Guidance note - The Crown Estate

Guidance note

Basic principles

English land law has, since feudal times,

been based on a system of tenure. A

freeholder is not an absolute owner but

a“tenant in fee simple” holding, in most

cases, directly from the Sovereign, as lord

paramount of all the land in the realm.

Whenever a “tenancy in fee simple”comes

to an end, for whatever reason, the land in

question may become subject to escheat

and the lord holding the superior interest,

in most cases the Sovereign, becomes

entitled to take possession of it. This

principle applies whether the freehold title is

registered or unregistered. This entitlement

(not an obligation) is called ‘escheat’.

Only freehold properties may be subject to

escheat. In particular, the following do not

fall within our remit:

• Leasehold properties.

• Rent charges.

• Time share properties.

• Freehold property abroad held by a

British registered company.

• Mineral rights (where they exist as proﬁts

à prendre as opposed to an exception

and reservation of land itself).

• Freehold property owned by joint tenants

(in this sense meaning the joint owners

of freehold property) only one of whom

has been made bankrupt or has been

dissolved. So, in the event of disclaimer

of the interest of one joint owner in the

property, the legal estate in the freehold

does not escheat since it is not vested

solely in that person or company but is

Burges Salmon LLP represents The Crown Estate in relation

to property which may be subject to escheat to the Crown

under common law. This note is a brief explanation of this

complex and arcane aspect of our legal system intended

for the guidance of persons who may be affected by or

interested in such property. It is not a complete exposition

of the law nor a substitute for legal advice.

vested in the joint tenants upon a trust

of land.

• Freehold property held subject to a trust.

Properties which may be subject to escheat

within England, Wales and Northern Ireland

fall to be dealt with by Burges Salmon LLP

on behalf of The Crown Estate, except for

properties within the County of Cornwall

or the County Palatine of Lancaster.

Routes by which

escheat arises

There are a number of ways that freehold

properties may become subject to escheat

to the Crown, including but not limited to:

• Disclaimer by Treasury Solicitor

under the Companies Act

The Treasury Solicitor (bona vacantia

division – www.bonavacantia.gov.uk)

deals with all cases of ‘bona vacantia’

– the term used to describe ‘lost’

property. The property of a company

which has been dissolved may pass to

the Treasury Solicitor in this way.

The Treasury Solicitor, however, may

disclaim any property which vests in the

Crown as bona vacantia. Freehold property

disclaimed by the Treasury Solicitor may

then become subject to escheat.

• Disclaimer by trustee in bankruptcy

or Ofﬁcial Receiver

It is open to a trustee in bankruptcy or

an Ofﬁcial Receiver to disclaim property

vested in a bankrupt. The effect of such

a disclaimer of a freehold property is to

determine the bankrupt’s interest and

the trustee’s obligations and liabilities

with effect from the date of disclaimer.

The property may then become subject

to escheat.

• Disclaimer by liquidator

In the case of a company which is being

wound up in England and Wales, the

liquidator may, by giving the prescribed

notice and with leave of the Court,

disclaim any onerous property. He may

do this notwithstanding that he has

taken possession of it, endeavoured

to sell it, or otherwise exercised rights

of ownership in relation to it. As the

disclaimer takes place before the

company is dissolved, the property does

not vest in the Treasury Solicitor as bona

vacantia. The property may then become

subject to escheat to the Crown.

• On dissolution of a foreign company

The freehold property in England and

Wales of a dissolved foreign company

may be subject to escheat to the Crown.

Such assets are not dealt with by the

Treasury Solicitor as bona vacantia

because the company is not formed and

registered under the Companies Acts.

A “foreign” company includes, in this

context, one registered in any of the

Channel Islands or in the Isle of Man.

• On an Industrial and Provident Society

(or Friendly Society) ceasing to exist

Any freehold property held by an

Industrial and Provident Society may

be subject to escheat to the Crown if

The Crown Estate – Escheat

All general enquiries

regarding escheat should be

addressed in the ﬁrst instance

by email to escheat.queries@

burges-salmon.com or by

post to Escheats, Burges

Salmon LLP, One Glass Wharf,

Bristol BS2 0ZX.

Who to contact

www.burges-salmon.com

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registered ofﬁce is at One Glass Wharf, Bristol BS2 0ZX. A list of the members may be inspected at its registered ofﬁce. Further information about Burges Salmon entities, including details of their regulators, Is set out on the Burges Salmon

website at www.burges-salmon.com.

© Burges Salmon LLP 2018. All rights reserved. Extracts may be reproduced with our prior consent, provided that the source is acknowledged. Disclaimer: This brieﬁng gives general information only and is not intended to be an exhaustive

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the Society is dissolved or otherwise

ceases to exist. Mere cancellation of

the registration of a Society does not,

of itself, mean that the Society has

necessarily ceased to exist.

Freehold property held by a Friendly

Society may also be subject to escheat

in similar circumstances.

• On dissolution of a statutory company

Property may be subject to escheat

where such entities are dissolved by

statutory instrument, but freehold

property has been overlooked.

Subordinate interests and

encumbrances – Liability of

the Crown

Escheat does not determine any

subordinate interests in the property in

question, such as a lease or mortgage,

or any other encumbrances to which the

property is subject. The Crown will not, by

virtue of the property becoming subject to

escheat, assume any liabilities in relation

to such interests or encumbrances or of

any other nature. The Crown is not a

successor in title to the freeholder and

does not derive title under him. Only if,

exceptionally, the Crown took possession

of the property, or committed an act of

management in relation to the property,

might it assume any liabilities. Where

a property may be subject to escheat,

the Crown is not the ‘owner’ in any

conventional sense and does not have the

ordinary responsibilities of an owner.

Duchy of Cornwall and

Duchy of Lancaster

Properties subject to escheat within

the County of Cornwall or the County

Palatine of Lancaster fall to be dealt with

by The Duchies, not The Crown Estate.

The County Palatine of Lancaster includes

the County of Lancashire and parts of

Merseyside, Greater Manchester, Cheshire

and Cumbria. The solicitors to The Duchies

are Farrer & Co (enquiries@farrer.co.uk).

Practice

The Crown Estate is not bound to dispose

of property subject to escheat, or to

dispose of such property to any particular

purchaser. Normal policy is to dispose of

such property to an appropriate purchaser

where it is possible to do so. In the case of

a block of ﬂats, the appropriate purchaser

will usually be such of the long lessees

as want to participate. In the case of a

private road, the appropriate purchaser

will usually be such of the adjoining

owners served by the road as want to

participate. Other cases will depend upon

their merits.

If an obvious candidate to have the

property has grounds for applying to the

Court for a Vesting Order, The Crown

Estate may decide not to oppose that

application.

The Crown Estate does not manage or

insure properties subject to escheat.

Procedure

Enquiries received about properties

concerning which The Crown Estate has

no information will be passed to the

Treasury Solicitor (Bona Vacantia Division).

Other enquiries will be investigated and

we will, as soon as we are able, give an

indication of whether a disposal may be

possible and on what terms.

We may initiate or require evidence of

consultation with other appropriate

persons.

If a disposal is a possibility we will require

the interested party or parties to appoint

a solicitor to act for them, which should

be a single ﬁrm if they are more than one.

If a mortgage or other charge exists over

the property, the lender may be prepared

to release his interest without requiring any

payment. A mortgagee holding a power

of sale may sell under that power and The

Crown Estate will not be involved.

Burges Salmon LLP

Issue January 2018

If the lender is not prepared to release

his charge, or if there are other claims

and the claimants indicate in writing

that they do not propose to exercise

any rights that they may have under

the Companies Acts or the Insolvency

Act, a sale may still be arranged but the

prospective buyer will be made aware

of the existence of the other claims

and will be given a copy of any relevant

correspondence with the other claimants.

Price

Disposals are usually at market value.

The Crown Estate has a statutory duty

to secure best consideration in all the

circumstances of a disposal. A minimum

consideration is payable in cases where

there is no readily ascertainable market

value but a disposal is nevertheless

possible.

Legal and valuation costs

We normally recover a contribution to

the legal costs incurred on a disposal and

reimbursement of the cost of obtaining

any appraisal of value.