Complicated Freehold Lease problem

blackshirtuk

This is quite complicated, so thanks for reading and any help you may be able to give.

I have a ground floor leasehold flat in a house split into 2 flats.

The freeholders are the upstairs flat. The couple split and he was taken off the lease but not the freehold.

He borrowed unsecured loans of around £20k on which he didn't pay.

The loan companies went to court and secured a charge on the freehold.

The freehold is possibly worth £5k max.

I have an oppurtunity to buy upstairs flat, but cannot also buy freehold until the loan companies remove their charge for which they want £20k.

How is it possible that the loan companies have secured a debt on a share of the freehold of £20k when whole freehold is worth £5k?

The upstairs flat owner is surely being penalised as they cannot sell their share of freehold.

Can anyone offer a way forward?, i do not want to pay £20k for something worth £5k

Mant thanks for reading and any advice welcome!

vectistim

You can buy the lease of upstairs, but, as I see it, the lender's charge over the freehold essentially blocks any freehold move unless the freeholder agrees to transer the charge to some other property (which is rather unlikely), do you know if there is any form of charging order - is he repaying the amount outstanding at some pittance per month?

G_M

The guy upstairs clearly owes £20K. The creditor wants his £20K, so will not remove the Charge till he gets it!

So the owner(s) of the Freehold cannot sell the Freehold till they pay what they owe - £20K!

The lease can be sold of course, quite independantly of the freehold.

Richard_Webster

If all this is going on I can't imagine that the freeholder will comply with his/their obligations under the lease so better not buy the flat.

blackshirtuk

Thanks for the replies,

"If all this is going on I can't imagine that the freeholder will comply with his/their obligations under the lease so better not buy the flat."

One of the reasons I want control!

This is situation seems unfair to the leaseholders, as we are being penalised by the loan companies, for someone else's problem.

I believe there are rules about forcing freeholder to sell to leaseholders at a reasonable price, why then do this charge surpass other laws? who decides what is reasonable?

Is there a way to challenge the charge?

Richard_Webster

Sorry I'd forgotten that you already owned the flat - so I was advising you not to get involved - but obviously this is now too late!

G_M

blackshirtuk wrote: »

...
This is situation seems unfair to the leaseholders, as we are being penalised by the loan companies, for someone else's problem.

I believe there are rules about forcing freeholder to sell to leaseholders at a reasonable price, why then do this charge surpass other laws? who decides what is reasonable?

Is there a way to challenge the charge?

How is this unfair to leaseholders? You (each) still have a lease, with all the original rights and obligations that come with the lease.

The rules say (I believe) that when the freehold is sold the leaseholders must be given first option. But the freehold is not being sold..

blackshirtuk

G_M wrote: »

How is this unfair to leaseholders? ..

I feel it unfair because in order to purchase the freehold it will cost £20k instead of £5k.

The other lease holder owns share of freehold but is effectively prohibited from selling her share.

blackshirtuk

Richard_Webster wrote: »

Sorry I'd forgotten that you already owned the flat - so I was advising you not to get involved - but obviously this is now too late!

no problem

Actually wish I wasn't but even if i decided to sell, this would probably become an issue again, so trying to work out the best/cheapest way forward!

Ulfar

How would this go if the OP went to LVT, would they take account of the charge when making their valuation decision on the OP's right to buy the freehold ?

It seems very strange that any bank would lend with the security being the freehold.

DVardysShadow

blackshirtuk wrote: »

I feel it unfair because in order to purchase the freehold it will cost £20k instead of £5k.

The other lease holder owns share of freehold but is effectively prohibited from selling her share.

A very informative thread https://forums.moneysavingexpert.com/discussion/1839539

If only one of the joint freeholders was responsible for the original debt, a charging order should not have been granted, a restriction should have been placed on the Land Reg instead.

As you say, the charging order is unfairly against the other joint freeholder and for this reason, the restriction is the appropriate remedy.