Restriction on a Freehold House

bowlhead99

Just to share a PM conversation for others' benefit.:

MystArch89 wrote:

I know i should be asking my solicitors opinion and which i have, but i feel like he's treating it lightly and fobbing me off thus im hoping for a second opinion or advice.

At the end of the day, you are paying him for his professional opinion, and have recourse if the advice is bad, so you should generally take and act on the advice.

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.

Sounds normal

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 you could give a bit of opinion?

Let's say you or one of your heirs sells in sixty years time. What would be the correct price in pounds in the year 2078? I suspect fixing or capping the price at £1000 is not high enough, as it might not even buy a loaf of organic bread or a point of rocket fuel for your flying car. Yet you would think it too high if you were selling next month. And pegging it to RPI or CPI won't work because house prices or legal work doesn't always move in sync with those measures.

Also, you don't know how complex it will be for the mgr company to complete the certification or management pack in 2028 or 2078. Maybe some regulations come into force in two years time meaning it gets more complex. Maybe there is some development on the estate which causes it to be more burdensome to give the information in 2025 Vs 2024, but then the problem goes away and it's easier in 2026.

It would be "fair" for them to charge you the appropriate (but not known today) price in the relevant year. If you demand a fixed price, the management company is onto a loser if they charge you the 2019 or 2026 price instead of the 2025, 2028 or 2078 price, so you are not going to get them to fix at a price that they expect to be below their cost. While for you, fixing now at worst-case scenario 2028 levels just in case the regulations charge for the worse and there's some complex corporate activity that year, would be silly

Should i insist that he negotiate with the seller solicitor for the mgmt fee to be set...

Not practical for reasons above

or agreeable,

"agreeable" as in you have to agree with what they want to pay else you get it for free? What if you refuse to be reasonable and agree?

The current position is that they will charge some amount that they think is not excessive for the work involved , while you will think it is unfair/ money for old rope, and you can challenge them in court if you can be bothered.

If you flip that around and say that they must charge you a number that *you* think is fair and if they don't like it they can challenge you in court, is not going to work. Because they will just say, we want £500, you want £100, we can't be bothered taking you to court, but we're not going to sign off on your house move until you pay up, so feel free to take us to court. And that's where you are already.

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.

Generally the other people buying on the estate will be in the same position with the same covenants on all of them and it's normal for the management company to sign off the property as compliant with the terms (and up to date with any service charge payments etc) at the time one of you wants to sell

Your solicitor knows there is no point trying to charge the developer's product to be different for you, to what it is for the other 99 of 100 houses on the estate. They would be on a hiding to nothing. You are engaging him as a conveyancer to convey the title of the property from the developer's name to your name, probably for a low fixed fee that means his conveyancing business actually loses money if he wastes the ten minutes I just spent writing this note, on writing this note himself. He is well over budget if he starts messing around trying to make the million or billion pound developer roll over.

If you want to engage him separately as your commercial negotiator to go and waste five hours at £200 p/h in a fruitless endeavour to change the terms, go right ahead, but it might be more efficient to throw £999 in the bin instead of spend that £1000. Also, if you're spend £1000 with your solicitor on that negotiating sweetener, what happens when the reply comes back that for an extra £200,000 they will waive all covenants on your property and then you won't need a certificate of compliance at £300 when you come to sell. You won't go for that anyway.

So, solicitor is saving a few minutes of his life in brushing you off and not spending time debating it with you, because the conclusion will be that you are stuck with it - and if you don't like the deal, don't buy. And it's hot outside so he wants to get down the pub at 6pm rather than do 10 mins of unpaid overtime explaining how it works.

MystArch89

Hi all,

Many thanks for the advice and insight into the things that you all have said.

Sorry to have seem to have made such a big fuss/pedantic requests over this issues, (FTB jitters i suppose). It was more of the fact that it was not revealed up front which i would have been more than happy for should it have been revealed straight up front from the developer - something along the line there's a nominal fee for post sale paperworks should u sell.

But all in all, I've finally come to an agreement with the Developer solicitors and they actually gave in or gave it as a gesture of good will i suppose to fix the mgmt pack price at 250+vat with no delay on exchange.

Hopefully my next purchase will be more smooth and seamless with me armed with all the armanent of what to check and ask straight up front.

Much appreciated again for everyone's time to reply to my thread! Big thank you to bowlhead for the long reply! Would have bought u a pint for that advice after 6pm should it be possible to give a beer to a reply ! :beer:

Hoploz

Well done, I think that's great. You weren't happy with something, you went through the necessary channels, and you got what you wanted. All power to you. Fantastic work!

DavidT67

Worth noting that the management company should be working for and controlled by the owner occupiers, not the developers. The directors of the management company ought to be nominated from the residents. They are then free to appoint a professional property management agent of their choice. If this is not the case and you and your fellow freeholders cannot control the company, elect directors and appoint agents, then you should stay well clear, effectively you are a leaseholder...

When our estate was complete, the developers handed control to the owners, we quickly realised the London based managing agent was ripping us off wholesale and dismissed them appointing a more trustworthy local agent.

MystArch89

Thanks for the advise David.

Yeap that is on one of my agenda things to do once completion is done and attending one of the mgmt member meeting. It seems the development still have another phrase which is yet to start, so most likely have to cope with the developer choice of mnging agent till the full phrase complete. But i have got written confirmation that the mgmt company will be assigned to a few resident directors once the estate is fully completed and the developer pulling out.