Where a company owns property and that company is dissolved from the register at Companies House, the land it owns becomes ‘bona vacantia’ (literally ‘vacant goods’) and vests in the Crown. This can make things difficult for a mortgagee who has a legal charge over that property. Whilst the power of sale can still be exercised, it has generally been necessary to inform the treasury solicitor and seek consent to the sale, even if there was to be a shortfall against the secured debt. This inevitably increased both the time taken to sell and related costs.
However, the Bona Vacantia Department (BVD) of the Government Legal Department has now set out new guidelines, specifying a new procedure for dealing with these cases which will be trialled as of 1 July 2015.
Under the guidelines, the mortgagee does not need to contact the BVD until the property has been sold and only if there is a surplus due to the Crown. If there is no surplus (as in many cases) no contact needs to be made with the BVD at all.
If there is a surplus, the mortgagee (or more likely its legal representatives) must write to the BVD confirming the details of the company which owned the property (including the name, company number and registered office). The letter should also enclose official copies for the property (including the Land Registry filed plan) and copies of the legal charge and transfer. Finally the letter must enclose a redemption statement showing the proceeds of sale, any costs deducted, the amount which has been paid to the mortgagee and confirmation of the surplus payable to the Crown.
On receipt of the documentation listed above, the BVD will check the evidence and completion statement and, assuming they are happy with the information, will provide instructions on how the surplus monies should be paid. If the BVD are not satisfied with the evidence provided, they may raise further queries.
The new trial guidelines appear to be a sensible modification of the procedure around bona vacantia property and should decrease the time and cost spent in dealing with these properties. In most cases, no contact will need to be made with the BVD at all. Even where contact does need to be made, as this needs only to be done after the event, it should not delay the sale of the property or the payment of proceeds to the mortgagee. Notwithstanding this, the duties of a mortgagee when exercising a power of sale under a mortgage should not of course be forgotten.