Vendor putting the property back on market for auction, building insurance or not??

moon_river

We are in the process of buying a property (share of freehold, leasehold flat), and we have been ready to exchange for almost 3 weeks now. All the vendor has to do is to sort out the building insurance, as the building is currently insured separately by different flats, albeit the vendor owns the whole building at the moment.

Our solicitor insisted on the vendor getting the insurance sorted, and it seems that the vendor is not too keen on this idea. Out of the blue, the vendor put the property up for auction. I just wonder if anyone can shed some light on this..? Should we just overlook this and exchange ASAP? What are the possible implications should we decide to exchange anyway?

Thank you in advance for your help. I am really frustrated and at lost now:(.

camptownraces

It would be unusual for the vendor to be responsible for insuring the building unless he owned the freehold.

If that is that the case, your vendor is likely to be responsible for the structure of most of the building.

You may know whether either or both of these apply. Your solicitor should have told you.

Your survey should have given some indications about the condition of the structure.

It sounds as if you may have a lucky escape from this purchase.

moon_river

Thanks for your reply camptownraces. The situation is quite complicated, basically 4 flats (2 buildings with 2 flats in each) share the freehold. Our vendor owns one of the buildings as it stands. Our solicitor insisted the vendor to sort out the building insurance with other co-freeholders, but the vendor doesn't seem too keen as this hasn't been sorted out still after 2 months.

Our surveyor did not bring up any structural issues but as we are buying a flat only, so he didn't have the opportunity to investigate the rest of the building.

Are we on the verge of losing another flat again..:(

Thrugelmir

moon_river wrote: »

Should we just overlook this and exchange ASAP? (.

On the basis that you are purchasing with a mortgage. The solicitor will not exchange contracts. As it puts the lender at risk.

silvercar

Would it be worth buying the leasehold flat only without the freehold?

AdrianC

You're buying the flat leasehold anyway.

The only question is whether you get a share in the company who own the freehold or not. The buildings insurance is the responsibility of the freeholder, whether it's a company (who you might or might not own a bit of) or an individual.

Bantex_2

Technically there is no such thing as share of freehold.

moon_river

Thrugelmir wrote: »

On the basis that you are purchasing with a mortgage. The solicitor will not exchange contracts. As it puts the lender at risk.

We didn't think of this actually because the lender did not put this a a condition on our offer. Having said that, there are separate insurances covering the flats, including the common parts. So it's only the fact that the building is not insured as a whole, will the lender still be concerned?

moon_river

AdrianC wrote: »

You're buying the flat leasehold anyway.

The only question is whether you get a share in the company who own the freehold or not. The buildings insurance is the responsibility of the freeholder, whether it's a company (who you might or might not own a bit of) or an individual.

I think that's right about the leasehold, and I assume the responsibility of getting building insurance falls on all the freeholder. As the vendor is keen to sell the flat, so I just assume that the vendor decides not to bother with the insurance anymore.

AdrianC

moon_river wrote: »

I think that's right about the leasehold, and I assume the responsibility of getting building insurance falls on all the freeholder. As the vendor is keen to sell the flat, so I just assume that the vendor decides not to bother with the insurance anymore.

But the vendor is selling the leasehold flat - so the insurance is irrelevant to the flat. The freehold is not changing hands, only a share in the company may be, so the actual responsibility for insurance remains with the same entity as now. (Unless the freeholder currently owns it as an individual, and will transfer it to a company so that the OP can have a share - in which case, the current freeholder will remain part-owner, via his share, but the responsibility will transfer from individual to company.)

Think of it as having two hats. You have the leaseholder hat, under which you own the flat.
You have the "share-of-freehold" hat, under which you own a share in a company, which happens to own the building. They're related, yes, but they're not the same thing.

moon_river

Thanks AdrianC, that's really useful.

Just a thought, say the vendor does not want to sort out the insurance and the property actually goes to the auction (the vendor hasn't pulled out on us yet..). Will getting building insurance still be part of the requirements to complete??

Also can we not sort out the building insurance ourselves upon completion?

Sorry I am asking all these daft questions, I am at my wit's end, this is supposed to be a straightforward no chain sale!