Section 5 Notices - Right First Refusal

Before a block of flats can be sold the leaseholders must be give the right of first refusal. This means that you must offer the freehold to them on the same terms as it is being sold for. You must write to them and give them two months in which to decide whether or not they wish to proceed. They have two months from the date that the notice is received to decide if the want to exercise their rights.

If the lessees decide to buy the freehold they must serve a counter notice on you in a prescribed format confirming their intentions to proceed with the purchase. In order for the lessees to qualify more than 50% of the block needs to sign up or you do not have to sell to them.

When you serve the notices on them you must make sure you get proof of postage from the cashier at the post office to prove that the notices were sent. It is important that you do this so as there are no problems later on


Serving The Correct Documentation

You must ensure that you keep copies of the notices as the buyers solicitors will need to see them before they can complete the sale. It is a criminal offence not to serve these notices before selling the block and no buyer will be able to complete any sale until the two month period has elapsed.

Another point worth noting is that you can sell the freehold for more than you have served the notices at but you can not sell for less. The section 5 notices themselves are pretty straight forward to draft but care must be taken to ensure that everything is in order as you will have wasted two months if you have to serve them again due to a mistake.