Updated: Apr 24
Updated 24th April 2023
This is a question we have been getting regularly since we launched the Sua Casa service, so we've made this article available to Members of our Site. It does also reference other Blogs on the site, so do take a look around.
Selling a Fractional Interest is NOT the same as selling a property,. There are a number of stakeholders that you need to work with to make this happen. This is an attempt to break down the process into steps. For this to make sense you need to understand how your Fractional Ownership is organised and who all the Stakeholders are. If you are unsure, please check out https://www.sua-casa.net/post/who-s-who which is available to Members and explains the various stakeholders and their roles.
The following is a step-by-step approach to selling your Fractional Interest dealing with the technical steps in the process.
What type of Fraction do I own?
There are 2 types of Fractional Ownership relevant to the property in Cape Verde. If you own a 50% interest it I possible that you have a direct land-registered interest in the property. If you do not know, contact us at firstname.lastname@example.org to ask. Please include your name in the request and we will confirm if you hold a direct land-registered interest.
If you DO own a direct land-registered 50% interest then you will need to instruct a lawyer able to carry out conveyancing in Cape Verde. Contact us to ask about help with this and we will be able to recommend someone suitable. The rest of this article does not apply to you.
Most Fractional Owners will NOT have a direct land-registered interest, but will have a Membership of a UK-based LBG Company which holds the property for them. This article deals with this situation. Read on.
2. What price should I charge?
You need to decide what price you will be willing to accept for your Ownership and you will need to be able to set this minimum offer price to proceed. Only you can determine what price you will be willing to accept, but there may be a number of factors you wish to take into account, including:
- Have I been paid compensation by the FSCS? If you have, then it is likely that any income that you get from the sale of your Ownership is likely to be paid either to your pension administrator or the FSCS and not to you. Therefore, you might wish to purely surrender the Ownership to avoid liability for ongoing costs of maintenance or your pension. There is a separate process for Surrendering your Ownership. Please contact us at email@example.com for more information or check out our article on this subject: https://www.sua-casa.net/post/how-do-i-surrender-my-fractional-ownership.
- What am I likely to get if I don't sell? Because the decision to sell is not your only option, you should compare this to what you are likely to receive as income if you do not sell but keep hold of your interest. We can provide a tool for assessing this to help you. Please contact us as firstname.lastname@example.org, providing your name and requesting the value tool and we will try to help with this. You should be aware that we are a TRG-funded programme so are not independent.
If you would like an independent assessment of value then there are a small number of companies who will provide this for a fee. They charge approximately £250 for an assessment, although some do offer discounts. It is possible that if you own your Fraction via a Pension that your provider will give a valuation (they have a responsibility to do this). If you do need an independent value assessment please e-mail us on email@example.com for a list of providers. The most popular provider is available here: https://www.sua-casa.net/post/independent-valuations
Once you have decided on a minimum sale price you are ready for the next step.
3. Offer to other Owners
You own a Membership of an LBG Company, and when you sell your interest it is actually a transfer of this Membership that takes place. Under the rules of the LBG Company you MUST first offer other Members the opportunity to buy your Membership at your minimum price. To do this you write to the Directors of the LBG Company to make the offer.
To help the following is an example of the letter or e-mail you might write:
From: [insert the Owner of the Membership here which may be you or your Pension]
To: The Directors of [full name of the LBG Company relevant to your Membership - if you don't know this we can help you]
Sale of my Membership
I wish to inform you that I am intending to sell my Membership in the LBG Company for a minimum price of [insert your price here]. Please offer the Membership to the other Members of the Company in accordance with the Articles. I understand that the other Members have 8 days to accept the offer. If I have had no response from you within 10 days of this letter I will assume that no other Members are willing to purchase my Membership and I will therefore be free to sell my Membership to any third party at or above the minimum price at any time within the next 3 months.
I wish to be clear that any liability for fees or rights to historical income will transfer with my Membership and I have allowed for this in determining my acceptable minimum price.
I understand that this action falls within the terms of my Membership as described within the Articles and will not attract any fee or other charge from the Directors of the Company and I have agreed no additional fees with any third party.
Thank you for your assistance.
[Insert your name or signature]
One variation here - if you own your Membership through a Pension, then the Trustee or Administrator should do this. In that situation you might complete a letter in the above form and then instruct your Pension Provider to send it to trgfmholdings.com.
4. One of the Members Agrees
If having completed step 3 you get a response to say that one of the other Members has accepted then congratulations - you have a buyer. You can then do the following:
- Provide your details for receipt of the funds to the Directors
- Tell the Directors that he can record the transfer of Membership to the other Member once you have received the funds.
- Ask for confirmation that you are no longer a Member and that you no longer have any rights to income or liability for costs associated with the Membership.
Although not strictly necessary, it would be a good idea to confirm the completed sale to TRG (which you can do via Sua Casa if you prefer) to make sure that you are no longer chased for BRM Fees or don't get paid rental income incorrectly. Normally the Directors would also do this, but you may wish to do so for complete peace of mind.
In the past there have been examples where new Members have refused to pay overdue BRM fees or other costs, so it is wise to take these into account when setting your minimum price, as described within the example letter.
5. If one of the other Members does not accept within 10 days.
If you hear nothing back within 10 days of the sending of the letter from step 3, then you are free to sell the Membership to any third party as long as it for an amount equal to or greater than the minimum price. If you know of someone that would like to buy at that price then you can conclude that directly yourself.
If you do not know of anyone then you can come to us at Sua Casa and we will ask those we know who have interest in acquiring TRG assets if they would be interested with a time limit of 3 months on the deal. When you do this you should confirm your minimum price and confirm that you have been through the above steps. If any of those we know are interested we will respond with their offer and then you will be free to accept and we will help you complete the transaction. We will not charge for this service.
If you get a response with an offer lower than your minimum price then you can reject that if you wish. However, if you decide to accept a lower offer, you can go back to step 3 above and set a new lower minimum price. Alternatively you may decide to hold on to the Membership. It is always your choice.
The above information is not financial advice or pension advice. It is a generic explanation of the transaction processs for your Fraction within the TRG structures. Should you require advice you should speak to a suitably qualified or regulated advisor.