Lease assignment costs

Pupnik

I am having an issue with our purchase. We were due to exchange last week until the seller's solicitors got in touch with our solicitors to tell us we need to fill out a form from the freeholder and pay a fee. This was out of the blue and had never been mentioned before. The fee is £600 and the form is pretty much like applying for a mortgage again. The seller's solicitors challenged it and received a very abrasive letter back from the company who own* the freehold company. Even if we paid the money and filled out this ridiculous form there is no way we will be able to exchange before our mortgage offer runs out as this form says to allow up to 8 weeks for interviews and assessments. We are now considering pulling out of the sale alltogether because this freeholder company are coming across as nothing but crooks and I do not want to get into bed with them (so to speak). This fee is on top of the £150 it will cost to transfer the lease after completion and on top of the £250 the seller has already paid for various information. All in all it is causing a lot of stress and raises a lot of questions- why do we only find out about it now? If my solicitors missed this what else did they miss? I asked my solicitor to point out in the lease where it says we have to pay it, and she admitted she had not read my lease as she had been on holiday when it came in and someone else went through it! I am gobsmacked, what on earth am I paying for? I have no idea who read it- a work experience person for all I know!

Has anyone ever heard of such a ridiculous hoop to jump through just to buy a flat? Other than the mortgage application itself I mean! The flat itself is quite cheap, that fee is actually 2 months mortgage repayments which to me is extortionate. I have found a lot of references to people applying for leases with regards to business properties such as pubs but not flats. I really don't know what to make of it, I just know I am not paying it and I am not filling out that form and if that means the sale falls through then so be it. I feel terrible for the vendor but she should have mentioned this earlier (she paid it herself when she bought it, apparently). I also don't know where I stand with our solicitors, I feel very let down that they did not thoroughly go through our lease- she actually first advised me to pay this fee because 'it was in the lease' until I asked her to tell me what section it was in. She hadn't read it but assumed it was there just because this awful property management company said it was, which to me is just not good enough. We put a lot of trust in solicitors for checking the legal side of things- I read the lease myself of course but half of it went over my head!

* I say 'own' but I can't see them on the register of title I have from the Land Registry :undecided I realise this is an entirely different issue but where should the freeholder name be listed? The front of the document has the name of the person who originally converted the house into maisonettes but as far as I can tell he has nothing to do with the management company who are collecting the ground rent.

timmyt

Pupnik wrote: »

I am having an issue with our purchase. We were due to exchange last week until the seller's solicitors got in touch with our solicitors to tell us we need to fill out a form from the freeholder and pay a fee. This was out of the blue and had never been mentioned before. The fee is £600 and the form is pretty much like applying for a mortgage again. The seller's solicitors challenged it and received a very abrasive letter back from the company who own* the freehold company. Even if we paid the money and filled out this ridiculous form there is no way we will be able to exchange before our mortgage offer runs out as this form says to allow up to 8 weeks for interviews and assessments. We are now considering pulling out of the sale alltogether because this freeholder company are coming across as nothing but crooks and I do not want to get into bed with them (so to speak). This fee is on top of the £150 it will cost to transfer the lease after completion and on top of the £250 the seller has already paid for various information. All in all it is causing a lot of stress and raises a lot of questions- why do we only find out about it now? If my solicitors missed this what else did they miss? I asked my solicitor to point out in the lease where it says we have to pay it, and she admitted she had not read my lease as she had been on holiday when it came in and someone else went through it! I am gobsmacked, what on earth am I paying for? I have no idea who read it- a work experience person for all I know!

1. do you have a solicitor
2. did you go cheap in which conveyancing firm did you choose

yes, 100% your solicitors fault for not spotting this weeks ago - you will need to make a formal complaint, and say you will be looking for wasted legal costs and all other costs related to being unable to proceed to purchase this

Has anyone ever heard of such a ridiculous hoop to jump through just to buy a flat? yes, freeholders sometimes have to approve you at an interview...often age related, but not always.......the freeholder must not be able to withhold consent unreasonably - your solicitor is bound by the CML Handbook in this regard. It says:

5.13.3The only situations where we will accept a restriction on the mortgage or assignment (whether by a tenant or a mortgagee) of the lease is where the person whose consent needs to be obtained cannot unreasonably withhold giving consent. The necessary consent for the particular transaction must be obtained before completion. If the lease requires consent to an assignment or mortgage to be obtained, you must obtain these on or before completion (this is particularly important if the lease is a shared ownership lease). You must not complete without them.http://www.cml.org.uk/cml/handbook/englandandwales#C2528

Other than the mortgage application itself I mean! The flat itself is quite cheap, that fee is actually 2 months mortgage repayments which to me is extortionate. I have found a lot of references to people applying for leases with regards to business properties such as pubs but not flats. I really don't know what to make of it, I just know I am not paying it and I am not filling out that form and if that means the sale falls through then so be it. I feel terrible for the vendor but she should have mentioned this earlier (she paid it herself when she bought it, apparently). She should pay as you made an offer for her property for X I also don't know where I stand with our solicitors, I feel very let down that they did not thoroughly go through our lease- she actually first advised me to pay this fee because 'it was in the lease' until I asked her to tell me what section it was in. She hadn't read it but assumed it was there just because this awful property management company said it was, which to me is just not good enough. We put a lot of trust in solicitors please do not use this word if they are not, as it is very rare indeed for people to get an actual solicitor for checking the legal side of things- I read the lease myself of course but half of it went over my head!

* I say 'own' but I can't see them on the register of title I have from the Land Registry :undecided I realise this is an entirely different issue but where should the freeholder name be listed? The front of the document has the name of the person who originally converted the house into maisonettes but as far as I can tell he has nothing to do with the management company who are collecting the ground rent.

as in red OP, happy to answer more if you need me to

Pupnik

Thanks for replying timmyt- as for whether we have a solicitor or not, on the paperwork we first received with all the bits and bobs such as complaints procedure (been looking at that tonight!) she says she is a qualified solicitor, but just today when I looked on the firm's website at her bio it says she is training to become a licensed conveyancer so I am a little confused about what she is qualified for, and what the difference between a licensed and unlicensed conveyancer is. Oh and they aren't cheap although their work feels cheap to me. Anyway, whether she is a solicitor or not she did not read our lease so I don't know whether a solicitor or conveyancer or licensed conveyancer or receptionsit read our lease. I don't think the seller has a solicitor as all of the letters from that side that I have copies of are signed as a firm name not an individual's name so I don't believe that any solicitor at all has looked at the lease in the months that this has been going on. Do you think this would be a cause for complaint in itself? It seems to me that it is probably the single most important document in this whole process.

I am really surprised that freeholders can interview potential buyers- I do know they have to provide their consent but it seems strange to apply for it, the application form is far more in depth than the one I filled out to rent the flat I am in now, all for £25 ground rent a year- seems very excessive. It makes me worry about what other nasties are lurking in the lease, especially anything that could affect buying the freehold as a collective enfranchisement later down the line.

Do you think it is an issue that the company collecting the ground rent and claiming to be the freeholder is not listed on the lease or the Land Registry register of title? I have e-mailed the solicitor to ask her for clarification but I have nothing official that proves they own the freehold and all documentation I have lists the name of the person who originally converted the house 20 odd years ago, I feel like there must be a document missing that details the change in freeholder.

Richard_Webster

OP will have a copy of the leasehold title for that flat. If he obtained a copy of the freehold title for the building as a whole that would show the name of the current freeholder.

Unless this is a retirement flat where there could be genuine issues about the lessee's ability to cope in a flat as opposed to a care home and the freeholder therefore wants to check that the person can cope on their own, this level of interference is unreasonable.

The answer is for OP to walk away. He should have been told who the managing agents and the freeholders are. He can Google their names and if he finds forum entries related to complaints about scams then you will be strengthened in his resolve not to proceed. Certainly if I was acting for a buyer and I found out that a freeholder was levying that level of fee and interfering to that extent I would warn my buyer client about this and point out possible difficulties in selling with such an awkward freeholder.

propertyman

I agree with Richard that something is not right here. its empting to deal with themgd that we understand eg complaints and googling people but teh answer may be simple.

1: As Richard says what is the lease for?

2: Read the lease looking for word sale or assignment. That will identify a clause saying if the landlords consent assign(sell) the lease.

if there is no requirement that matches the document that they have sent, then your solicitor should be responding that the vendor might easily sue them for unreasonably withholding consent.

if the freeholder manages a number of schemes one of which might be shared ownership or a retirement unit. they might just have sent out the wrong response. it happens.

Take a breath and ask the question.

Pupnik

Thank you both of you. I agree, I feel like it is unreasonable- it is not a retirement flat, it is a regular residential maisonette, one of two in the building, and both of us are in our late 20s so we aren't exactly going to be struggling to change our lightbulbs or what have you. We do need the freeholder's consent according to the lease however I had been led to believe both by my solicitor at the very early stages and from the experience of people I know that this would cost around £60 or so, not £600 and not with a very invasive form. I'm coming to terms with the fact that we may well now have to walk away, but it is upsetting as this has been going on for so long now and I do love the property still, but the feeling in my gut is to walk away because if this is the trouble we are having before we have even bought it I dread to think what other trouble there could be dealing with the freeholder once we are living there. I will check that they haven't mistaken our property for a retirement flat but I am not holding my breath.

propertyman

Pupnik wrote: »

Thank you both of you. I agree, I feel like it is unreasonable- it is not a retirement flat, it is a regular residential maisonette, one of two in the building,

No don't walk away just yet.
What is the precise wording of the clause requiring consent? I can help with guidance on waht o say ion reply.

the law is crystal clear- a landlord cannot unreasonably withold consent, in this case putting on onerous requirements and delay; section 19 Landlord and Tenant Act 1927 and section 1 L & T Act 1988

Your solicitor should know that and be able to respond.....

Pupnik

The lease states:
"Not to assign underlet or part with possession of the demised premises as a whole without the consent in writing of the Landlord first being obtained (such consent not to be unreasonably withheld) PROVIDED that as a condition of any such consent to an assignment the Landlord may require that the intended assignee execute a deed to be prepared by the Landlord's Solicitors at the Tenant's expense containing a covenant by such intended assignee to perform the covenants on the part of the Tenant contained in clause 2 hereof and the other covenents of the Tenant herein contained as if those covenants were therein repeated with the substitutionn of the name of the intended assignee for the name of the Tenant and containing also a provision that the proviso for re-entry contained in this Lease shall take effect as if the covenant contained in the said deed were a covenant on the part of the Tenant contained in this Lease and thereupon the obligations of the Tenant or other assigning party under said Clause 2 and other covenants of the Tenant herein contained or any such deed as aforesaid shall cease but without prejudice to any right of action against the Tenant or other assigning party for any antecedent breach thereof."

Bit of a mouthfull- they don't like their full stops, do they? Clause 2 is to pay ground rent and gas/ electricity. I have said that if there are any legal costs related to providing permission then that is understandable (although I don't see why they should) but I would prefer to pay the solicitor directly rather than take their word about what it would cost, especially as I don't think they are using one at all. The second part just leaves me baffled, I realy don't understand what it is saying

Richard_Webster

"Not to assign underlet or part with possession of the demised premises as a whole without the consent in writing of the Landlord first being obtained (such consent not to be unreasonably withheld) PROVIDED that as a condition of any such consent to an assignment the Landlord may require that the intended assignee execute a deed to be prepared by the Landlord's Solicitors at the Tenant's expense containing a covenant by such intended assignee to perform the covenants on the part of the Tenant contained in clause 2 hereof and the other covenents of the Tenant herein contained as if those covenants were therein repeated with the substitutionn of the name of the intended assignee for the name of the Tenant and containing also a provision that the proviso for re-entry contained in this Lease shall take effect as if the covenant contained in the said deed were a covenant on the part of the Tenant contained in this Lease and thereupon the obligations of the Tenant or other assigning party under said Clause 2 and other covenants of the Tenant herein contained or any such deed as aforesaid shall cease but without prejudice to any right of action against the Tenant or other assigning party for any antecedent breach thereof."

As this clause serves no practical purpose in the case of a residential lease what it really means is "Not to assign underlet....without first entering into an unnecessary deed to enable the landlord's solicitors to have a consistent income stream...."

propertyman

The clause covers 2 conditions;

1: A deed, which is now superfluous, as Richard has explained very well. That said the landlords have not asked for it.

2: The landlords terms; Only their consent is required. the 88 Act sets out the criteria which can be summarised as the landlord must justify any conditions as being reasonable, and the test of that is what is " common sense".

Given that the flat purchase requires I suspect a mortgage for the majority of the price and that you are at large, with a financial status, and thereofre unliley to be a criminal, the interview is unreasonable. Similarly the length of the lease makes any possible breach which harms their reversion remote, any breach should be indemnified by the lease provisions for costs, and that the LVT provide a relatively low cost alternative for proving a breach.

On threat of pulling out your vendor should be writing to say that they are applying for consent and that their terms are unreasonable; if they refuse to withdraw then they will proceed with the assignment and either defend any action for forfeiture, seek the courts order to assign and damages. This problem will only reoccur for them.

The landlord is clearly a !!!!!!. Or living in 1973.

Pupnik

Hi, sorry for the delay in my reply- I just didn't want to think about it over the weekend, this whole thing has been stressing me out so much I just needed to switch off from it. The soliciors on both sides (ours and the sellers) just don't seem inclined to fight it at all, they both agree the fee is unfair and they can't see why they require it but don't seem to be challenging it much, hence why I am trying to find out everything I can online. The letter from the seller's conveyancer even says 'it appears to be something they have found they can impose but we cannot see the justification for the information for the information requested and had assumed that the fee includes the preparation of the deed of assignment on the basis that this form is not it.' Not very helpful... plus I don't like seeing words like 'assume' in a letter to do with such an important matter- I really don't want any assumptions to be made on either end! I suppose they are waiting for us to instruct them but I don't really feel like I know enough about it, although this thread has certainly helped.

The fee is supposedly for a license to assign but why would they need our NI numbers, bank account details, job information, address history for the past 3 years etc for this- it doesn't seem normal at all. What information should a license to assign on a residential property require? We have our mortgage already and are only borrowing £38,000 so can easily afford the £25 a year ground rent...

In your opinions do you think it would be overreacting to pull out because of this fee/ unreasonable request for personal information? I know that in the scheme of things £600 is not that much but I am concerned about how else they would fleece us if we moved in- when we want to buy the freehold if they can charge £600 for this what on earth would their 'legal costs' be for that? If they are so unreasonable at this stage I can only imagine they will be much the same the whole time we are there. Plus I do not like how long this has taken to find out- I don't know when the seller's solicitors requested permission to assign but I know ours have been asking whether it has been granted since August, and the person dealing with it at this awful management company went on holiday for 3 weeks in September so it was only the week before last, when we had planned to exchange, that we found out about it. What a bunch of jokers.