Service charges and deeds

sh_kilnao

I have recently bought a house, for which the previous owners had bought a freehold some half a year before we exchanged. Now, there seems to be the old leasehold deed associated with it as well, and freehold seems to acknowledge that with the following charge “The land is subject to the lease set out in the schedule of leases hereto”, and also in the “title absolute” the leasehold title is referenced.

My question is: in the view of this, what are my obligations toward the management company regarding the service charges? I can’t find anything in the freehold, nor the leasehold deed, but it may be that I just can’t read it properly (as I am not a lawyer, that is).

Any suggestions would be very welcome!

NS

Richard_Webster

Your solicitors should have made sure that you acquired the leasehold title as well as the freehold - then you can be your own landlord! If you only got the freehold subject to a lease then you do't have a right to live in the house! All you can do is collect the rent from whoever does own the leasehold title. This is unlikely so that's why your solicitors should have made sure that you had the leasehold title as well.

I think you are getting confused between flats and houses - just because a lot (but not all) flats have service charge arrangements doesn't mean to say that leases of houses have to have anything in them about service charges - they might occasionally have them for things like maintaining a private road or some random piece of open space the Council didn't want to look after - but mostly all you will have to do under a lease of a house is pay the ground rent. If you now own the freehold as well then you would be paying it to yourself - which you can do if you want!

Unless you have had a letter form a management company why do you suppose a management company has anything to do with the price of bread here?

propertyman

For readers of the thread the service charge on leasehold houses, or estate rents on freehold houses are very common especially on new builds.

Councils do not simply decline to look after them, but that they they ask for a huge payment from the developer to adopt these areas.

Increasingly these schemes extend to street lighting and water and sewerage pumps, main and flood drains to the public sewer and not simply landscaping roads paths and boundaries.

Not that your council tax is any lower for it!

sh_kilnao

Thanks for the reply!

Richard_Webster wrote: »

Your solicitors should have made sure that you acquired the leasehold title as well as the freehold - then you can be your own landlord! If you only got the freehold subject to a lease then you do't have a right to live in the house! All you can do is collect the rent from whoever does own the leasehold title. This is unlikely so that's why your solicitors should have made sure that you had the leasehold title as well.

Yes, (I believe) I understand the requirement to have both titles, however I've heard too that these two titles should eventually merge, into a single freehold deed. I am not sure how that happens though, probably after the leasehold expires?

Richard_Webster wrote: »

I think you are getting confused between flats and houses - just because a lot (but not all) flats have service charge arrangements doesn't mean to say that leases of houses have to have anything in them about service charges - they might occasionally have them for things like maintaining a private road or some random piece of open space the Council didn't want to look after - but mostly all you will have to do under a lease of a house is pay the ground rent. If you now own the freehold as well then you would be paying it to yourself - which you can do if you want!

Unless you have had a letter form a management company why do you suppose a management company has anything to do with the price of bread here?

Actually, I just received a letter from them, which prompted me to write this post. I remember estate agent saying there was no service charge for this property, so now I am suspecting that the management company is not up to date with the recent purchase of freehold. True, there are some communal areas around the house that need maintenance, but on the other hand I don't have any documentation regarding management company obligations towards me and vice versa. Probably I got it all wrong, as this is all based on my very limited knowledege of these matters... just hoping to find out what is the common practice before I do anything else.

NS

Richard_Webster

Sometimes the lease has to be kept going in the sense that that you own two titles and the two are not "merged",e.g. to give you rights to use a rear access way or something like that which are in the lease but not in the freehold, but that's another point which doesn't really matter in this context.

Really you need to go back to the solicitor who acted for you and ask them to tell you whether or not there are any service charges and who is entitled to collect them. Sometimes the freehold title may contain a means of collecting such charges through a device called a variable rent charge.

What exactly is this management company asking you to pay?

propertyman

I agree with Richard that you need to talk to your solicitor on the purchase.

The problem is that the lease on the house had it seems obligations to contribute to services.

When a freehold is bought it is normal to surrender the lease but what happens to those olbigations ? Buying the freehold does not sever all obligations.

There is either the practical solution of leaving the lease in place, or by negotiation or court determination the freehold becomes subject to another means of charging either
-a variable rent charge
-estate rent or
-a separate deed of covenant between the estate owner and the house freeholder setting out the services provided and the basis of payment.

or they got it horribly wrong and they have been severed!

I suspect that the PM company are not up to date , but so to might you be, and not have all the information.

I suspect it just needs explaining by your solicitor.