Recovery Method: Enforced Sales Procedure: Section 103 Law and Property Act 1925
Legislation: Section 78 Building Act 1984 – Dangerous Buildings – Emergency Measures
BACKGROUND
The property at 77 Eastern Esplanade was a key target of the No Use Empty campaign after its serious structural defects became a major problem for Thanet District Council. Protected scaffolding had to be erected around the property to protect the public from falling masonry and two dangerous chimneys stacks that were leaning precariously had to be demolished.
The condition of the property was such that, if significant and substantial remedial works were not carried out, there was a very real concern that the property would deteriorate to such a point that it was beyond economical repair and demolition would have to be considered.
Following the death of the owner, the property was passed on to various family members throughout Saudi Arabia. Consequently, the Solicitor acting for the estate could not sell the property on the open market, as the ownership of the property could not be fully established, leaving the council to foot the bill for the work carried out.
A sale was then enforced on the property in April 2007, following which Town&Country Housing Group, one of Thanet District Council’s preferred affordable housing partners, have brought the property back into use. When work started the property was boarded up, with windows missing and major infestation by pigeons in the upper floors. Due to missing slates from the roof, water had been poring through the property for a number of years, causing serious decay, including dry and wet rot.
The four one and two bedroom flats have been refurbished and were offered for sale on a shared-ownership basis, allowing for those on a low income to get on to the property ladder by owning part of the equity of the property. Shared-owners are able to acquire additional equity at a later stage when they can afford to and rent is paid on the share of the property they do not own. When marketed the flats ranged in price from £100,000 to £140,000. Purchasers were able to buy as little as 25% share and pay rent of 2.7% on the remaining portion.
ENFORCED SALES PROCEDURE
Where there is a debt to the Council, created as a result of the Council undertaking works in default, as in this case, the Council can use the Law&Property Act 1925 (Power of Sale), to recover the debt.
The Law of Property Act 1925 states that a Local Authority with a debt on a property can, under certain circumstances, registers the debt as a first charge with the District Land Registry. This would even take precedence over a mortgage, if there were any.
Once registered, the Council can then ask for the debt to be paid in full. Where the Owner fails to pay the debt, the Council can enforce the sale of the property, just like a mortgagor in possession.
The Council has recovered their reasonable costs out of the proceeds from the sale and the rest of the monies will be held in trust for the Owner. Once the ownership of the property has been resolved, the funds will be transferred to the owner.