Deed of Variation for loft space

bybyhosa

Hello everyone,

we are currently selling our flat and buying another house, but we are facing a very very complicated issue about our loft space. I will keep my story as brief as possible.

The previous owner has created a loft space without paperwork, however, this loft conversion was done in 10 years ago, so we got an indemnity insurance from them when we bought this flat. now we are selling this flat to our buyer who doesn't want to accept the indemnity insurance, because they found out one of our neighbours complained us about loft conversion from the search. Their solicitor is insisting the insurance is invalidated as someone made a complaint against us. They request us to do a deed of variation to add the loft space, the problem is if we contact freeholder for this by ourselves, the insurance will be definitely invalidated. We don't know how complicated a deed of variation will be and if we can afford the cost, also if it's rejected we'll end up with no protection to ourselves at all.

Has anyone had done a deed of variation to add loft to the lease? does that process take a long time to complete it?

Thanks in advance!!!

nicmyles

I'll defer to others with more direct experience of this, but a couple of questions:

-what exactly does the indemnity insurance cover? Normally this would be for when some work is done without building regs approval and it indemnifies you against costs if the council happens to discover this and ask for remedies. But if the work was done over 10 years ago as you say, this is no longer relevant as they won't take enforcement action anyway.

-is the freeholder aware that the loft conversion has been carried out and did they approve this? Normally there would be clauses in your lease preventing leaseholders from making changes to the layout without permission.

-isn't the loft space included in your lease anyway? Presumably the original loft space would have had to have been, for the previous owner to have any right at all to convert and occupy it. I may be wrong, but I wouldn't have thought you would need to alter the lease just because the space itself had been altered, as long as the lease shows the loft space as was formed part of the property.

Basically what I'm getting at is that it doesn't seem that you should require any indemnity insurance for the council/planning/building regs bods anyway. From what you've said, I'd be more concerned about the previous owner's rights to carry out the work and occupy the loft space in the first place - and I don't think any indemnity insurance could help you if those were the issues.

bybyhosa

Hi nicmyles，
Thanks for your help. The indemnity insurances we had covered the problem of no planning/building permission and the fact that the roof space wasn't included in the demise. The freeholder knew it from the complaint a few years ago and no one had contacted us about it. The deed of variation they were asking is to have it demised, which I think will be very costly to us and will invalidate the indemnity insurance immediately (the loft space was never sold as a proper room anyway).

Thanks again for your help. Very much appreciated!

Cakeguts

bybyhosa wrote: »

Hi nicmyles，
Thanks for your help. The indemnity insurances we had covered the problem of no planning/building permission and the fact that the roof space wasn't included in the demise. The freeholder knew it from the complaint a few years ago and no one had contacted us about it. The deed of variation they were asking is to have it demised, which I think will be very costly to us and will invalidate the indemnity insurance immediately (the loft space was never sold as a proper room anyway).

Thanks again for your help. Very much appreciated!

If it isn't included in your lease you can't sell it. Is there a way that you can block off the roof space so that it isn't usable any more? Does the price of your flat allow for the fact that the loft space cannot by used because it doesn't belong to the flat?

bybyhosa

Thanks Cakeguts. The price agreed doesn't reflect the fact that there's a loft space (compared to other similar properties on the market), and it's always mentioned as a bonus space throughout the sale.

Slinky

If the freeholder has known about this for some time but has not taken steps to ensure the breach doesn't continue, does that lessen their power to do anything about it?

I was threatened with an injunction many years ago on a business issue. Time went by and the injunction never came. My solicitor told me that to have a chance of winning in court, the other party should have taken action as soon as they became aware of the issue. If they tried to enforce it now there would be no chance they could succeed as too much time has passed to make their case.

G_M

* The attic is not part of your lease. You cannot sell it.

* A Deed of Variation to the lease is not expensive to draw up. A couple of hundred max. The cost will be in what the freeholder demands for agreeing.

Why should the freeholder simply agree to 'give' you an extra bit of the building for free? He is more likely to want to sell it to you.

* Lack of Planning consent, or Building Regs, is less of an issue. After that long, the council will not (cannot) pursue the owner.

bybyhosa

Thanks G_M. The loft room was already there when we bought it, and it wasn't in the lease, that's why we got the indemnity insurance to cover it in first place. Does that mean our solicitor didn't do their job properly when we did the purchase?

nicmyles

The indemnity insurances we had covered the problem of no planning/building permission and the fact that the roof space wasn't included in the demise. The freeholder knew it from the complaint a few years ago and no one had contacted us about it. The deed of variation they were asking is to have it demised, which I think will be very costly to us and will invalidate the indemnity insurance immediately (the loft space was never sold as a proper room anyway).

What would the indemnity insurance even cover in this case? Costs attached to purchasing the space? To restoring it to its original state if the freeholder demanded that (as they could potentially do depending on terms of the lease and whether or not the previous leaseholder had permission to do the conversion)?

If it were me buying, the problems are so potentially massive that no indemnity insurance would be good enough, so I can see why they're demanding a deed of variation.

*That said*, if you've already baked it into the price, why would you agree to take any further action? If you've priced it accordingly, it is what it is, no?

That could be the line to take, but I think for most buyers the potential unknown costs and inconveniences are so massive, it's going to be a deal-breaker for most.

Have you considered attempting to get the deed of variation and then putting the flat back on the market priced accordingly? I don't think this buyer can have it both ways - it's either cheap or problem-free, not both.

eddddy

nicmyles wrote: »

Have you considered attempting to get the deed of variation and then putting the flat back on the market priced accordingly? I don't think this buyer can have it both ways - it's either cheap or problem-free, not both.

Presumably, the loft belongs to the Freeholder.

I doubt the freeholder would give it away to the leaseholder as a gift.

So I guess the starting point would be to ask the freeholder if he would like to 'sell' the loft space, then start negotiating a price.

When the price is paid, the lease can be varied accordingly.

nicmyles

So I guess the starting point would be to ask the freeholder if he would like to 'sell' the loft space, then start negotiating a price.

Exactly, but my point is that when/if that's done, the OP probably should be putting the flat back on the market at an increased price, not continuing with the sale to this buyer at the knock-down price agreed without the loft being part of the demise. If these issues are baked into the price, I'm unclear why the OP is considering spending money on regularising the situation for this buyer.