Trouble with a vendor

Nef_2

Hi all

Hoping some of you savvy lot can help with some advice on the following.

My wife and I are first time buyers, looking to complete the purchase of a flat we rather like.

The problem, is that having sat down with our solicitors, it transpired that much of the information specific to the property which the Vendor gave (and appeared in the HIP), was incorrect.

The flat is a leasehold property, and according to the vendor, had 110 years left, unexpired. It turns out that this is entirely incorrect, and the lease actually stands at 81 years.

Furthermore, the annual maintenance fee payable for the property is a good £400 more/annum than what we were told and the underground parking space which comes with it is unallocated, instead of allocated as it was declared.

The vendor has accepted that he provided incorrection information, but seems entirely unbothered by it. He is making no effort whatsoever to correct it (has made no offer to reduce the asking price, provide compensation etc), and is instead now suggesting that if we dont proceed, he will put it back on the market.

The lease is what we are most bothered about, and we have tried to enquire as to how much it would cost to either extend or obtain share of freehold (with a view to come to some sort of arrangement with the vendor based on that), but it has proved impossible to get a reliable figure from anyone. The freeholders want to send in surveyors before confirming a cost, and the vendor seems entirely unconcerned by the whole thing and just keeps pushing for us to exchange regardless.

Given that we are talking a 30 year drop in the value of the lease, Im not particularly inclined to just bite the bullet, which is what im sure this vendor is hoping we do. What to do?

Should we 'estimate' the cost of acquiring freehold/extending, and simply ask that they deduct that from the asking price (no guarantee that he will agree of course), or fork out for the surveyors but risk him shrugging his shoulders when we get a figure anyway, and end up £600 further out of pocket.

Or do we just walk away and somehow look to recoup costs.

We really had our hearts set on the flat which makes the whole thing really frustrating.

Any words of wisdom are most welcome.

poppy_f1

personally i would walk away and find somewhere else - my thinking would be what else are they lying/gave incorrect info about

Richard_Webster

If property had a HIP then it has been on the market a long time, which says something in itself!

If there was a HIP then it should have contained a copy of the lease so you would have known how long the lease was form that so I'm not clear what you mean there.

Nevertheless if you are saying that the seller told you the lease was 100 years and it is only 81 then clearly you have cause to seek to renegotaiate.

Don't try to buy the freehold of just your flat unless you literally have money to burn! It immediately reduces the flat's value by around 30% and makes it unmortgageable (and all the other flats in the building as well).

If there are no more than 4 flats in the building then it is conceivable that the freeholder might sell you a share in the freehold of the whole building so that it is held in joint names with him. Why he would want to do that and thereby lose control, I can't imagine.

If he did agree and you paid him something for this, that would not guarantee any lease extension which would still be required in due course to make the flat mortgageable for sale. Both signatures would be required on a lease extension deed and he can simply refuse to sign!

The only sensible way to get the freehold is to club together with other flat owners and force the freeholder to sell the freehold of the building to you, but you have to get the others on board, and this is often difficult.

So I think this business about buying the freehold is probably a red herring. You need the seller to organise a lease extension. If he won't, then walk away. If this is a small building with only a few flats then personalities become quite important as far as management is concerned. Go and talk to other flat owners about how the place is managed, and whether they have been able to get lease extensions.

DVardysShadow

Walk away. Normally, you have to bear to bear your own costs if contracts are not exchanged, but in this case with misrepresentation in a HIP, I think a claim for your costs would be warranted. HIPs were intended to have information in them on which you could rely to the point of not needing to do searches.

maninthestreet

DVardysShadow wrote: »

Walk away. Normally, you have to bear to bear your own costs if contracts are not exchanged, but in this case with misrepresentation in a HIP, I think a claim for your costs would be warranted. HIPs were intended to have information in them on which you could rely to the point of not needing to do searches.

If no exhchange of contracts has taken place, then neither side can claim their costs from other side if one side pulls out.

Nef_2

Thanks Richard and others for the replies.

The reason I say it was in the HIP is because I remember my solicitor being quite surprised that it had one. What he said was that the Vendor's solicitor had communicated the details on the value of the lease (showing 110 years) in the paperwork that had been sent over, so that might have been in seperate docs.

The flat itself is in a large development (100+ other appartments), and the freeholders have already confirmed that we would be able to both extend the lease, and/or acquire share of freehold. They also confirmed that were we to purchase share of freehold, we would be permitted to extend to 999. What they cant give us is confirmation on associated costs.

The vendor has indicated he wouldnt be against having surveyors in, but a) wont pay for any of it himself and b) hasnt given concrete guarantees as to what he will consent to afterwards. I suppose we could try to work out a deal prior to paying for the surveyors.

Were we to walk away without the vendor having offered any kind of deal, are we not able to claim back costs from him? I would have thought that he would be liable, seeing as he a) misrepresented the property and b) refused compensate for the 'error' despite us being willing to negotiate. Or is he essentially free to do what he likes until contracts are exchanged.

womble12345

Instead of walking away I would offer XXk less and tell him to take it or leave it. You can work out what XX is by what you expect a lease extension to cost and/or work out how much less you would borrow to save £400 a year on mortgage payments to cover the extra service charge.

Richard_Webster

OK, so there seems to be a company owning the freehold and some flat owners presumably have share in it and others don't and the company is prepared to sell you a share?

If so then whatever you negotiate for the share should also include the cost of extending the lease.

Chances of getting nay money from seller are very small. The sheer cost of investigating it all and seeing what evidence there was etc would probably outweigh your loss.

minibbb

Afternoon Nef

Sorry to hear about the trouble you are having, I have had some recent experiences with leases so thought I may be able to help.

I live in a a block of 12 flats which are all leasehold. I purchased a 2 bed in the block in 2007 and the Vendor paid the £11000 to extend the lease from its current 53 years so that I could get a mortgage.

Last month I moved to a one bed in the block and was able to negotiate a lease extension into the deal, this time it came to £16000 (for one less bedroom!!)

May Father is buying another in the block and the quote comes to £20000 for the lease now.

Ultimately the vendor needs to apply for the lease extension before being given a quote for it, there are also all sorts of solicitors fees involved. I would imagine it will be between 15-20K.

If they are not willing to do this I'd walk away unless they knock a hefty amount of the purchase price to allow you to extend it in the future.

Good luck!

DVardysShadow

maninthestreet wrote: »

If no exhchange of contracts has taken place, then neither side can claim their costs from other side if one side pulls out.

Yes, that is exactly what I said is the normal case. But you are missing the fact that I presented an argument for costs being claimable here. I would like to hear your argument whey costs should not be claimable for a false representation in the HIP - which was intended to be information that a buyer could rely on without need for further searches.

DVardysShadow

Nef wrote: »

Were we to walk away without the vendor having offered any kind of deal, are we not able to claim back costs from him? I would have thought that he would be liable, seeing as he a) misrepresented the property and b) refused compensate for the 'error' despite us being willing to negotiate. Or is he essentially free to do what he likes until contracts are exchanged.

In almost every circumstance, you cannot claim from the vendor for anything which arises before exchange of contract. It is totally untested territory, but if a false representation was in the HIP [and only in the HIP] I think that you could argue that the vendor should bear costs.