Solicitor did not disclose information to Lender

BMilo1

Long story short, 2 years ago when going through the process of trying to sell our property, the potential buyer's solicitor and lender (same lender as us) queried a doubling ground rent clause in the lease. The sale fell through as the freeholder wasn't willing to enter into a Deed of Variation. The lease has 147 years remaining, ground rent currently stands at £175 per year but doubles every 15 years (due to double in 2030). Being first time buyers when we purchased the property in 2015, we assumed the doubling ground rent clause wouldn't have any implications for us as we were only planning on living in the property for 3 years at most, so wouldn't own the property long enough for the ground rent to double.
The fact that the potential buyer was using the same lender as us and was rejected based on these terms prompted me to check through our mortgage documents. It turns out that the solicitor did not submit any information of the onerous lease terms to the lender. Could anyone give me any advice/experience in dealing with this predicament? I've checked the CML handbook and it is a requirement that any onerous lease terms are communicated to the lender. Do we need to tell the lender? Was it the solicitor's job to highlight this to the lender? Can our mortgage be withdrawn? Sorry for all the questions but we're currently stuck in a property we can't sell unless we extend the lease through the statutory route (adding 90 years and reverting the ground rent to peppercorn).

Many thanks in advance.

davidmcn

BMilo1 wrote: »

I've checked the CML handbook and it is a requirement that any onerous lease terms are communicated to the lender.

Did the handbook say the same thing at the time you bought, and would those terms have been considered onerous at the time?

Do we need to tell the lender?

No.

Was it the solicitor's job to highlight this to the lender?

Potentially. But if they've failed to do so, that's a matter between the solicitor and the lender. Whether they should have warned you against it is a different matter.

Can our mortgage be withdrawn?

No.

Although I can't answer the question, bear in mind that what is considered marketable, and lenders' requirements, do change over time - so it's not necessarily remarkable that the same lender is now refusing to lend on something which they might have accepted in the past.

anselld

It was your solicitors responsibility to tell the lender, however there was less hype about onerous lease terms back then and they may not at that time have considered it onerous.

The mortgage lender cannot do anything now though as far as your mortgage is concerned.

You may need to consider a statutory lease extension to kill off the ground rent but it will be expensive.

rachel230

The doubling clause in your lease is now being recognised as onerous lease terms.. This is now being recognised as a scandal and as you have unfortunately discovered makes selling your home extremely difficult. People who are trapped in their homes because they are unable to sell due to the lease being onerous, are now advised to sue their conveyancer. Did you use the one recommended by the developer? (If new build).
The National Leasehold Campaign Facebook group was set up specifically to campaign against onerous leases. Join them. You will get good advice.Many are part of a class action against the conveyancers who did not explain to their clients about doubling clauses/onerous leases.

BMilo1

Thanks for your replies! I believe the lender did specify at the time that they should be made aware of any onerous lease terms. I am actually looking in to claiming for professional negligence from the original solicitor at the moment - solicitor is currently going through the motions as there were a couple of other things the original solicitor didn’t advise us on. I have been a member of the National Leasehold Campaign on Facebook for some time! They are great! Our property isn’t a new build - the reason for this whole dilemma is that the seller actually extended the lease informally with the freeholder around the time of us completing the purchase. We just want this whole ordeal to be dealt with to be honest as we want to move on a start a family!

rachel230

The National Leasehold Campaign are great. They have built up a large following and are really raising awareness of leasehold scandals including uncapped and unregulated service charges. The government backed "Help to Buy" scam has a lot to answer for!

da_rule

Maybe serving a section 42 notice on the landlord might make them reconsider their opinion on not varying the lease, if they think they’re going to lose the ground rent altogether.

Obviously make sure you get a valuation first. Also, you could use the cost of the extension as evidence of your financial loss (the cost you’ve had to incur to get a marketable lease), should your negligence claim go anywhere.

BMilo1

If I were to extend the lease through the statutory route how much would this cost? Lease Extension calculators do not take into account doubling ground rent! 147 years remaining, ground rent doubles every 15 years - current ground rent is £175 per year with the first double being in 2030.