Mortgage charges for share of freehold

neil1979

Hi, I'm aware that when buying a leasehold property with a mortgage the mortgage company will put a charge on the Land Registry leasehold title to protect their interest in that property.

With a share of freehold (where each flat has a leasehold and then a shared freehold) - am I right in thinking that the mortgage charge should still only be put onto the leasehold title (and not the shared freehold title)?

e.g. The sale of one leasehold flat shouldn't result in a charge being put across the whole building of flats (which could be 2, 5, 10 or even 100 different flats!).
If a mortgage company mistakenly did put a charge across the freehold then wouldn't that cause big problems when the other residents wanted to sell and transfer their freehold?

MrJB

The freehold will refer to the leases which have benefit over the land owned by the freehold. If you mean a mortgage charge as you say, was the Long leaseholder the same as the freeholder ie names? I cannot see how a charge can be registered against an interest which the title holders do not own.

neil1979

In this case the flat sold will share the freehold with the other 10 flats.
So the leaseholder would be 1 of 10 names who jointly own the freehold.
So for the solicitor to place a charge relating to a single mortgage company's dealings on one flat on the entire freehold means that some mistake has been made.
I'm sure it is an innocent mistake, but I'm just trying to understand that it is the incorrect thing to have been done before trying to get it fixed. Thanks.

eddddy

neil1979 wrote: »

So the leaseholder would be 1 of 10 names who jointly own the freehold.

English law doesn't allow more than 4 people to own the title to land. Normally, in these circumstances, the freehold would be owned by a company.

Is this a real situation or a homework question?

neil1979

Sorry for the confusion - It is a real situation, but I was using different numbers to attempt to anonymise my query. I didn't realise that there was a limit of 4!
So the real number is 2 flats, both sharing in the freehold. The other flat has just been sold, and the mortgage company of the new buyer has put a charge on the freehold title (which is I believe a mistake).
They have also put a charge on their leasehold title (which is correct) but I don't think it is correct for a charge to be put onto the freehold title as they do not own the whole freehold title - they just share in the freehold with myself. Thanks.

G_M

So you've bought a share of a freehold? did you borrow money from a mortgage lender in order to pay for this?

neil1979

We bought on a mortgage, and our mortgage company put a charge on our leasehold title (but not on our shared freehold).

They bought with a mortgage and their mortgage company put a charge on their leasehold title, and on the shared freehold.

You can see that both purchases were handled differently so there must be some error.

neil1979

I phoned up the Land Registry, and they did confirm that an error has probably been made.
The other buyer's mortgage charge should only have been placed onto their leasehold title, and not onto the shared freehold title.

MrJB

You can understand the lender wanting to secure the benefit of their share of the freehold though as it obviously enhances the value of the property.

HouseBuyer77

For share of freehold properties lender's generally don't consider the freehold part of things. They just treat it as a normal leasehold property. They assign no value to the freehold. So the lender would have no reason to place a charge upon the freehold.

Seem a bit odd someone can place a charge on something they part own without the permission of the other owners though?

neil1979

And presumably if the charge remained in place it would be an issue at some point in the future when we try to sell our leasehold, and transfer our part of the shared freehold to the new owner?