Absent Freeholder

vaseand

We've just found out that the freeholder for the house we are buying is absent and no ground rent demands have been receive for a few years. Our solicitor is asking the vendor for indemnity for this but how is this likely to affect our mortgage? Our solicitor isn't going to raise it with th mortgage until the vendors solicitor has proposed an indemnity policy so wondered if anyone has any experience of this on houses? Can only find information on this for flats. The freeholder isn't responsible for any building maintenance or the insurance.

violettasomerset

We had a similar issue when we moved into our leasehold house - the last demand for rent had been c.25 years previously. It made no difference to the mortgage, and all that happened was that the sellers knocked 6 years worth of ground rent off the purchase price (a whole £18!) to cover the rent that could be claimed if the freeholder did emerge. Not sure what an indemnity would cover regarding rent as they could probably only claim 6 years worth. If there's been building works done without permission of the freeholder (if the lease requires their permission) then an indemnity might be worthwhile for that, but surely you'd pay out more for the indemnity than the ground rent would be worth?

TrickyDicky101

I suspect the indemnity is all about resolving a potential issue for the mortgage lender rather than providing any (other) actual benefit to the purchaser.

Pete9501

What happens if you want to extend the lease and you can't find the freeholder?

violettasomerset

Leasehold houses often seem to be on longer leases than flats - ours was originally 999 years, for example, with a fixed £3 groundrent per year. It is still possible to purchase the freehold (and presumably extend the leaseholder), slightly more complicated perhaps than if the freeholder is known, but the legal paperwork can go through and the money is held by the Crown I believe in case the freeholder reappears. When we looked into buying the freehold, the solicitor advised there wasn't really any major benefit, as given the length of the lease it is as good as freehold.

dannim12345

You can 'force' the sell of the freehold - http://www.fridaysmove.com/vesting-orders-explained-how-buy-freehold-where-your-landlord-missing/285

Could be worth considering in the future but probably not worth the cost/effort... Just ask for the price to to be reduced by 6 years worth of ground rent (which is as far back as they can claim) and an indemnity policy won't do any harm (if they are playing).

ethank

If the vendors are aware there may be a policy in place already.