We have noticed a recent increase in companies being dissolved while still holding assets, notably freehold property.
Where property has been purchased in the name of a company, possibly for tax reasons, individuals can, over time, forget that they do not legally own the property. Therefore if a company is automatically struck off by Companies House for failing to keep up to date with the filing of key documents, or is even voluntarily dissolved, often little thought is given as to the consequences.
The issue only really comes to light when the individual wants to deal with the land in question, most commonly when looking to sell it. The advice we have to give at that point is that the individual cannot deal with the land in any way as they are not the owner. Understandably, this can often elicit a fair degree of shock and frustration.
I set out below the logical questions which follow on from a discovery that land which you thought you personally owned in such circumstances is in fact no longer yours!
Who now owns the land?
When a company is dissolved any property it beneficially owns passes to the Crown (Section 1012(1) of the Companies Act 2006). This is known as the process of “Bona Vacantia.” If the Crown becomes aware of the fact that the land has passed to it, it can either decide to deal with it itself (e.g. by selling it), or through escheat, can disclaim the land and pass it on to the Crown Estate for them to decide how it should be dealt with. In most circumstances where land passes to the Crown Estate the freehold title will be extinguished and will then be sold on.
How do I get it back?
If the company is restored at Companies House then the company is deemed to have continued in existence as if it was never dissolved or struck off. Any property it held at the date of dissolution will automatically belong to the company once again.
If the Crown has disposed of the land to a third party then the restored company cannot have the land back, but the Crown will pay over the consideration it received (minus any costs). This process involves a formal application to the Treasury Solicitor.
How do I restore the company?
How the company is to be restored will depend on how it was dissolved. If the company simply failed to file documents at Companies House then a process of administrative restoration can be undertaken. This simply involves an application to Companies House and bringing the company up-to-date with its filing obligations e.g. by filing its accounts.
However, where active steps have been taken to dissolve a company, or it has been struck off, an application must be made to the Court prior to Companies House being able to restore it. This process can obviously be timely and can often lead to prospective sales being lost.
The above applications must be made six years from the date of the company’s dissolution.
We are able to assist in restoring companies to the register to re-vest the land. We are also able to assist in any potential professional negligence claims against professionals who advised in a company’s dissolution without considering the assets held by it. In such circumstances it may be possible to claim any associated costs and losses from them.