Help due to complete in 2 weeks. Freehold/Deed problem

ruby2

Please could anyone help me with the following?

I have exchanged contracts and am due complete the sale of my home on the 26th of this month.

I am in the process of buying a flat. The flat was advertised as having a share of the freehold. However this quarter share was not held in a trust or management company.

I received a verbal commitment that the all participants agreed to set up a management company once I had bought. Not really worth much but I trusted the seller and decided to proceed.
There are 4 people sharing the freehold and one leaseholder that has a beneficial interest.

My solicitor has been aware all along that my aim is to get the management company set up as soon as possible, as I am really scared of the risk of having a property with out this safety net and the problems with getting mortgage on flat were no management company exists.

I am paying cash and as much as I hope I will live there for many years. Following the death of my partner I feel that nothing is certain. Therefore if I needed/wanted to sell in the future I would like to know that it would be possible and that I would not have wait for a cash buyer.
However today I have just received a proposed deed of trust. That would move the share of the freehold of the flat I am intending to buy to another leasehold owner in the block and that I would become a beneficiary of the deed of trust.

I have tried to discuss this with my Solicitor/Conveyancer however she is off sick. Which seems to be the case for a lot of the time that my sale and this purchase has been going through.

So my concern/ questions are

1. Am I right about the problems I may incur if I had to sell. And no management company existed?

2. If verbally it has been agreed in principle to set up a management company why would present leaseholder and the existing freeholders want me to accept a beneficial interest rather than the share of the freehold? As once a management has been set up, everyone could have a share of the freehold via the company. Does this proposed set up indicate that really there is no intention of setting up a management company?

I am sorry this post is long winded. But I am really panicking. Please if anyone has any info or ideas please reply.

Doozergirl

I don't really understand. Who is registered as owning the Freehold with the Land Registry if it is shared and they haven't formed a company?

I don't understand why you have exchanged contracts knowing that the problem existed. If the title is defective, a mortgage company will not like it at all.

ruby2

Hi Doozergirl

I had to agree to the sale of my home. No choice. The sale completes in two weeks.

I am due to exchange next week on the purchase of a flat and complete the purchase on the same day as my sale.

The flat I am buying is one of 5.

Due to there not being as Management Company.

The seller has a ¼ share of the freehold, so four people registered with the Land Registry. The fifth owners is represented by a beneficial deed of trust.

IE only four people can be registered as owning the freehold.
So the 5th owner is included by the deed of trust.



If they are committed to setting up a management company. Why is the existing person with the deed of trust/beneficial interest? So keen to replace my seller on the deeds and for me to become the one with the beneficial interest.

Is there any difference between a share of the freehold or a beneficial interest?

Once a Managemt Company is set up. It would own the freehold and all five owners would own the Management Company.
So it beomes the share of the company and not the actual freehold that becomes the way to pass on ownership. Mmuch better all round.

Richard_Webster

If there are more than 4 flats, as the law prevents being registered as proprietors of a property at the Land Registry, so only 4 of them have to be registered as trustees for all of them. That is no big deal in itself - but see next paragraph.

If OP is concerned that the freehold should be transferred to a Company owned by the lessees, then either this should have been sorted before contracts were exchanged or the risk that it will never happen accepted.

See this thread for a serious of threads setting out some of the issues involved with shared freehold:

http://www.houseweb.co.uk/house/forum/Forum1/HTML/000278.html

ruby2

Richard. Thank you for your reply.

Although I understand that people may refuse to set up a Mmanagement Company.
I really cannot understand why anyone would have reason to, as it safeguards everyone.

Doozergirl

Sorry, ruby, I misunderstood when you said you had exchanged contracts. I thought you meant that you had exchanged on the flat.

I agree with you. If everyone were happy with the situation, then why would one tenant want to change names at the Land Registry. It may well be that there is nothing wrong with it, but it obviously doesn't sit entirely happy with at least one other tenant in the block.

I would make it a simple condition of sale that a management company is formed to own the freehold and that you all own equal shares. Solves the problem forever. The other tenants may all come across this when they come to sell. Involves some expenditure, but shared between five it shouldn't be too painful.

ruby2

Hi Doozergirl

Thank you for your reply.

Even if they agreed would it be possible to set up a management company in two weeks?

My instinct had been that they are Ok people but really do not understand the situation. I had hoped that once there I could explain it and get their agreement.

I live 200 miles away so anable to talk to them face to face at present.