We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Leasehold & Freehold - Unable to merge without losing rights of access.
FirstHouseMadness
Posts: 10 Forumite
So,
I have had an offer accepted on my potential first home, and as we approach the final steps, it comes to light that there is both Leasehold & Freehold owned by the current owner, when I put in a full asking price offer on the pretence that it was solely freehold. The house is the middle property on a three house shared driveway.
At first, when questioned, the sellers conveyancer described there to be “no benefit of merging the titles” describing this to be the reason why they were still separate and had been kept separate all this time. However as described below, it seems that should the titles be merged, the access rights (stated only in the leasehold and not in the freehold) would be lost and it is unlikely that I would be able to get the rights transferred from the Leasehold to the Freehold upon merging.
The Leasehold access right outline the right to pass and repass over the first house of three on a shared driveway, the house I'm wanting to buy being the middle property, with one more house beyond, which requires access over both the first house, and the land of the house I want to buy. Both of these houses have some rights written into their freeholds which seem to have been merged at the same time (1988), note that the houses were built somewhere after 1985 but not before 1988.
I am concerned that this could well put people off the purchase in the future when I come to sell the property, regardless of my choice. I have been presented with a series of options that I could pursue, but I am wondering whether I should just consider finding another property as it seems the seller and his conveyancer are unwilling to pursue these desired changes/merging of titles and would in fact rather take their chances at putting it back on the market, meaning I will be taking the responsibility and risk on myself.
I desperately need some advice from anyone who could offer it as I’m currently very unsure even with my solicitors input, I still fear that I could well be lumbered with a difficult-to-sell property. One thing to note is that the property has previously sold multiple times over the last 15 years or so, and the situation hasn’t changed, so people must have been happy with the situation in order to make the purchase previously. Furthermore, it seems the lease would expire automatically in or around 2085 and as stated below, I would not be able to renew the lease without a “vehicle” as I cannot renew a leasehold against myself. How could this effect future buyers views on the property?
Please see below the options currently stated by my solicitor, and an explanation of the position as it stands below:
Merging Freehold and Leasehold titles
As you can see, there are both leasehold and freehold titles for this property - this has usually oc- curred because the developers originally sold the property as a leasehold house but have sub- sequently sold the freehold title to the owners as well. Both titles are owned by the seller as you know. We have discussed this at length, particularly because the shared access right is only present in the Lease and not noted in the freehold title.
You have several choices with regard to this:
1. You can leave the matter as it currently is. This would mean that the right to use the front access is preserved in the leasehold title.
2. You can leave the matter as it currently is and add the protection of an indemnity insurance policy which would alleviate any concerns that the right of access is ambiguous. I would suggest that the policy is one which covers future owners and their lenders, and which has an in- creasing limit of indemnity to take account of the property rising in price.
3. You can ask the current owner to merge the titles. This would close the leasehold title register, but the rights contained in the Lease would still exist until the Lease expires (there is case law to confirm this). This may take some time as the current owner has a mortgage and the lenders consent would be required. Your deeds would need to contain details of the reasoning for doing this, and confirmation of the case law behind the rights continuing in order for a new buyer to understand the position as quickly as possible when you come to sell.
4. You could ask the current owner to merge the titles (see 3 above) and ask them to request that the Land Registry bring the rights form the Lease over to the freehold title. I have no experience with this type of request, but have been advised by the seller's conveyancer that, in his experience, the Land registry refuse because they believe that the case law adequately deals with the situation.
5. You could ask the current owner to merge the titles (see 3 above), with or without the additional request to the Land Registry (see 4 above) and add the protection of indemnity insurance (see 2 above).
6. You could complete the purchase on the basis of (1) or (2) above and then, when we apply for your ownership to be registered at the Land registry, we also apply for the titles to be merged. As this would be done in the fraction of time before your mortgage is registered, your lenders consent would not be required. Your deeds would still need to explain the position with regard to the right of access, as per the final sentence of point (3) above.
7. You could proceed as per 6, but add the protection of indemnity insurance (see 2 above).
8. You could proceed as per (1) or (2) but after completion approach the neighbour(s) to agree a Deed of Easement clarifying the rights and responsibilities for the shared access. The Deed would need to be registered at the Land Registry against all the properties involved, and this would require the consents of any mortgage lenders. I have advised that I would draw this up and act for you in this respect, following completion, at a cost of £200+VAT and any disbursements. Any indemnity insurance policy obtained as per (2) would probably be invalidated by this exercise, but would not be needed in any event if the Deed is in place.
9. You could proceed as per (1) (2) or (8) and then extend the Lease. As I mentioned, this would be a slightly complicated exercise as you cannot grant a Lease to yourself, so you would have to grant it by or to a management company or some other vehicle or person. It's not impossible though.
The legal system is unfortunately a matter of opinions and interpretations, and there is no 'right' answer as to how to deal with this, nor is there any guarantee that a future lawyer or buyer would agree with the actions taken. However, I have dealt with properties with access rights issues and resolved them successfully with indemnity insurance. I have acted for buyers and sellers with properties with two titles and have sometimes merged the titles, and sometimes not, depending on the rights etc involved. My advice would be to proceed as per (2) and then (8) if you believe the neighbours would be willing to engage.
REPORT ON TITLE
Rights to which Property is Subject In addition to the rights which the property has which are referred to above, the property is itself subject to certain rights enjoyed over it by adjoining and neighbouring properties. These are listed in clauses XX and XX of titles XXXXXXXX and XXXXXXXX (TITLES HIDDEN FOR OBVIOUS REASONS). As you will see these give the owners of other properties specific rights over the Property, which may affect your plans for the property. You will need to bear these in mind. Please read through the various rights etc (both for and over the property) affecting the Property. If you would like any further information about these aspects please contact us. Bear in mind that your solicitor has not visited the Property, so you must advise us if you believe that the Property may be subject to rights that we have not mentioned in this Report.
So, what should I do?
I have had an offer accepted on my potential first home, and as we approach the final steps, it comes to light that there is both Leasehold & Freehold owned by the current owner, when I put in a full asking price offer on the pretence that it was solely freehold. The house is the middle property on a three house shared driveway.
At first, when questioned, the sellers conveyancer described there to be “no benefit of merging the titles” describing this to be the reason why they were still separate and had been kept separate all this time. However as described below, it seems that should the titles be merged, the access rights (stated only in the leasehold and not in the freehold) would be lost and it is unlikely that I would be able to get the rights transferred from the Leasehold to the Freehold upon merging.
The Leasehold access right outline the right to pass and repass over the first house of three on a shared driveway, the house I'm wanting to buy being the middle property, with one more house beyond, which requires access over both the first house, and the land of the house I want to buy. Both of these houses have some rights written into their freeholds which seem to have been merged at the same time (1988), note that the houses were built somewhere after 1985 but not before 1988.
I am concerned that this could well put people off the purchase in the future when I come to sell the property, regardless of my choice. I have been presented with a series of options that I could pursue, but I am wondering whether I should just consider finding another property as it seems the seller and his conveyancer are unwilling to pursue these desired changes/merging of titles and would in fact rather take their chances at putting it back on the market, meaning I will be taking the responsibility and risk on myself.
I desperately need some advice from anyone who could offer it as I’m currently very unsure even with my solicitors input, I still fear that I could well be lumbered with a difficult-to-sell property. One thing to note is that the property has previously sold multiple times over the last 15 years or so, and the situation hasn’t changed, so people must have been happy with the situation in order to make the purchase previously. Furthermore, it seems the lease would expire automatically in or around 2085 and as stated below, I would not be able to renew the lease without a “vehicle” as I cannot renew a leasehold against myself. How could this effect future buyers views on the property?
Please see below the options currently stated by my solicitor, and an explanation of the position as it stands below:
Merging Freehold and Leasehold titles
As you can see, there are both leasehold and freehold titles for this property - this has usually oc- curred because the developers originally sold the property as a leasehold house but have sub- sequently sold the freehold title to the owners as well. Both titles are owned by the seller as you know. We have discussed this at length, particularly because the shared access right is only present in the Lease and not noted in the freehold title.
You have several choices with regard to this:
1. You can leave the matter as it currently is. This would mean that the right to use the front access is preserved in the leasehold title.
2. You can leave the matter as it currently is and add the protection of an indemnity insurance policy which would alleviate any concerns that the right of access is ambiguous. I would suggest that the policy is one which covers future owners and their lenders, and which has an in- creasing limit of indemnity to take account of the property rising in price.
3. You can ask the current owner to merge the titles. This would close the leasehold title register, but the rights contained in the Lease would still exist until the Lease expires (there is case law to confirm this). This may take some time as the current owner has a mortgage and the lenders consent would be required. Your deeds would need to contain details of the reasoning for doing this, and confirmation of the case law behind the rights continuing in order for a new buyer to understand the position as quickly as possible when you come to sell.
4. You could ask the current owner to merge the titles (see 3 above) and ask them to request that the Land Registry bring the rights form the Lease over to the freehold title. I have no experience with this type of request, but have been advised by the seller's conveyancer that, in his experience, the Land registry refuse because they believe that the case law adequately deals with the situation.
5. You could ask the current owner to merge the titles (see 3 above), with or without the additional request to the Land Registry (see 4 above) and add the protection of indemnity insurance (see 2 above).
6. You could complete the purchase on the basis of (1) or (2) above and then, when we apply for your ownership to be registered at the Land registry, we also apply for the titles to be merged. As this would be done in the fraction of time before your mortgage is registered, your lenders consent would not be required. Your deeds would still need to explain the position with regard to the right of access, as per the final sentence of point (3) above.
7. You could proceed as per 6, but add the protection of indemnity insurance (see 2 above).
8. You could proceed as per (1) or (2) but after completion approach the neighbour(s) to agree a Deed of Easement clarifying the rights and responsibilities for the shared access. The Deed would need to be registered at the Land Registry against all the properties involved, and this would require the consents of any mortgage lenders. I have advised that I would draw this up and act for you in this respect, following completion, at a cost of £200+VAT and any disbursements. Any indemnity insurance policy obtained as per (2) would probably be invalidated by this exercise, but would not be needed in any event if the Deed is in place.
9. You could proceed as per (1) (2) or (8) and then extend the Lease. As I mentioned, this would be a slightly complicated exercise as you cannot grant a Lease to yourself, so you would have to grant it by or to a management company or some other vehicle or person. It's not impossible though.
The legal system is unfortunately a matter of opinions and interpretations, and there is no 'right' answer as to how to deal with this, nor is there any guarantee that a future lawyer or buyer would agree with the actions taken. However, I have dealt with properties with access rights issues and resolved them successfully with indemnity insurance. I have acted for buyers and sellers with properties with two titles and have sometimes merged the titles, and sometimes not, depending on the rights etc involved. My advice would be to proceed as per (2) and then (8) if you believe the neighbours would be willing to engage.
REPORT ON TITLE
Rights to which Property is Subject In addition to the rights which the property has which are referred to above, the property is itself subject to certain rights enjoyed over it by adjoining and neighbouring properties. These are listed in clauses XX and XX of titles XXXXXXXX and XXXXXXXX (TITLES HIDDEN FOR OBVIOUS REASONS). As you will see these give the owners of other properties specific rights over the Property, which may affect your plans for the property. You will need to bear these in mind. Please read through the various rights etc (both for and over the property) affecting the Property. If you would like any further information about these aspects please contact us. Bear in mind that your solicitor has not visited the Property, so you must advise us if you believe that the Property may be subject to rights that we have not mentioned in this Report.
So, what should I do?
0
Comments
-
Edit: Post edited to remove incorrect year.0
-
I don't get why leaving it as it is is an issue?
You own both the LH and FH so when in the future you want to 'extend' the lease with you agree with yourself a sum of 1p to extend the lease and away you go!Those who risk nothing, Do nothing, achieve nothing, become nothingMFW #63 £0/£5000 -
The issue is that, the LH cannot be extended as I would own it, it has been described to me that you cannot extend a lease to yourself (as described by both my sides solicitors and the seller). Therefore, I am stuck with a decision of whether to merge the titles and lose the rights (they would still remain in law until the lease expires - then what? no access rights at all!) or leave the titles separate and risk another prospective buyer wondering why the paper trail is such a mess and why the rights are in one place and not the other.
I have tried to explain the best I can but my knowledge is limited and I worry I could be buying a problematic house, although perfect in so many ways, could end up being a real burden if I want to sell up quickly.0 -
Fair enough I didn't know you can't extend the lease to yourself.
In thats case I'm sure someone more knowledgeable will be along soon to helpThose who risk nothing, Do nothing, achieve nothing, become nothingMFW #63 £0/£5000 -
The real concern is whether this is going to put off future buyers when they see both FH & LH titles attached to one property, and then see that the access rights are only present in the LH, when that expires all rights expire with it... its very confusing for me and this is what's making me apprehensive at this stage.0
-
Go for option 10.
Seriously, what do you expect a bunch of amateurs you've never met, with dubious senses of humour, to add to what your paid-for legal adviser has said?
He has summed up the legal position, outlined the options and suggested combinations of options.
If you have doubts about what he has said, or need further clarification, go in and see him. Sit down face-to-face and discuss the pros and cons.
Then decide.0 -
Go for option 10.
Seriously, what do you expect a bunch of amateurs you've never met, with dubious senses of humour, to add to what your paid-for legal adviser has said?
He has summed up the legal position, outlined the options and suggested combinations of options.
If you have doubts about what he has said, or need further clarification, go in and see him. Sit down face-to-face and discuss the pros and cons.
Then decide.
Fair point, and I understand why this would be the common sense option.
I am faced more with a decision of whether this is a risk most people would take, am I being overly cautious or is this situation one that is similar to many others experiences, I'm trying to build the best picture I can before making my decision and this was my last ditch effort, posting on here, to try to determine whether it really is something that would make a buyer look twice.0 -
Arguably by posing the question here you are in essence answering it.
If you are questioning the wisdom of purchasing into this legal scenario, then inevitably there will be some other buyers who pose a similar question when you come to sell.0 -
Will your mortgage be secured against the freehold title, the leasehold title, or both?
A possible work around for the lease might be:
1) At 1pm you purchase the freehold;
2) At 1:01pm you, as freeholder, grant an extension to the lease (which is still owned by the seller);
3) At 1:02pm you purchase (take an assignment of) the newly extended lease.
Therefore the lease extension was between 2 separate parties and your solicitor can register the transfer of the freehold, the lease extension and the transfer of the lease.
The reason for asking about the lender is that extending the lease will close the existing leasehold title and open a new one, so the lender would have to secure the funds against the new title number, not the old one.0 -
The freehold... Is it JUST for this one leasehold property? Or is it the freehold for the entire block of three leaseholds?0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.9K Banking & Borrowing
- 253.9K Reduce Debt & Boost Income
- 454.7K Spending & Discounts
- 246K Work, Benefits & Business
- 602K Mortgages, Homes & Bills
- 177.8K Life & Family
- 259.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards