Collective enfranchisement—participation agreements
Collective enfranchisement—participation agreements

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Collective enfranchisement—participation agreements
  • The need for co-operation
  • The participation agreement

The need for co-operation

Collective enfranchisement involves strict time limits and requires all participating tenants to co-operate. Every participant must provide a certain amount of money and if anyone fails in this obligation, or to fulfil it on time, then either the process will collapse or the remaining participants will have to make up the shortfall. Participation agreements are often used to provide a contractual basis for ensuring financial contributions and for controlling other aspects of the process.

Before issuing the initial notice the tenants must:

  1. assess eligibility

  2. make a preliminary assessment of costs, and establish a cost fund

  3. arrange finance

  4. confirm details of the nominee purchaser

  5. gather and collate all required information and prepare the Initial Notice

The participation agreement

The participation agreement is a contract between the members of the nominee purchaser to govern the freehold purchase. Its principal purpose is decision making:

  1. there are currently no plans to implement provisions in Commonhold and Leasehold Reform Act 2002 (CLRA 2002) which would require the purchaser to be a right to enfranchise company (RTE company). Until commencement of the relevant section of CLRA 2002, the purc