Houses

Question: What happens to a commercial lease if the tenant (ie. a corporate tenant) becomes dissolved?

Answer: Bona Vacantia.

Bona Vacantia is one of those archaic Latin terms which crops up now and again and is sometimes familiar to those who have the privilege of watching day time television (Heir Hunters). But what exactly does it mean? The term is Latin for ‘Ownerless property’ which has by law vested in the Crown.

Originally the term applied to personal property but it now includes freehold and leasehold property. When a company is dissolved, all property and rights whatsoever vested in or held on trust for the company immediately before it gets dissolved are deemed Bona Vacantia. It is the responsibility of the directors and shareholders to deal with the property and assets of a company before it is dissolved.

Nothing on the title register of the property changes when the property becomes Bona Vacantia so the Land Registry will still show the dissolved company as the registered proprietor. What does this mean for the freehold owner? In the simplest of terms and minus the Latin of an angry man – headache, extra expense and a vacant property. Before a landlord can close the obsolete leasehold title, it must satisfy the registrar that the leasehold interest has come to an end (time consuming). The sooner the obsolete title is closed, the less likely the property will sit empty – lets face it, which prospective buyer will lease the property if the title register confirms there is a potential interest in the property?

Let’s talk facts!

The Crown will not pay the rent or take on any liabilities of the tenant covenants. The Crown will usually always disclaim commercial leases – although landlords should be aware that there is no guarantee that this will happen.

For landlords there is a formal process whereby they can make an application to the Bona Vacantia Division (BVD) of the Treasury Solicitor’s department requesting the lease to be disclaimed. Once the BVD have issued the notice of disclaimer, the landlord will need to apply to the Land Registry for the leasehold title to be closed and the notice of the lease removed from their title register. Alternatively landlords could save themselves a lot of bother by forfeiting a lease for non-payment of rent where they sense that a tenant is about to go bust.

This blog post was written by Real Estate legal assistant, Sigourney Gerald.


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.