leasehold query - can someone please help?

JennyW_2

my husband and I are currently in the process of purchasing a leasehold flat. The property is a detached property which was converted into 2 flats. We are purchasing the ground floor flat - the freeholder occupies the 1st floor flat.

I have today received a letter from my solicitor and the bit I'm confused about is as follows:

Please find enclosed form TR1 which is the transfer deed required to transfer the legal ownership of the property from the seller to yourselves.

para 1 The document has been drafted so that you hold the property as "joint tenants". This means that you both own the property jointly and upon sale you will both be entitled to half of the proceeds of the sale. By holding the property this way, upon the death of one party, his or her share will automatically pass to the other. It is not possible to leave your share by will.

para 2 It is possible for you to hold the property as "tenants in common". This means you both own a specific share by the property. This may be 50% each or any other percentage you wish. By holding the property this way you will each be entitled to the relevant percentage of the proceeds of the sale and upon death your share will pass in accordance with your will. Ifyou wish to hold the property this way, please advise us in writing and we will amend the deed accordingly.

In layman's terms, can some please let me know if what is being explained in the first paragraph is the way to go? Also I'm a bit confused when it says "you will both be entitled to half of the proceeds of the sale" - surely we get all the proceeds of the sale if it's our flat to sell? Or does it mean if the property as a whole is sold (both flats), then we get half the proceeds and the freeholder gets half???

Also when it says "you both own the property jointly..." does this mean the flat is owned by me and my husband or does it mean the whole property is owned by the freeholder and my husand and I?

I'm really sorry if this is muddled but I'm a bit confused. I just need to know if what is explained in paragraph 1 is the best option and not that in paragraph 2 about "tenants in common".

Thank you.

TAZ

i am no expert but having read the above the letter i beleive is regarding you and your husband not you and the other flat's tenant(freeholder).
i think it discribes how you two as a couple can devide the moneies from sale of the property should you split. i beleive this was brought into house sales because of the number of people sharing either in marriage or long term commiments
thats what i think anyway hope it helps

Ian_W

I agree with Taz. It's describing you and your husbands ownership of YOUR flat and AFAIK has nothing to do with the freeholder or the flat above.

The norm with married couples is to own it as per para 1, there are sometimes advantages for IHT or where the owners aren't a "couple", in owning as in para 2 so that half of the property c an be left to someone else in a will.

JennyW_2

thanks guys for helping clear this up. So you think that when it says "you both.......",you think it's referring to me and my husband, not us and the freeholder? It's not well worded is it?

Ian_W

If you read it in conjuction with the first para:
TR1 which is the transfer deed required to transfer the legal ownership of the property from the seller to yourselves.

The freeholder who owns the upstairs flat, unless I'm missing something, won't be having their property transfered from your seller to them - they already own their flat. The TR1 is the document that goes to Land Registry when your sale completes to show you as the new legal owners of the title.

Somerset

As others have said it's referring to how you and your husband own the flat legally. At this stage ie the purchase stage. the solicitors are preparing the paperwork to pass to the Land Registry. The entry on the Land Reg will show how the title is owned. You have the choice of 'joint' (default) or 'tenants in common'. This choice might make a difference if you split up, but is generally more inheritance tax geared ie if one dies, the flat automatically passes to the surviving spouse and is outside the inheritance 'pot'.
It's nothing to do with the other flatowner or other flat.