What to be aware of when buying share of freehold?

crocco

I have put an offer on a property with a share of freehold, it's very early days and the vendor hasn't responded through the agents so all I know is that the remaining lease is 75 years and the flat is in a block of 16 properties.

Can someone please confirm some things for me:

1) although the lease is below the magic number of 80 years it shouldn't matter because as a freeholder I would only pay relatively low legal costs and not any other fees eg. marriage value?

2) In order to extend the lease I need agreement with ALL freeholders?

3) If the freehold is owned by a Ltd company then as long as I have majority consent by shareholders then that will also be fine?

4) If the freehold isn't owned by a company I should probably stay well clear anyway?

5) The fact that the vendor is able to sell the flat means that all freeholders must have already given consent so I can just get their details from the vendor if I do want to extend the lease?

6) Is there any reason a freeholder may want to run the lease down and block any kind of renewal?

7) What else should I be aware of and what questions should I be asking?

Many Thanks

richardw

crocco wrote: »

..Can someone please confirm some things for me:

1) although the lease is below the magic number of 80 years it shouldn't matter because as a freeholder I would only pay relatively low legal costs and not any other fees eg. marriage value?.....

Where does it say the freeholder will agree to a NIL marriage value?

crocco

Forgive my ignorance on this but if the marriage value is due to the freeholders and the freeholders want to extend the lease then isn't the cost effectively nil?

richardw

It is best to look at all the details in the freeholder set up, there may be terms such as "all future marriage values will be market rates', best not to assume that the marriage value will be nil, best to find out what is actually laid down in the paperwork.

crocco

Thanks, I will obtain information regarding the freeholding but in terms of my other points am I along the right lines?

crocco

Also, please correct me if I'm barking up the wrong tree but if marriage value is £10K and all the freeholders are prepared to pay up then we will essentially be paying ourselves anyway?

richardw

crocco wrote: »

... if marriage value is £10K and all the freeholders are prepared to pay up then we will essentially be paying ourselves anyway?

The freeholder will get the money.
The freeholder set up could have a term "if a lease is sold and the freehold shareholding changes, there shall be no distribution of freeholder funds to the exiting shareholder"

You are just making too many assumptions that could be wrong.
The devil is in the detail and will need to be looked at.

crocco

Could you explain that again like I'm 5 please? I want to buy a share in the freehold and extend the lease from 75 years just recap.

richardw

Your Solicitor needs to look at the detail in the freeholder set up and advise you.
Perhaps avoid spending money on surveys and searches until this is done.

crocco

thanks again,

I'm going to obtain the company that owns the freehold's articles etc

What will the documentation be called that will have the provisions of the freehold agreement? I'll attempt to obtain it in advance.

thanks

crocco

I have identified the management company has 10 shareholders.

2 are directors and live nearby and 1 is the company secretary who lives in the block of flats.

There are no articles of association registered at companies house therefore I am informed this means the model articles will kick in.

Is this normal? What implications might a model set of articles have?

thanks again