Dispute over ground rent threatening the sale

Galanova

Hi all

I wonder if any of you have been in such situation and if you can recommend anything.
I am selling my flat and buying a house. A house purchase is ready for exchange and the flat sale is still dragging. Today I found out that the reason of the delay is that the solicitors of the buyer found out that under the lease the owner is not liable for ground rent. When I was buying the flat I was not made aware of this and have been paying ground rent.
Anyway, we are speaking about £30 a year. Now the buyer's solicitors are arguing with the management company trying to get their confirmation that the ground rent is not payable. The management company is refusing to give this confirmation.
To me it sounds like a potential for a very lengthy dispute.
The buyer is a property investor who wants to buy and let the flat. Surely he understands that he is losing much more in the argument over £30 a year?? Especially considering that when he was making an offer, he asked for £2500 discount for no reason and I gave it to him?

What would you do in this situation?

eddddy

So are you saying that the lease says the ground rent is zero, but you are billed £30 for ground rent each year?

(Has there been a lease extension on the property which reduced the ground rent from £30 to zero? In that case, the lease might say the GR is £30, but the deed of variation says it's zero.)

Galanova wrote: »

What would you do in this situation?

Leave it to the buyer to do whatever they want. If the lease is clear that the GR is zero, I can't see that there is an issue.

Is the buyer suggesting that you should do something?

Tom99

[FONT=Verdana, sans-serif]Look for yourself at the lease or deed of variation, your buyer does not need to ask the management company what ground rent is payable.[/FONT]

Galanova

I have no deed of variation and I am still to look through the lease as it is quite a long document.
But for now I've checked what info was given to me in the sales pack by the solicitors when I was buying and I see that it states the ground rent is "peppercorn rent". Do I get it right that in this case it is up to the free holder to decide whether to charge the ground rent or not?
I know that the previous owner of the flat also paid ground rent.

Tom99

Galanova wrote: »

I have no deed of variation and I am still to look through the lease as it is quite a long document.
But for now I've checked what info was given to me in the sales pack by the solicitors when I was buying and I see that it states the ground rent is "peppercorn rent". Do I get it right that in this case it is up to the free holder to decide whether to charge the ground rent or not?
I know that the previous owner of the flat also paid ground rent.

A peppercorn rent means exactly that, one peppercorn, no more no less.

davidmcn

Galanova wrote: »

What would you do in this situation?

Ask the solicitor whether the current issue really is just over a liability of £30 a year (just in case you've misunderstood), and if so !!!!!! they (and/or the other party) are playing at?

moneyistooshorttomention

Galanova wrote: »

What would you do in this situation?

Be very annoyed with myself that I'd been daft enough to pay money I wasn't due to pay for some years now.

Admitted £30pa isnt much - but what your buyer (this buyer or any other buyer) is going to be concerned about is whether "real" rises might get imposed on that at some future point. Perhaps from some other company buying out the right to those non-existent ground rents and then proceeding to shove the non-existent cost up a lot.

They don't want to be the ones at risk of any sort of legal issues involved in getting this lot to admit that the charge simply doesn't exist - and hence you are the one that has to sort this out before they'll buy it.

Fair enough - imo.

Tom99

moneyistooshorttomention wrote: »

Be very annoyed with myself that I'd been daft enough to pay money I wasn't due to pay for some years now.

Admitted £30pa isnt much - but what your buyer (this buyer or any other buyer) is going to be concerned about is whether "real" rises might get imposed on that at some future point. Perhaps from some other company buying out the right to those non-existent ground rents and then proceeding to shove the non-existent cost up a lot.

They don't want to be the ones at risk of any sort of legal issues involved in getting this lot to admit that the charge simply doesn't exist - and hence you are the one that has to sort this out before they'll buy it.

Fair enough - imo.

[FONT=Verdana, sans-serif]The ground rent is not 'non-existent' it one peppercorn and this landlord or any other landlord can't shove it up any higher than one peppercorn.[/FONT]
[FONT=Verdana, sans-serif]The OP is owed a refund.[/FONT]

eddddy

moneyistooshorttomention wrote: »

....but what your buyer (this buyer or any other buyer) is going to be concerned about is whether "real" rises might get imposed on that at some future point. Perhaps from some other company buying out the right to those non-existent ground rents and then proceeding to shove the non-existent cost up a lot.

That's not possible.

A lease is a legal agreement - if the lease says the ground rent is a peppercorn (i.e. zero) for the term of the lease, the freeholder cannot change that.

(The only way it can be changed is if the leaseholder and freeholder both agree to change it.)

Galanova

Thanks to everyone who has answered.
I think things are a bit clearer now. If the ground rent is not payable and the management company still charges it (for the reason I now want to clarify) then probably for the buyer it's not a matter of paying £30 annually and not that they don't want to deal with unexpected rises of rent (it being impossible) but probably it's a matter of trying to sell the flat in future and having potential problems with the management company (for example not issuing lease pack until he pays the ground rent he doesn't want to pay).
Would be interesting to hear his solicitor's explanation and how they think this can be resolved...

moneyistooshorttomention

Tom99 wrote: »

[FONT=Verdana, sans-serif]The ground rent is not 'non-existent' it one peppercorn and this landlord or any other landlord can't shove it up any higher than one peppercorn.[/FONT]
[FONT=Verdana, sans-serif]The OP is owed a refund.[/FONT]

:rotfl::rotfl::rotfl::rotfl:....................