flat with shared freehold but no lease?

lilab_2

The flat I am buying has been marketed as shared freehold with no lease. Is this possible?

Thank you

Richard_Webster

This is in England/Wales? Can't comment on property law in other jurisdictions - Scotland, Northern Ireland, Isle of Man etc.

How do you know there is no lease?

Sometimes people who don't understand shared freehold forget that they still have leases of their individual flats so you do get people saying "we're shared freehold, we don't have leases...."

You can check at the Land Registry to see what titles are registered for the property.

I suppose it is just possible that A & B own a property together and A lives upstairs and B downstairs and B now wants to sell his "share". They think you will pay good money and they think that B can just transfer his share to you (U). Well to start with A will have to join in to sign it and the resulting freehold will then belong to A & U. You can't get a mortgage on it unless you have a joint mortgage with A and he probably will think that he doesn't know you from Adam and why should he be tied up with you in a joint mortgage!

So most likely there is a lease and the seller doesn't understand.

If there are no leases then to sell they would have to grant a new lease to you of the flat you are buying.

If they think they can sell a single flat without a lease then when they go to see a solicitor he will put them right.

lilab_2

Thank you.

I don't need a mortgage. There are six flats. I have looked on Land Registry. There is both a leasehole listing and freehold listing for the flats. But when you go to download documents there is no lease available.
The guy I am buying from set up the Management Company (Ltd company) which owns the freehold. He is the secretary. I have checked that accounts are filed at Companies House and they are, so it all seems above board in that respect. However, he maintains that there is no lease. In the register it says leasehold with 107 years left, but the vendor doesn't have a copy, nor does Land Registry.

I love the flat and really want to buy it. I guess that's what I'm paying my solicitor for, but I'd like to know whether it is at all plausible that the lease could have been dispensed with.
Thanks for your response.

steve1980

Yep, that does happen, although not very often these days. Grab it while you can. It's very similar to a leasehold as in if things need doing they are split between the owners of the apartments.

A shared freehold basically cuts out the managing agent (oh, how nice that would be!) but when things go wrong you are the first port of call.

lilab_2

Thank you Steve1980, that's great and it's put my mind at rest. I absolutely want to buy it.

Sorry I can't find the thank you button to click, but you've been a great help.
:T

Richard_Webster

I'd like to know whether it is at all plausible that the lease could have been dispensed with.

Yep, that does happen, although not very often these days. Grab it while you can. It's very similar to a leasehold as in if things need doing they are split between the owners of the apartments.

A shared freehold basically cuts out the managing agent (oh, how nice that would be!) but when things go wrong you are the first port of call.

Sorry, but this is wrong.

For a shared freehold to work there must be leases. A private individual cannot download leases from the Land Registry - you can only get them by postal application. Have the Land Registry actually said they have not got a copy of the lease?

If the flat you are buying is listed as leasehold then there must be a lease. If the Land Registry or the seller has lost it that is a problem., but it doesn't mean there is no lease. The seller would have to provide whatever information/copies he could and indemnity insurance for a missing document. The landlord should have his copy and if the seller pays him then that might be available.

If you have looked at the Land Registry then you should find a leasehold title for the flat you are buying and the registered proprietor of that title should be the person who is selling the flat. If there is no leasehold title for the flat in question see next a paragraph.

Where is the flat and how long has the present owner had it? He might have bought it before compulsory registration and therefore no leasehold title shows at the Land Registry for that flat.

lilab_2

Thank you Richard Webster.

Well it's all very confusing. The official register and title say it's Leasehold.

The vendor says not anymore!

My solicitor says it must be, the vendor's solicitor says it isn't.

The vendor is listed correctly as the proprietor on the register/title docs.

It's in the Mole Valley, and the current owners have been there since 1994.

The Vendor sent me the following:

Our Ref; Freehold/Leasehold


Dear Sir/Madam,

.......... is an old Victorian house that was converted into six, one and two bedroom flats in the 1980’s and then refurbished in 1993. In 1999 the freehold to the flat was bought by the flat owners. This was then transferred to ...............Ltd a non-profit making management company, set up by the flat owners to maintain the property and grounds of .

Each flat owner has a £1 share in ............Ltd with there being a total of six shares to the company. When a flat is sold the share of .............Ltd and the one-sixth share of the freehold is transferred to the new flat owners. Only flat owners can hold a share to the company and a share of the freehold.

Every month each flat owner is required to pay a £100 service charge into the ............bank account. This money is used towards the up keep of the property including Grounds Maintenance, Communal electricity, Window Cleaners and Buildings Insurance. As the flat owners own the freehold there is no ground rent or lease, just a shareholders agreement. If emergency repairs are required this is also paid out of the .......... maintenance account, if insufficient funds are available then all flats are liable for a one sixth share of the repair cost.

Yours Sincerely

Mr .................
Company Secretary

Richard_Webster

This looks like classic shared freehold using a company and the people running the management company probably don't know what they are doing.

You say the seller has a title that he is selling - look at the registry entries for the leasehold title to the flat and you will see details of his lease.

Ask whether any of the flats have a mortgage on them? If so there must be leases. No mortgage lender is going to lend the security of something owned jointly by a number of people through a company. If you think about it for a minute you will see that if you didn't keep your payments up the lender would want to repossess and sell - the other flat owners would not be happy with that would they?

If the leases are getting short then when they need extending those running the management company will come out with the nonsense about there not being leases etc and will refuse to extend the leases because they will deny they exist. That could cause difficulties selling.
Therefore if those running the management company don't understand their own set up you have the seeds of future problems and you need to be careful.

lilab_2

Thanks again.

I have since been told more by the vendor who I shall call Mr X. The property was originally converted into flats in the 1980's, there are six flats and one house on the parcel of land. The first builder was sacked then the company who bought the houses - one house and the other for conversion plus the land sold to a developer. The developer completed the conversions and he lived in the house. Unbeknown to the residents of the now completed flats he sold the freehold to the land in a private deal to a friend. The residents then took him to court as he had not asked them if they wanted to buy the freehold. After a three year battle the residents won the court case and they bought the freehold back. It was at this point in 2003 that the management company was formed. The old lease was no longer valid because the developer should not have sold the land to his friend. The management company did not then re-issue leases to any of the residents. The title deed for Mr X's flat - the one I tried to buy still has the developer down as landlord because Mr X bought the flat before all of this happened back in 1994.

Does this make sense?

Apparently since the management company has been formed there have been 7 sales of the other flats and all have been sold as freehold.

So I don't really knows what happens to me now.

Sorry forgot to add: There are 107 years still remaining on the original lease with the landlord who now no longer exists (his company also went into liquidation)

ILW

It does appear the place would be impossible to get a mortgage on, if you are planning to live there forever and get it really cheap, it may be worth going for

lilab_2

I don't need a mortgage, but thank you for letting me now.