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Bona Vacantia – What Does it Mean?
Bona vacantia is one of those archaic Latin terms which crops up now and again, sometimes in the context of a property owner dying without a will and without heirs. But what exactly does it mean? It is actually Latin for "ownerless goods" and is the name given to ownerless property which has by law vested in the Crown. Property can become "ownerless" if a company is dissolved. If a company's registered office and the property are in England and Wales then usually the property becomes vested in the Crown and is dealt with by the Treasury Solicitor.
Bona vacantia property
Both freehold and leasehold property can become bona vacantia. Where a company is a tenant and the company is dissolved then the lease will become bona vacantia and pass to the Crown. The Crown will not, however, take on any of the liabilities of the tenant nor be bound by any of the tenant's covenants.
The consequences of a lease becoming bona vacantia
The Bona Vacantia Division (the BVD) of the Treasury Solicitor’s department will decide how to deal with the lease. It is the BVD's policy to always disclaim commercial leases (reserving a market rent) that pass to the Crown as bona vacantia – although landlords should be aware that there is no guarantee that this will happen. If the lease is disclaimed a copy of the notice of disclaimer will be published in the London Gazette and made available on Companies House. If the BVD disclaims a leasehold title it means that it is treated as never having passed to the Crown as bona vacantia at all. The leasehold title is extinguished on disclaimer. In the unlikely situation that the BVD decide not to disclaim a lease then it would be sold at market value. The BVD will not assign commercial leases, save in very limited circumstances.
The BVD will confirm whether the Crown is going to disclaim its interest in the lease and must do so within three years of the Crown first becoming aware that the property is bona vacantia. An application can also be made to the BVD by a person interested in the property and this requires the Crown to declare whether it is going to disclaim the lease within a shorter period of 12 months (unless a longer period is allowed by the court).
Forfeiture or disclaimer?
If a corporate tenant is dissolved then the landlord may wish to apply to the BVD to disclaim the lease instead of seeking to forfeit the lease. It is not possible for a lease to vest in the Crown as bona vacantia if the landlord forfeits before the tenant is dissolved.
Given that it is Crown policy to disclaim most commercial leases the BVD is often swift to issue the notice of disclaimer. This process is likely to be rapidly concluded, allowing the landlord to apply to the Land Registry for the leasehold title to be closed and the notice of the lease to be removed from the freehold title.
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