Share of Freehold not Transferred

sharky_mk

Hi,

I need some help with Freehold/Leasehold flat I any help will be much appreciated. I am sorry it is long and winding but...

I bought the flat around one year ago from auction – repossession by Barclays bank. Now I am trying to sell it.

The problem is that I have the lease with 76 years unexpired and I supposed to have a share of the freehold as I understood it by the variation of the deeds done back in 2000. But the freehold title is still in favour of the two of the original leaseholders/freeholders and one current leaseholder/freeholder.

My solicitor tried to locate the two missing freeholders listed on the title but was not successful. I am not sure how far has he tried to locate them but they seems to disappear from the Electoral Register sometime ago. Unable to locate them he submitted something to Land Registry but it was refused on grounds that their whereabouts are unknown does not mean that they are unfit or incapable.

Is it possible to go to the court and obtain a Vesting Order (or its equivalent) based on the variation of the deeds where the tow now missing Freeholders have signed that in transfer of the Lease, the new lessee gets one third share of the Freehold. What costs this will involve and time frame. Will it be required to pay into courts accounts money for the freehold?
Here is the variation of the deed (edited):

THIS DEED OF VARIATION is made this 8th day of September 2000 BETWEEN B. A. of Flat 1

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, Essex, D. P. R. B. of Flat 2,

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, Essex and J. P. O’B. of Flat 3,

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, Essex (hereinafter collectively called “The Lessors” which expressions shall include their Successors and Assigns where the context so admits) of the one part and the said B. A. (hereinafter called “The Lessee” which expression shall include his Successors and Assigns where the context so admits) of the other part.

WHEREAS

(1) This Deed is supplemental to a Lease ( hereinafter called “The Lease") dated the 8th January 1990 and made between K. H. D. of the one part and S. J. H. of the other part being a Lease of all that the ground floor Flat known as Flat Number 1,

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, Essex (hereinafter called “The Demised Premises") which were demised unto the said S. J. H. for a term of 99 years from the 23rd October 1989 subject to the Rents and Covenants therein contained.

(2) The residue of the term of years granted by the Lease is now vested in the Lessee.

(3) The Lessors are entitled to the reversion immediately expectant upon the expiry of the term granted by the Lease.

(4) The Parties hereto now desire to vary the terms of the Lease in the manner hereinafter appearing.

NOW THIS DEED WITNESSETH that it is hereby mutually agreed as follows:-

1. The Lease shall henceforth be read and constructed and take effect as if immediately following the Lessee's covenant in clause 5.(x) is added the following clause:-

"5 (x) The Lessee for himself and his successors in title to the intent and so as to bind so far as he lawfully can or may the estates and property for the time being vested in the Lessee but not so as to incur any personal or further or other liability HEREBY CONVENANTS with the Lessors and with the Lessees of Flats 2 and 3,

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, Essex that upon any assignment or other transfer or disposal of the Lease the Lessee will simultaneously convey or transfer the one third share in the freehold interest so that at all times the Lessee for the time being of the demised premises is also owner of a one third share of the Freehold interest in the Estate"

2. In all other respects the Parties hereto confirm the Lease which shall continue in full force and effect save as modified above.

In WITNESS WHEREOF the Parties hereto have hereunto set their hands the day and year first before written

.. Signed and witnessed by all thee parties…

As far as I understand from above whoever owns the lease owns one third share of the freehold. From what I have been told by my solicitor I understand that somewhere down the line the Freehold title was not transferred correctly to the new leaseholders.

I believe this should be classed as a technical error and corrected as such since the said above original leaseholders agreed to transfer their share/interest of the freehold on transfer of the lease.

As mentioned, I bought the property (lease) at an auction - the exchange was made on the day of the auction, but the solicitor never made me aware of the anomaly with the freehold afterwards. I read the lease and other documents and I thought that the mentioned variation of the Lease gives me the automatic share of the Freehold. Unfortunately as now found it does not.

As a result of that I am loosing/lost around £3000 in lost rent and interest payments. I would never tried to sell it had I known that it was unsealable through the usual route and I would have rented it while this was sorted but I did not know.

I am using the same firm now for the sale, unfortunately the person dealing with the sale (he also dealt with the purchase) left (I was not made aware of it) and now one of the partners "deals" with the sale. "Deals" is because I do not think he is very interested in the case and very hard to contact due to his workload/court appearances.

I really need a second opinion as I do not have much trust in the firm. Also could I do it on my own? I'd rather pay for my own mistakes instead paying for someone else's.

I have got some response by other solicitors and they reckon, I have to attempt to contact the Freeholders before I go to court. Why do I need to contact them – they have disposed of their interest in the Freehold when they sold their lease and if I find them, why I would need to go to the court – they can sign it, may ask for some money but possibly cheaper than going through court.

There must be similar cases – any suggestions and practical advice is appreciated.

Thanks!

propertyman

upon any assignment or other transfer or disposal of the Lease the Lessee will simultaneously convey or transfer the one third share in the freehold interest so that at all times the Lessee for the time being of the demised premises is also owner of a one third share of the Freehold interest in the Estate

In all that post this is the relevant part.

You and the other leaseholder/ freeholder can apply to the court that having been unable to locate the former owners that the freehold title is transferred.

sharky_mk

Thanks propertyman,

I thought the same and I pointed this out to the current solicitor dealing with the case and he commended me for that! It shows just how much they are dealing with it!

But I need more practical advice - I am aware of the Vesting Order route but as mentioned before, another solicitor suggested that I have to attempt to contact the Freeholders before I go to court, which I find pointless as they disposed of their interest in the freehold.

Which court I should go and which forms I need to fill if it is going to be a Vesting Order or something else as for the Vesting Order it appears I have to show that I attempted to contact the listed Freeholders, property to be valued and the valuation sum paid, instead of going just presenting the above quoted part of the lease variation and using common sense on the side of the judicial system ( So far, I find it lacks any common sense ) and transfer the freehold.

While it may be a complicated legal matter and as such it may be advisable to obtain a legal advice, I have very little trust in the solicitors I use at the moment and as well in the legal system on the whole as it appears the matters are over complicated without a sound reason. Also I have used two different solicitor firms to deal with property purchase/sale and both times I have been let down to put it mildly - so 2 out of 2 does not inspire a great deal of confidence in the legal profession. Pardon me if I offended the good ones out there, I am a tradesman and often we are all painted with the same brush, so I should know better not to generalize, but unfortunately, this is how I feel at the moment.

I understand this is going to cost me money and time, both of which I spend a lot already. I do not mind spending as long as it is justified as you have to pay the piper eventually but I wish it is done with less grief.

Thanks again!

Fire_Fox

Absent or uncontactable freeholders are the jurisdiction of the Leasehold Valuation Tribunal in some instances, and it is an inexpensive process. If you don't find what you want by reading a few of their guides LEASE have an excellent free telephone advice line. http://www.lease-advice.org/publications/

Are you using solicitors that specialise in leasehold conveyancing and leasehold disputes? Did you have the legal pack checked by a solicitor before you bid at auction? If not that might be part of your problem.

sharky_mk

Hi,
Thanks for the information.

I contacted the LAS but unfortunately they were unable to give me any practical advice. They think that if I go for Vesting Order, a premium needs to be paid. Unfortunately I still cant find similar case anywhere on the net.

Unfortunately I was not made aware that there is a problem with the Freehold. I bought it at auction - exchanged the same day and did not get the advice before but I should have been told after. As you gathered I am not using socialized leasehold solicitors and do not have much trust in them.

I just need practical advice how to solve it and I will deal with the blame after.

Is there something like Vesting Order but with no premium to be paid based that the Freeholders disposed of their interest in the Freehold when they sold the Lease. Or could be a Vesting Order with zero premium?

Thanks!

Fire_Fox

Change solicitors, either within the practice or another practice. If LEASE cannot help you it's likely you need to pay for specialist legal knowledge.

propertyman

sharky_mk wrote: »

But I need more practical advice - I am aware of the Vesting Order route but as mentioned before, another solicitor suggested that I have to attempt to contact the Freeholders before I go to court, which I find pointless as they disposed of their interest in the freehold.

It's all correct.

This is well outside of the remit of the LAS and beyond the ability of the average solicitor, it's fairly specialised, so don't sack them yet .

In the first instance you would try to contact the former owners.
Others elsewhere have had great success with findermonkey.co.uk.

If that fails then I would use the services of a reputable enquiry or tracing agent.

In then applying to the Court, part of the evidence to persuade them to issue a Vesting order, is to show what steps were taken to identify and locate them, and in some cases, public notices.

In a recent case of a missing leaseholder a notice was put in the local paper of a small island and the telephone rang two days later.

Where an order is awarded the Lands Tribunal is asked to assess a sum should the former owner appear, however in this case there should be none due to the restriction on the title you mentioned earlier, and that each party can show that in their contract for purchase, the FH would be transferred with the lease, but at one price.

( to other readers this in one reason I always say avoid trusts or such covenants, put it in a company where transfer of ownership is automatic)

While CPR 8 is the method, you should not be doing this yourself.

You might see that is something that last solicitor would be remedying if they made a mistake, otherwise its probably too specialised for the average solicitor.

I would
- try tracing myself
- have Solicitor appoint enquiry agents
- ask Counsel to draft the proceedings and make the case in court
- they can also make the valuation argument

And when it is transferred put in title indemnity insurance which at worst would cover legal fees if former freeholder rolls up.

Good luck.

Richard_Webster

As mentioned, I bought the property (lease) at an auction - the exchange was made on the day of the auction, but the solicitor never made me aware of the anomaly with the freehold afterwards.

So you bought it at the auction relying on your understanding of the position and went to a solicitor afterwards....

Sorry but this is a classic case of why it is important to take legal advice before an auction.

Now you are faced with expensive court costs - there is no magic fairy who will put it all right for you I'm afraid.

Not a lot of help to you I know but maybe someone else will read this and think twice before buying at an auction without getting things checked properly.

sharky_mk

Thanks propertyman,

This is exactly what I was looking for - the pure practicality of it. Now I have the second opinion, I needed as well as the route required to be taken and the costs associated with the transaction - I offered to the buyer a discount to cover the costs and she could deal with it in her own time without me loosing on interest and council tax payments. Hope it goes better from now on.

Thanks again!

sharky_mk

Thanks Richard Webster,

I know that legal advice should be taken before but I took the risk and of course I will have to pay for the problems to be sorted out.

I do not have a problem paying for court or whatever it is required, but what I have a problem is that even I have exchanged and the solicitor completed the purchase for me, I was not made aware of the problem. It should have been pointed out regardless of when I took the advice.
If this was done at the time of purchase, I would have had over 7 months to sort out and I would not have tried to sell it before it was sorted - I would just have rented it for the time-being. I became aware with the problem only when I tried to sell it.
Although I have my fair share of the blame for not seeking advice in advance, I still believe that the solicitor should have pointed out the potential trap even I had exchanged.

They attempted to get the freehold transferred by Land registry with only 1 freeholder and attempt to locate the other two, which of course was refused. I spoke to LR and their position is clear - all signatories or court order. This may have seemed the cheaper route but it is no use as it stands no chance - this cost me further £750 in loses (3 months) in interest and council tax. If I was told that if we go to court and this will guarantee the correct transfer, I would have chosen that route as there are more things to be considered apart from the face value.

All of the above shows that the legal advice is only good if correct otherwise you end up paying for other's mistakes as well, but how do you find decent solicitor, tradesman....

I hope others read it and helps them if they encounter the same problem.

Thanks again everyone for your input!

Richard_Webster

I do not have a problem paying for court or whatever it is required, but what I have a problem is that even I have exchanged and the solicitor completed the purchase for me, I was not made aware of the problem. It should have been pointed out regardless of when I took the advice.
If this was done at the time of purchase, I would have had over 7 months to sort out and I would not have tried to sell it before it was sorted - I would just have rented it for the time-being. I became aware with the problem only when I tried to sell it.
Although I have my fair share of the blame for not seeking advice in advance, I still believe that the solicitor should have pointed out the potential trap even I had exchanged.

I think it depends on the solicitor's retainer. Mostly if you have successfully bid at an auction all the solicitor will do is give effect to the transaction you have already agreed and warn you in general terms that he is not giving you any advice about the legal implications of the transaction. The fee would be cheaper because of that.