Agreement for a shared freehold

FreddyJ

Hello. I am currently in the process of buying a share of the freehold of the property I already own. I will own a 50% share of the freehold and my downstairs neighbour will own the remaining 50% share. In addition, we will both hold 999yr leases. There are only two flats in the building. My neighbour rents the flat out to tenants and therefore I see her only occasionly.

Should I draw up an agreement between myself and my neighbour detailing our duties to each other? For example, who arranges buildings insurance, how we pay for maintenance etc? Should I get our solicitor to draw this up to make it official? I am aware that should I decide to sell my flat, the prospective buyers will not know my neighbour and therefore will want things official.

Thanks.

Fire_Fox

You really need to discuss this with your conveyancing solicitor, does he specialise in leasehold/ share of freehold agreements or is there anyone in the practice who does? You will find this website helpful in getting your head around the huge amount of legislation you will need to comply with as freeholder:
http://www.lease-advice.org/publications/

Richard_Webster

What you have to think about it is what happens if having got a nice written agreement saying who should do what etc the other person doesn't comply with it. Go to court at great cost?

Sorry to be a wet rag - its just that I do find that people have a touching faith in legal agreements - which are often only as good as the enforcement powers available to the parties in question.

Also when the other flat owner sells her flat you will need a new agreement with the new owner.

Yes, you will have to sort out in practice what is done - although if the other person is letting her flat then I expect you will end up doing all the running....

Actually with a shared freehold where you literally own the freehold title together the biggest potential problem is you having an argument with the other flat owner and then when you want to sell they refuse to sign over the freehold to your new buyer.

Related to this is how you make decisions as co-freeholders. Basically your decisions will normally have to be unanimous .e.g about which contractor to get in to do some repairs. There will usually be a degree of discretion about whether some work is done this year, next year or the year after. It will only be when it gets really desperate and on any interpretation the freeholders would be in breach of their covenants if they don't get some work done that it would be possible to go to court to compel the other co-freeholder to pay for it.

You can improve your position by putting a deed of trust in place which says that each of you has no choice but to sign such a transfer when requested to do so and can at the same time provide for the other points you are concerned about. The trust (which will be a trust to hold the freehold title) continues and when a new flat owner comes along one trustee resigns and is replaced by his successor. If he won't resign then there have to be some mechanics in place to compel this.

Your basic problem here is that once you go into legal stuff there's a cost. It is better to have an agreement/trust deed than not. but from a practical point of view sometimes it is difficult to get people to commit in this way and they just say that informal arrangements are sufficient and don't want to involve solicitors drawing up legal documents as inevitable cost to those concerned.