Loan for a flat management company

Soundgirlrocks

eddddy wrote: »

H soundgirlrocks

Is the developer going to sign an 'option to purchase' or 'conditional contract' which is dependent on getting planning consent? If so, what happens if they don't get consent? You'll have paid all the legal fees and have no sale.

The legal cost are just for amending the leases, worse case and sales fall though, all the leaseholders would be left with extended leases which has only cost them the legal fees (Paid by the loan and then recovered via ground rent)

eddddy wrote: »

(Obtaining planning consent may cost many thousands and take up to 2 years - if there are appeals etc.)

Or is the developer buying without planning consent? If so that sounds very suspicious. e.g. they tell you they will only apply for consent for a bungalow to get the land cheap, then apply for consent for a block of flats.

Option to purchase is the route we will go down,the developer will then apply for planning. The option will be scaled so that if he gets planning for more than a bungalow he will pay more for the plot, but as I said earlier the plot is next to 3 existing bungalows and surrounded but semis, a block of flats is highly unlikely.

eddddy wrote: »

What happens if you get all the legal work done, then a leaseholder changes their mind or gets stroppy. e.g. because "I think we should hold out for a higher price" or "I think I deserve a bigger share of the sale than him, because..."

What if somebody wants/needs to sell their flat during this process? Or even worse, gets it repossessed? You need to cater for this in your planning.

All the leases are currently around 70 years, it is in everyones interest to extend the leases, a flat with 125 years lease is much more valuable than one with 70. The sale and amending the leases are two separate events. Even if we only amend the leases all the leaseholders would be in a better position. Any funds raised from the sale will be kept by the company rather than being paid as dividends and used for maintenance. Also each leaseholder has one share in the company so if we were to divi up the cash it would have to be split equally.

eddddy wrote: »

It sounds like you've got a quote from a solicitor - is that just to vary the leases? i.e. to follow your instructions?

Or is it for advice from a specialist property lawyer, who will advise you the best way to do the process from end-to-end? (And would therefore be much more expensive.)

Ive been speaking with a specialist lawyer they are the ones that discovered we can't sell without amending the leases. They are acting on behalf of the company, rather than me personally.

The loan is purely for the legal costs of the lease extension, amendments and sale. It would be fully covered by the ground rents, and so not affected if the sale fell through.