flat with shared freehold but no lease?

System

There are a few things I just don't understand. How can the 107 year lease not be valid just because the developer sold to a friend and the building then won its case? The lease is still there with freehold changing hands only? The arrangement the seller mentions doesn't really work in practice.

Why is the sellers solicitor failing to recognise this lease? Surely he must know it exists as it is his job to do so.

How far back are they willing to go when providing you with the service financial statements? I used to audit service charge accounts and we always used to have the lease data on file for comany's such as the one you mention. Maybe ask him to query his auditors.

lilab_2

Thanks Walcott, I don't know how it isn't valid. I am very confused. Seems to me that when they bought the freehold they should have drawn up new leases for all the flats on 999 year leases, then there wouldn't have been this issue. The vendor has been there since 1994 so I guess he didn't even think about it and he is the company secretary of the management company. I think he thinks that there are no consequences for not having a lease, but from the onward selling point of view there is. I asked him for the lease that he had and he said he didn't have it anymore as it was worthless.

I have done some looking on property websites to see what has been listed against other flats that have sold in the recent past. One of them lists the sale as freehold the others all as leasehold. I guess what is needed is for the management company to alter the information stored at Land Registry.

I see that the years would be valid but I don't see how the Landlord's details would be if the original landlord is no longer there?

I really love the property, but am beginning to think that I should walk away from this one and try and find something else.

Jenniefour

The Management Company are there to do just that - manage the properties on behalf of the leaseholders (flat owners) who also happen, collectively, to own the freehold - and have chosen to employ the external Management company. So how are the external Management company doing their job properly when there is no lease to refer to? And where are the Mems and Arts, another important document.

I don't see why the freehold changing hands would change the leases - but I might be wrong there.

Vendor of your flat is company secretary of Management company? So ask him where the mems and Arts are - or have they not got these either.

Jenniefour

lilab wrote: »

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

The flats were most likely sold as leasehold with a share of the freehold.

Sounds to me like the flat owners (leaseholders) who are also collectively the freeholders have been trying to avoid sorting all this out - possibly because it will cost to get a solicitor to get it sorted out - very short sighted. Have the other owners ever been asked if they want to get it sorted and share the costs? Having properties that are not mortgageable simply because everyone's trying to hold onto a bit of money just does not make sense - they are restricting their pool of potential buyers.

If they don't get this sorted out I would be very tempted to walk away - if you ever want to move and and sell you'll be looking for cash buyers only.

The Management company sound as though they don't really know what they're doing - although they are collecting the money and paying for repairs and so on.

annie123

lilab wrote: »

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

The vendor says not anymore!

The vendor is wrong. The flat is a leasehold with a share of freehold.

When it was converted each flat had a new lease drawn up.
So it has gone from 1 freehold house to 6 leasehold flats with a freehold.
Think of the freehold as covering the ground/land that the entire building/gardens cover.
A lease is basically a long term rental agrement, if it were never extended it reverts to the freeholder.......or in this case the group of freeholders.
As a freehold you can extended your lease without charging yourself
When a mortgage is taken out it is secured on the lease not the freehold. This is because it would be impossible for the lender to repossess (in this case) 1/6 of the grounds the development is on, so it repossess what it has lent on; the flat lease.

The original lease is there somewhere. It is the sellers solicitor that should obtain it from the land registry, but there is nothing to stop your solicitor from doing this but he will charge you for it.

Each flat may have different length leases, they do not all have to be the same, but lenders will want 50 years plus the term of the mortgage for most mortgages.

If you're buying from via an estate agent, get them involved, they deal with this all the time.

G_M

If you're buying from via an estate agent, get them involved, they deal with this all the time.

:rotfl: :rotfl: :rotfl:

EAs are NOT legal experts. Not even legal amateurs. They frequently don't understand even straight forward Title questions, let alone issues like this. You have a solicitor. It's HIS job.

Each flat has a lease. Irrespective of who bought/sold the freehold, whether the freholder went bankrupt, whether the flat-owners bought the freehold under the umbrella of a management company, whatever, those leases still exist.

If for any reason they don't, then don't buy - you'll have a nightmare selling again in the future.

And even if they do, I'd be wary - the level of ignorance in your 'shared freeholders' does not bode well for the future.

lilab_2

Thanks everyone. My feeling is that they have avoided sorting it all out. I don't think anyone is being underhand, I just feel that they haven't understood. When I look at the sales that have gone through, as I said some say freehold and some leasehold. The estate agent hasn't got a clue, and why should he?

I know that the management company have filed accounts at companies house. I am just a bit wary. Such a shame because it's a fantastic property with stunning views. I know my vendor tried to sell last year, but the buyer got cold feet. They've never really explained why.

If the original lease still exists at Land Reg then I'm not too worried, if as you all say it's still a valid document despite the change of landlords. There are 107 years left on the lease, so it's fine for a re-sell in a couple of years or so.

Seem that in a nutshell:

I need a copy of the lease
The title and register need to be correct
I need to see articles and mems of the management company
I need all flat owners to sign to allow the transfer of the one sixth share of the freehold to me

They have told me that it was recently agreed to paint the outside of the building and a quote had been obtained. It will mean a £600 per flat contribution, which I think is okay. Yesterday I asked to have a coy of the quote sent over urgently so that I could see what work needed doing and what was covered by that £600.

If they send it over, then I will feel they are upfront. If they don't I will feel time to walk away.

Thanks everyone for your help. If you have any other thoughts please do let me know.

Richard_Webster

I need a copy of the lease
The title and register need to be correct
I need to see articles and mems of the management company
I need all flat owners to sign to allow the transfer of the one sixth share of the freehold to me

Almost right. If a company owns the freehold you do not need all the other flat owners to sign. If you buy shares in Marks & Spencers you don't expect every single shareholder to sign to allow you to have a share in it do you? Principal is the same - only the company secretary and may be one director will need to issue you with a share certificate after the seller has signed a stock transfer in your favour. If the company is limited by guarantee rather than shares it is even easier.

As others have mentioned the details of the lease shown on the leasehold title to the flat may well mention that name of some person who originally granted the lease. That has nothing to do with anything now. If the freehold changes hands the leases remain - they do not automatically get cancelled. The company bought subject to any existing leases - they can't do away with them without the express agreement and a deed of surrender from the owner of the leasehold title and if he had surrendered his leasehold title then it would not be registered at the Land Registry at all! So the lease does exist!

Frankly I think you are getting to the stage where if you want to proceed you need to engage a good solicitor (not a conveyancing factory) who understands such matters, and let him sort it out for you.

If some of the other flats have been sold with separate freehold titles then that is a disaster and you should not proceed - but let your solicitor check all this.

lilab_2

Thank you Richard Webster.

I thought that was correct regarding the lease. I have checked on websites that show recent property transactions and all the flats that have been sold in the last 7 years have been sold as leasehold, so that means that obviously they are doing the right thing and a lease must exist. The most recent sale was in 2009.

Thank you for clearing up that only one or two directors need to sign the freehold share over to me, that makes sense.

Also I have got my own solicitor in a reputable company who has looked after me for many years and she is not allowing anything to go further until all these issues are resolved or I decide to pull out.

I am very grateful for all the advice. Today I'm off out looking at other properties just in case. I think I need to make a final decision next week as my buyers will then get their formal mortgage offer and will want to move very quickly.

Thank you again. I'm really grateful :T

Jenniefour

OP - please take note of what Richard Webster is saying. Edit - great, you have.

Yes, probably the current owners simply do not understand - and why would they if they've never met up together with a decent solicitor who can help them get things sorted out.

Beware of buying - unless all is sorted out first. Poisoned chalice and all that.