Restriction on a Freehold House

MystArch89

Hi everyone,

Just wondering if this is a normal practice and does everyone just live with it in regards to purchasing a new build or does people usually challenge the seller solicitors to remove the clause.

We are in the process of buying a new build , pretty much due to exchange contract imminently, it slipped my eyes when I skimmed the contract, and have now asked a close lawyer friend to have a look and they said this clause seems a little out of line than usual general freehold purchase. (this friend is not a practising lawyer in the uk so he is unfamiliar with uk Law but he said this is a bit of anomaly in the country where he does practice when it comes to freehold purchases)

Questioned Clause as below

CHANGE OF OWNER OF THE PROPERTY
4.1
The Buyer agrees with the Seller and the Management Company:
4.1.1
Not to dispose of the Property or any part of it unless the disponee enters into a Deed of Covenant with the Seller and the Management Company and delivers the completed Deed of Covenant to the Management Company; and
4.1.2
Not to dispose of the Property or any part of it within 5 years of the date of this transfer unless the Buyer procures that the disponee gives written consent to the Seller similar to that specified in clause 10.2.
4.2
The parties apply to the Chief Land Registrar to enter a restriction on the register of the title to the Property as follows:
'No disposition of the registered estate (other than a charge) by the proprietor of the registered estate or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be registered without a certificate signed by a conveyancer that the provisions of Clause 4.1 of a Transfer dated
have been complied with or that they do not apply to the disposition.'


I had a second look again and realised this does seems a little out of line and wondering if anyone can clarifies whether this is the norm? or should i actually be challenging my solicitor to challenge it. I've asked him but have not gotten a reply as to yet.

I understand the need for the Deed of Covenant to protect the aesthetic of the estate, and am totally happy with that.

On clause 4.1.2, why is there a significance of the 5 year clause? Is there something in UK law in regards to 5 years for deed of convenant?

And on clause 4.2, Does this mean if i'm trying to sell the new build within 5 years or after 5 years, I would have to first seek consent from the management company? or asking them for a certificate? This seems a bit ridiculous considering im already paying a huge sum for a freehold house. I'm opted to purchasing a house for this very reason that i do not like leasehold and their terms that comes with it, and yet there seems to be as much restriction on freehold?? and it is being registered within the land register as well.

Would this lead to issues down the line when i'm trying to sell in future?

Many thanks in advance for anyone thoughts or advice for this.

sal_III

Ask your Solicitor handling the purchase, that's what you are paying him/her for. Not a non-practising lawyer friend.

Looks to me like a "normal" clauses making sure you and any future owner of the house keeps paying the management fees, that are nowadays common for freehold houses in new developments.

I'm afraid that if you don't like similar terms you won't find many new build houses without them and will have to look for an old freehold house.

xylophone

https://hoa.org.uk/2016/11/problems-facing-freeholders-new-developments/

eidand

do a bit of research into new builds, there are groups on facebook dealing with this sort of thing, look at the reviews of every house builder and then ask yourself if you think you should proceed with this. that's all I am saying ...

xylophone

https://www.leaseholdknowledge.com/ripped-off-private-estate-charges-developers-property-predators-just-like-leaseholders-says-hornet

MystArch89

Hi everyone, many thanks for the response and advice with links.

I've instructed my solicitors to look into them and for him to clarify things to me in simple terms , just waiting for him to get back to me.

So would this be the norm in the contract and title deeds? I've seen some people suggesting that the amount cost for certificates etc should be fixed in the contract prior to exchange and i'll work with the solicitors to push for a figure to be placed into it and not just a blank figure.

And have there been any issue with lender not willing to lend to prospective buyer because of this? But i would think that this is just down to me as a seller paying off the Management Companies for them to issue the certificate as a one off for me to sell and move on.

And would it be possible for me to challenge them to remove it ? or i would have to just abide with it and insist on a fixed price in the contract.

MystArch89

Hi everyone,

Really sorry to trouble you guys again, but just wondering if i could get some further advice from yourself.

I have spoken to the solicitors again today and just felt the way he's dealing with it is so nonchalant which i'm hoping to ask for opinions and whether to insist it to him. or might even considering changing the solicitors but we are very close to exchange or should i say we have actually gone past the deadline for exchange.

He's saying if i were to sell, i would have to arrange for a management pack etc for the buyer , in which i'm more than happy to oblige and also duly oblige all my duties as a buyer obligation to the mgmt company. What i'm not liking is he said there's no such thing as fixing the fee for this certificate or mgmt pack in the contract as its subjected to change and not to worry as it wont be that high. If its too high, then thats when I can challenge it in court. I'm not pleased with this advice and wondering if anyone can give further advice?

Should i insist that he negotiate with the seller solicitor for the mgmt fee to be set or agreeable, or would it even be possible to have the restriction removed ( the property is a new build in an estate with estate charges to pay) . He's saying its impossible to remove it and the seller wont consider it and he wont propose it as well as its an estate and thats the norm. I have seen in Homeowner Alliance that we should be seeking to fix it but he's just pushing my opinion away and said no no u should not try to fix it and there no way to fix it as well.

I've now gone back to the developer sales/mgmt company and said i would want a figure at present as to what this might be before proceeding any further however the developer sales team is pushing hard to try and exchange by the end of this week as well.

Much appreciated if anyone can advice.

Linton

My view - I think you are making a mountain out of a molehill. If it bothers you that much withdraw from the purchase and look elsewhere.


The 5 year bit is perhaps that the developer is still selling houses on the estate and so is concerned that the rules are followed. After 5 years they dont care - its a matter purely for the Management Company.


As to the Certificate, it seems to me that the section means that, if you sell, your conveyancer has to certify that the Deed of Covenent has been duly transferred and the requirements that you have had to meet are imposed on your buyer and that the sale should not be permitted until this has been done. This is ensuring that the management company gets paid for the maintenance of the communal areas in perpetuity and that the DoC doesnt get lost.


However IANAL.

eidand

is this your solicitor or is it one recommended by the builder? If it's the latter, keep in mind that person does not have your best interests in mind at all.

I also suggest you make sure you get your own solicitor and make sure you understand everything related to that house otherwise you may fork out a fortune and end up with an un-sellable property.

I really don't understand why you would fork out so much money without performing your due diligence, you're not buying a freaking toothbrush, this is a life changing purchase .... treat it as such. Don't talk to a "friend" get a proper solicitor in and ask them everything.

luis1988

Hi MystArch89

Just wanted to add our current experience here. We are in the process of selling our 2 year old new build and stumbled across the management pack charge yesterday. Ours is £323 which is actually low compared to some others we have seen.

Unfortunately there is no way round it and it’s becoming quite common in new build developments, especially the smaller ones. Our current development has 30 odd houses.

For context, the new build we are buying through Barratt doesn’t have a management fee at all, but is a far larger development.

jennhg88

We are in the process of selling our nearly 5 year old "new build". During the enquiries process there was a management company questionnaire to fill in, this cost us £192 to obtain the management pack within 5 working days and I believe there is another fee to transfer the account into the buyer's name.

It's quite common for new builds development especially if the roads are not being adopted, we are buying another new build and it is much the same.