Backdated Ground Rent

Fire_Fox

Take your piece of paper to a solicitor, you need to know what it is!

clutton_2

""Did you not get legal advice on this transaction at all?? I am struggling to believe you have purchased the freehold for forty quid without any legal involvement if so."


do what FF says immediately ....... you have no idea what you have signed.....

sighs.....

curlygirl1971

Ok.

Just to be clear though - I haven't signed anything. I paid a fee and morgoed estates, the rent charge owners sent me a deed of release of rent charges that they have signed

clutton_2

paying a fee in exchange for something IS a contract in law.... whether you have signed something or not

it all may be ok - but untill a solicitor looks at it you wont know...

normally groundrents cost thousands of pounds to buy..........

Fire_Fox

£40 wouldn't even cover their admin costs, never mind their legal costs in drawing up a deed. Letting agents charge more than that for referencing!

curlygirl1971

Redemption of Rentcharges

Article:Real Estate News & Developments, April 2009
What are Rentcharges?

Rentcharges are periodical payments where there is no relationship of landlord and tenant. Rentcharges are therefore payable by freehold proprietors to rentcharge owners. The Rentcharges Act 1977 has limited rentcharges to a large extent by preventing the creation of 'new' rentcharges (there are certain exceptions to this rule). Existing rentcharges will be extinguished on either 21 July 2037 or sixty years from the date the rentcharge first became payable, whichever is later.

Why bother getting rid of them then?
Despite most rentcharges being low value, there are two main reasons why people choose to get rid of them:

1) To tidy up a property's title to make it more attractive to prospective purchasers.
2) Rentcharge owners can exercise remedies if a rentcharge remains unpaid. They can sue for the money owed, or they can enter the property to take items up to the value of the money owed. Alternatively, rentcharge owners can take possession of the property and take any income generated from it until the debt is paid. Even if the rentcharge itself is not high value, the consequences of not paying the rentcharge can be severe.

How are rentcharges extinguished?
There are two methods to get rid of rentcharges:

1) Application to Government Office for the North West
The Government Office for the North West ("GONW") has national responsibility for dealing with applications to extinguish rentcharges.

Certain details about the rentcharge owner and a copy of the rentcharge deed need to be supplied with the application.

In order to extinguish the rentcharge the applicant has to pay a redemption sum to the rentcharge owner. On average, this is seventeen times the amount of the annual rentcharge.

If the rentcharge owner cannot be found, the rentcharge can still be redeemed but instead of paying the money to the owner it is paid in to court.

A redemption certificate is issued by the GONW and an application can then be made to the Land Registry to remove all references to the rentcharge from the register.

2) Private Redemption by Deed of Release
This is a private agreement between the rentcharge owner and the proprietor of the land. A deed is executed and a redemption sum paid. The redemption value is a matter to be agreed between the parties. Usually this will be the number of years remaining multiplied by the annual rentcharge, although a discount for early redemption can sometimes be agreed.

An application can then be made to the Land Registry to register the Deed of Release and remove the rentcharge from the register.

I found the above on the website of a law firm. It appears I've done the 2nd (Private Redemption by Deed of Release)

With regard to the amount I have been charged:-

Morgoed Estates have charged me £40.50

As per no. 1 above: If I had made an application to the Government office then 17 x 2.25 = £38.25
As per no. 2 above: To the year 2037 there are 27 years remaining. 27 x Rentcharge of £2.25 = £60.75, less a discount for early redemption?

So I don't think that £40.50 is so unrealistic

Many thanks for everyone's comments - I shall get the 'Deed of Release of Rentcharge' checked. And yes I do appreciate that it would have been better to do so before I started this process, but I didn't and I'm sure I'm not the first or the last in that respect. Everyone makes errors of judgement at certain times - It's not often that I do but I've possibly made one and obviously I hope it doesn't come back to bite me on the butt.

curlygirl1971

Apologies to Liz69 for unwittingly hijacking her thread

Richard_Webster

Did you not get legal advice on this transaction at all?? I am struggling to believe you have purchased the freehold for forty quid without any legal involvement if so.

She didn't. See curlygirl's long recent post.

This wasn't a long leasehold property with a ground rent - it was a freehold property subject to a rentcharge and these are redemable using the process set out in her post - different thing altogether although it might appear the same. Hence my initial surprise at the low figure quoted - they didn't have any choice because the amount is fixed by law.

curlygirl1971

Richard

Hope you don't mind me asking you direct, but do I need to get the Deed of Release checked?

Thanks in advance of any response
C

Richard_Webster

Would be best to do so =- go back to the solicitor you bought through.