass to the Crown and the Crown will not be bound by any tenant covenants in leases.
- Does the Crown have a choice?
Of course one does!
The Crown has the option to disclaim any bona vacantia property. The effect of disclaiming means that the property is treated as never having passed to the Crown.
Once the Crown is notified of bona vacantia property, it has 3 years to decide whether to disclaim it. However, it is possible to apply to the Crown to require a disclaimer decision within 12 months.
Disclaiming is fairly common in circumstances where the property is low value, the asset is the subject of a dispute or litigation, or generally where it would not be cost effective for the Crown to deal with the asset in question. It is also very common for the Crown to disclaim commercial lease interests.
If the Crown decides to disclaim an asset, a copy of the disclaimer notice will be published in the London Gazette and sent to the Registrar of Companies. The notice will show up in the filing history of the dissolved company on the Companies House website.
If freehold property is disclaimed, the title will be extinguished and the property will ‘escheat’ to the Crown Estate (distinct from the Crown). Escheat is a separate and complex area and advice should be sought from a property solicitor if land has been disclaimed.
- Can I buy bona vacantia land?
If land has not been disclaimed by the Crown, there are two options for you to acquire it:
- You can apply via the appropriate body representing the Crown, to purchase the property. Bona vacantia property is sold by the Crown at market value and valuations are carried out by a district valuer.
- If you are able to locate or identify the former directors of the dissolved company or its liquidator, it may be possible to restore the company. In this scenario, the land would no longer be deemed bona vacantia and you could purchase the land in the usual way.
- Who do I contact about bona vacantia land?
It’s not a case of ringing Buckingham Palace I’m afraid.
In the first instance, you should discuss the matter with a property solicitor. They will be able to contact the appropriate representative body of the Crown on your behalf.
The bodies responsible for dealing with bona vacantia property across the UK jurisdictions are as follows:
- Northern Ireland: Crown Solicitor of Northern Ireland
- England and Wales: Bona Vacantia Division of the Government Legal Department *
- Scotland: Queen’s and Lord Treasurer’s Remembrancer (QLTR)
- *Cornwall or Lancaster: the Duchies’ of Cornwall or Lancaster’s solicitors
Any more questions?
The commercial property team at Mills Selig are experienced in dealing with matters involving bona vacantia property and are well placed to advise you on this subject matter.
Editorial prepared by Jayne Paterson, Consultant, Commercial Property @ Mills Selig
If you have any further questions on this topic or require specialist advice, please get in touch with us:
Anne Skeggs, Partner, Head of Property – Anne.SKeggs@MillsSelig.com
Anna-Marie McAlinden, Partner, Commercial Property and Head of Climate & Energy – Anna-Marie.McAlinden@MillsSelig.com
Jayne Paterson, Consultant, Commercial Property
Jayne has wide-ranging experience acting for private and public sector clients, including acquisitions and disposals, commercial leases and their management (for both landlords and tenants), refinances and supporting corporate transactions.
T: 028 9024 3878
E: Jayne.Paterson@MillsSelig.com
W: www.MillsSelig.com/CommercialProperty
