Newly converted flats and leases

VictoriaS_3

Hi,

I've seen a flat that I'd like to make an offer on. It is on the ground floor of a terraced house which has been newly converted into two flats. When I asked the states agent about the lease arrangements, she said that the owner doesn't really want the hassle of being a landlord and is planning on selling the flats as share of freehold.

I am assuming then that no leases are in place at all. Is it the owner's responsibility to get the correct legal documents drawn up (and to pay for them?). How should this all work? I am a bit concered about being landed with another legal bill on top of evenything else associated with the purchase.

The upstairs flat has not been sold yet either.

Any advice welcome. Thanks!

Victoria

VictoriaS_3

Does anyone have any thouhts on this?

Thanks!

Victoria

lincroft1710

Does anyone have any thouhts on this?

I personally wouldn't buy any property where the tenure was not clear. IMHO vendor should have sorted this out prior to marketing flats.

blckbrd

The flats will still need leases and as lincroft1710 says the FH should have sorted this out already.

VictoriaS_3

OK. Thanks for feedback. I will investigate further...

Victoria

olly300

If the flats are sold "share of freehold" then they will have leases. You and the other freeholder will have to give each flat a lease.

You need to establish exactly what is going to be done otherwise you cannot get a mortgage.

VictoriaS_3

It is all a bit vague. The marketing info mentions nothing about whether it is being sold as leasehold or share of freehold. When I asked the estate agent, I got the response that she thinks he wants to sell as share of freehold. This makes me think that the freehold is still currently operating in relation to the whole house and he hasn't sorted any of this out yet. He has only recently converted the house into 2 flats.

I can possibly make an offer under the understanding that the process of purchase will include arranging share of freehold leases?

I will find out more tomorrow hopefully, but I wanted to see if anyone has come across this before and whether it necessarily means that I should avoid... or if can easily be sorted out.

Thanks!

Doozergirl

The fact that it is brand new means that the leases will not have been drawn up yet as there is no-one to assign them to! You will have that first lease.

All flats, even share of freehold will have a lease, even if it's a very long one.

Ultimately, because it is new, your own solicitor and the developer's solicitor will thrash the lease out between them this is not something you need to ask for as a condition of sale - it is obvious, bread and butter conveyancing to a solicitor. I wouldn't necessarily expect your vendor (if they are primarily a builder) or an EA to be anything but wooly in their explanations - neither are solicitors.

It's not a problem, it's a benefit to you that the management of the building can be organised the way you want it - in a house of two it's quite nice for you both to look after it yourselves. Your vendor's motives are quite honest - they aren't looking to profiteer from you even after you've moved in.

VictoriaS_3

Thanks DoozerGirl- that makes sense!

Will it cost much more in terms of the coneyancing fees to do this though and what will the likely costs be? Should the vendor be paying for these extra costs or is it something I should cover?
Thanks, Victoria

Richard_Webster

The fact that it is brand new means that the leases will not have been drawn up yet as there is no-one to assign them to! You will have that first lease.

All flats, even share of freehold will have a lease, even if it's a very long one.

Ultimately, because it is new, your own solicitor and the developer's solicitor will thrash the lease out between them this is not something you need to ask for as a condition of sale - it is obvious, bread and butter conveyancing to a solicitor. I wouldn't necessarily expect your vendor (if they are primarily a builder) or an EA to be anything but wooly in their explanations - neither are solicitors.

It's not a problem, it's a benefit to you that the management of the building can be organised the way you want it - in a house of two it's quite nice for you both to look after it yourselves. Your vendor's motives are quite honest - they aren't looking to profiteer from you even after you've moved in.

I completely agree with Doozergirl's comments.

You and your solicitor will have the opportunity to contribute to the way the lease is worded, and also, importantly, whether the freehold is literally owned by both lessees or is held by a company which is in turn owned by you both.

Although there is some admin involved in having a company, if the other lessee disappears or has an argument with you then you may not be able to obtain his signature to the transfer of the freehold title which you will need when you come to sell, but with a company, the ownership of the freehold at the Land Registry doesn't change - it is still shown as registered to 25 Some Road Limited (or whatever the company is called) and so the freehold doesn't have to be transferred. The company can be set up as limited by guarantee where the formalities for membership are minimal and the company constitution can provide that you can only be a member if you own one of the two flats.

VictoriaS_3

Thank you Richard. Can you advise me as to approximate costs associated with all this - e.g. for the solicitor to draw up lease and other relevant documents, setting up a limited co. etc? I am assuming this would be addition to standard conveyancing costs. Are the costs my responsibility, that of the seller or shared?

Thanks

Victoria