Potential missing leasehold deeds for property we're in the process of buying as FTBs

laurawilliams500

I'm looking for clarity and opinions regarding our current house buying position.

We had an offer accepted on a leasehold property almost 7 weeks ago. We're FTB & there's no upwards chain. We've had the survey done, mortgage offer received, but we've now come to a potential issue whereby the property is unregistered meaning that currently there is no electronic documents at the Land Registry (he said this happens when sellers have owned a property since the 70s or before), and the vendor cannot currently locate the leasehold title deeds. Latest from our solicitors is that he's spoken to the vendors solicitors this morning as he's still awaiting the contracts while they locate the unregistered deeds. The vendor is currently awaiting response from their old mortgage lender to see if they hold the deeds but to quote my solicitor "it isn’t looking good"! He said "If they can’t be located then there may be significant delay whilst the sellers provide evidence of ownership."

So I've spoken to the solicitor and read some forums and think I understand that if they can't find the deeds, they'd have to apply to reconstruct the title and we'd likely only get a possessory title. I really want to know the pros/cons of this in anticipation that we may have to seriously consider whether to proceed with the sale (if it comes to that)?

Any advice would be appreciated!

laurawilliams500

Bumping the post to see if there's any advice out there...

eddddy

You're probably aware of many of the implications, but they're likely to include:

More legal work for your solicitor, and so more time and expense
- it's better to have a more experienced property solicitor, rather than a budget conveyancer'

The lease will probably be reconstructed from the counterpart lease
- you'll need a cooperative freeholder
- it will be even messier if the freeholder can't find the counterpart lease
- the freeholder might see this as an opportunity to charge a high fee

You'll need indemnity insurance, in case somebody eventually turns up with deeds/documents showing that they really own the flat (as opposed to the person you are buying from).

Your mortgage lender will need to be happy with with the possessory title and indemnity insurance.



Obviously, it would be more appropriate for the seller to cover lease reconstruction costs, freeholder fees, indemnity policy premiums.

But you may feel it's appropriate to drop your offer slightly, to cover your increased costs, the increased risk of it falling through, and the slight extra difficulty you might have when selling.

laurawilliams500

Just to clarify this is a house we're buying, not flat, though I assume all of the above is still applicable?

eddddy

laurawilliams500 wrote: »

Just to clarify this is a house we're buying, not flat, though I assume all of the above is still applicable?

Yes, I think so.

Except, if the counterpart lease isn't found, I guess with a house, there's slightly more scope for weird rights to have been granted which you might not know about.

For example, the lost lease may say that a neighbour has a right of way across your garden, or the right to graze sheep on your front lawn.


Also... I didn't mention, you will be bound by the terms of the indemnity insurance policy. Here's a random example, which shows exclusions etc: https://crminsurance.co.uk/policy_guidance/LD.pdf

laurawilliams500

Thanks for the advice!

I just can't understand how they seem to have left it until now - when a sale is proceeding - to start looking for the deeds! Fair play that the vendor may not have realised but surely they should have had steer from their solicitors from the very early stages as in when they considered selling?!

Another point maybe worth mentioning that the house was built in 1963. We don't know for definite if the vendors owned since then but apparently since before the 70s atleast. I suppose if they haven't had any issues to date, their long standing residence is a little more comforting and probably one of the reasons this is becoming an issue (before registration/documents were all electronic etc)

Ugh, holding out a speck of hope they might show up but I'm 99% sure they'd have been found now if they existed!

bouicca21

You need the lease not just for proof of ownership but for terms and conditions. your mortgage lenders are going to be seriously unhappy.

Do you know who the freeholder is - do they have a copy of the lease? Are there neighbouring properties with similar leases?

laurawilliams500

I've anticipated potential issues with our mortgage lender i.e. that they might actually withdraw the offer!

The freeholder is a management company in London. I personally don't know if they have any documentation to do with the lease but I would very much hope the vendors solicitors are checking that! My thought is, if the vendors been paying ground rent for so long (which he must have as confirmed it's £12.50) then surely there's something somewhere!!!

I'm just a little baffled as well by the fact the house has been rented out for the last 5/6... don't people have to prove ownership and the right to let?! It seems not or atleast not to the same extent.

laurawilliams500

Sorry and to check do you mean terms and contracts for our contracts?

bouicca21

I mean that the lease will set out your obligations and those of the freeholder. The lease isn't just about how much you pay in ground rent, it could have all sorts of other stuff. Your solicitors will not be able to advise you about how reasonable the clauses are if he/she can't read it. You also need to know how many years are left on it.

laurawilliams500

We have the freehold deeds and know there's 800 years on the lease from 1960 so that's not a worry... don't think we'll outlive that :rotfl:

Worst case scenario this sale falls through we've learnt SO much! Hopefully it doesn't come to that though :eek: