Underlease - any advice?

traineepensioner

Hi,

Hope someone can help....I'm in the early stages of buying a leasehold semi-detached house and have just received a series of confusing documents from my solicitor.:(

It appears that the seller of the house is an "underlessee" of the leaseholder (the underlease has a term of 990 years (from 1934) at a yearly rent of £4). The current leaseholder has a 999 year lease (from 1934) for the land containing 8 semi-detached houses and pays £15 per year. The "Title Absolute", which I assume is the freehold, is held by a company called G & O Rents LTD in Surrey

Is this a common arrangement? and do I have a right to buy the freehold after 2 years? "Underlease" is very new term to me and seems to be more common with flats & apartments. Is there anything I should be wary of with this arrangement? My solicitor has sent the documents for a signature and authorisation to start the searches. Once I sign I'm committed to paying for searches & the seller's costs if I back out.

The seller is acting on behalf of his mother and the solicitor has included a court order under the Mental capacity act 2005. I'm not too worried about this but concerned that the sellers questionaire is a total waste of time as he dosen't live in the house.

Also ....The house also has a small extension (3m X 3m) which the seller says was built in 1976 (approx) but there are no plans, building consents or title consents and I need to extend into it. Is this going to be a big problem?

Sorry for the number of questions and thanks to anyone that responds. I will ask my solicitor after the weekend but just need some of your thoughts.

Thanks again,

Trainee Pensioner

G_M

Your getting a (under)lease of 990 years? If you outlive that, well......
And that length of (under) lease should be pretty marketable if you want to sell.

Not terribly common, but common enough.
Check the freeholder here if you want (£4).
Extension. Can't see the local authority enforcing planning rules or Building Regs after all this time, but make sure your surveyor gives the construction the all clear.
Sellers questionairs are pretty much a wast of time anyway. They'll only own up to defects if it is provable that they knew of them, otherwise "not so far as the seller is aware" is a standard resonse. Rely on your own thorough investigations - personal and via professionals.

JQ.

Underleases such as that are surprisingly common, so nothing to be too concerned about. Some people like to retain interests in property which is why these things happen.

With regard to buying the freehold - I think that's very unlikely, but you need to ask your solicitor as they will be in the best position to advise.

Yorkie1

One question re what you have written - why do you say you are responsible for the seller's costs if you back out? I'd have thought that is not normally the case.

timmyt

traineepensioner wrote: »

Hi,

Hope someone can help....I'm in the early stages of buying a leasehold semi-detached house and have just received why would they send you documents without being part of a bound Report summarising all the legal papers about your property with such lease documents as index enclosures -or am I the only conveyancing solicitor to do that? .a series of confusing documents from my solicitor.:( by the sound of it you look like you didn't make sure you got an actual 'solicitor'

It appears that the seller of the house is an "underlessee" of the leaseholder (the underlease has a term of 990 years (from 1934) at a yearly rent of £4). The current leaseholder has a 999 year lease (from 1934) for the land containing 8 semi-detached houses and pays £15 per year. The "Title Absolute" all titles should be absolute, yours and the one above you, which I assume is the freehold, is held by a company called G & O Rents LTD in Surrey

Is this a common arrangement? no, but it sounds fine and do I have a right to buy the freehold after 2 years? no, why would you think that "Underlease" is very new term to me and seems to be more common with flats & apartments you are buying leasehold. Is there anything I should be wary of with this arrangement? My solicitor not a solicitor! has sent the documents for a signature and authorisation what? why would he not be getting on with the searches anyway, that is part of the conveyancing....he is not one of those conveyacers who waits for money for searches...to start the searches. Once I sign I'm committed to paying for searches you should be cracking on with everything, why are you dithering? & the seller's why the seller's costs? you are confused aren't you costs if I back out.

The seller is acting on behalf of his mother and the solicitor has included a court order under the Mental capacity act 2005. I'm not too worried about this but concerned that the sellers questionaire is a total waste of time as he dosen't live in the house.

Also ....The house also has a small extension (3m X 3m) which the seller says was built in 1976 (approx) but there are no plans, building consents or title consents and I need to extend into it. Is this going to be a big problem? no one on here can asnwer that, ask your 'solicitor'

Sorry for the number of questions and thanks to anyone that responds. I will ask my solicitor after the weekend but just need some of your thoughts.

Thanks again,

Trainee Pensioner

good luck sounds messy

traineepensioner

Hi again,

Many thanks for the replies. It looks like "underlease" isn't as unusual as I first thought.

Yorkie1 - The "agreement for sale" document I received from the solicitor, states that "In the event that either party fails to complete on the completion date then the defaulting party will pay all the other party's conveyancing costs & disbursments...." I won't sign this until I meet with the solicitor.

timmyt - The solicitor has sent me a series of documents (13 in total, including copies of the lease & underlease). The lease(s) certainly haven't had the benefit of the plain english campaign and, although B/W photocopies, refer to plans coloured in red & yellow?:o

To be fair, the solicitor has said that it isn't be possible to go into the details of the covenants & conditions of the lease in his covering letter. So I do need to arrange a meeting. He also mentions that the seller's solicitors have sent a "Epitome of Title" which confirms that the property is currently unregistered at the land registry. The superior lease & freehold are registered....and the word "should" in this next bit concerns me..."On completion we should be able to apply for an Absolute Leasehold Title."

I have to admit that, as the inferior leaseholder, I thought that I could purchase the Lease & freehold after 2 years. Oh well, might not be worth it.

It does sound messy & I'll let you know what happens.:eek:

Thanks again.

Yorkie1

The way I read the bit about costs, is that if a completion date is set but you fail to honour it, then you are liable for their costs. A completion date is not set until exchange. Therefore, subject to anything your solicitor says, I cannot see that you are liable for their costs if you pull out before exchange. That is completely contrary to all usual practices, which is why I raised it. You are still pre-exchange and therefore each side bears their own costs at this stage - otherwise you'd be at risk of their costs even if they had concealed anything which you found out as part of your standard pre-contract enquiries / surveys etc.

As I said, get your solicitor to confirm this, though.

onlinesac

Hello traineepensioner

I am curious in knowing how did you get on with your problem. I am also in the same boat. I am also about to buy something similar but getting worried as not aware of the things well.

Did you finally purchase it?

As you are a underlessee and not leaseholder whether you can buy freehold at all?

Did you discover what is the value of the property compared to leasehold property (may be 80-90%) or it doesn't make any difference?

Do you have to consider both values of extending under lease and lease?

what is the cost to register your bit?

Thanks.

timmyt

traineepensioner wrote: »

Hi,

Hope someone can help....I'm in the early stages of buying a leasehold semi-detached house and have just received a series of confusing documents from my solicitor.:(

why is your conveyancer (doubtful they are a solicitor) not summarising the documents in a bound report with atatchment of the documents if necessar, so you full understand it? good grief they sound way out of their depth. I'd have summaries it straightaway for you. I think it will be fine by the sound of it but without doing he work for you ..you will hope your conveyancer makes it clearer
It appears that the seller of the house is an "underlessee" of the leaseholder (the underlease has a term of 990 years (from 1934) at a yearly rent of £4). The current leaseholder has a 999 year lease (from 1934) for the land containing 8 semi-detached houses and pays £15 per year. The "Title Absolute", which I assume is the freehold, is held by a company called G & O Rents LTD in Surrey

Is this a common arrangement? seems irrelevant to me, provded you are happy with the lease, or has it been missold to you as freehold? and do I have a right to buy the freehold after 2 years? "Underlease" is very new term to me and seems to be more common with flats & apartments. Is there anything I should be wary of with this arrangement? My solicitor has sent the documents for a signature and authorisation to start the searches. Once I sign I'm committed to paying for searches & the seller's costs if I back out.

The seller is acting on behalf of his mother and the solicitor has included a court order under the Mental capacity act 2005. I'm not too worried about this but concerned that the sellers questionaire is a total waste of time as he dosen't live in the house.

Also ....The house also has a small extension (3m X 3m) which the seller says was built in 1976 (approx) but there are no plans, building consents or title consents and I need to extend into it. Is this going to be a big problem?

Sorry for the number of questions and thanks to anyone that responds. I will ask my solicitor after the weekend but just need some of your thoughts.

Thanks again,

Trainee Pensioner

seems your conveyancer needs to answer the above