Vendor changing his mind re: lease

rlkk

I’m buying a flat that was advertised as having a share of the freehold. The estate agents told me it would also come with a new lease. I made my offer on this basis, and my mortgage offer is also dependent on a new lease being created prior to exchange. It seems like the vendor has changed his mind and now wants to sell the flat with the freehold for the whole building, and no lease at all (??!!).

My questions are:

1. Any idea how the mortgage company will react to this? Will they still consider lending on the property, or just withdraw the offer straight away?

2. Have I got any legal rights here? Either the vendor has misled the EA or the EA has misled me, which has led to me making an offer under false pretences and now potentially losing out on solicitors’ fees etc.

3. Can anyone give me an estimate of the cost of creating a new lease from scratch? (The other flat in the building has a short lease, which probably can’t be used as a template unless it’s amended quite a lot.)

AdrianC

rlkk wrote: »

I’m buying a flat that was advertised as having a share of the freehold. The estate agents told me it would also come with a new lease. I made my offer on this basis, and my mortgage offer is also dependent on a new lease being created prior to exchange. It seems like the vendor has changed his mind and now wants to sell the flat with the freehold for the whole building, and no lease at all (??!!).

There will still be a lease.
The only things that are changing sound like...
1. The "share" is going to be 100%, not whatever smaller proportion you expected.
2. The lease won't have been extended - but that's not an issue, because you can extend it yourself for minimal cost.

My questions are:

1. Any idea how the mortgage company will react to this? Will they still consider lending on the property, or just withdraw the offer straight away?

You'll need to speak to them, but if you're 100% freeholder, your lease is effectively academic. You can extend it whenever you like with whatever terms you like.

2. Have I got any legal rights here?

Yes. The vendor needs to conform to the contract of sale that's exchanged.

Have you exchanged contracts yet? If you have, then the lender have already agreed to whatever's in that contract.

Either the vendor has misled the EA or the EA has misled me, which has led to me making an offer under false pretences and now potentially losing out on solicitors’ fees etc.

But you're getting more than you thought you were, not less.

3. Can anyone give me an estimate of the cost of creating a new lease from scratch? (The other flat in the building has a short lease, which probably can’t be used as a template unless it’s amended quite a lot.)

You aren't creating a new lease from scratch. You're extending your existing one.
And you will have 100% control over the extension of that other flat's lease.
If and when it expires, ownership of it reverts 100% to the freeholder.

rlkk

Thanks, AdrianC, for such a detailed reply.

There really is no lease. My (very experienced!) solicitors are completely perplexed and haven’t ever encountered a flat with no lease before, hence me seeking advice on here. It all seems a bit dodgy!

Thankfully, I haven’t exchanged contracts yet. I suppose this is a blessing because I can still pull out, but also a curse because there’s nothing other than a few emails confirming that the vendor originally promised a lease.

Thanks again for your help, I really do appreciate your expertise.

AdrianC

Whether they did "promise" or not is irrelevant. Anything that gets discussed before exchange is just a discussion. It's what's in the contracts at exchange that matters.

davidmcn

What explanation has the vendor given for not wanting to grant a lease?

eddddy

In theory, the seller can sell the freehold to you, and you (or your solicitor) immediately create a lease.

So you will end up owning 2 things:

• The freehold of the building
• The leasehold of the flat

That might satisfy your mortgage lender. But having your solicitor draw up a lease might be expensive.

But if the lease on the other flat in the building is 'strange' or faulty, it might make drawing up a new lease for your flat difficult or even impossible.

On the plus side, if the other flat has a short lease, as freeholder of the building, you might get a 'windfall' when that lease is extended.

rlkk

davidmcn wrote: »

What explanation has the vendor given for not wanting to grant a lease?

He hasn’t given one, just said that he’s now selling the freehold and if I want a lease I can sort it out once I’ve bought the flat. My solicitor says it’s probably because he doesn’t want to pay for it.

rlkk

eddddy wrote: »

That might satisfy your mortgage lender. But having your solicitor draw up a lease might be expensive.

Any idea how expensive? I’ll ask my solicitor for an estimate on Monday, but are we talking thousands or tens of thousands? I’ll also ask my solicitors to track down a copy of the other flat’s lease asap.

Thanks for your help.

AdrianC

Hundreds, I'd have thought.

You can get the other flat's lease from LR for three quid.

rlkk

AdrianC wrote: »

You can get the other flat's lease from LR for three quid.

I’ve looked for the lease on LR before but can only see title register and title plan. Entirely possible that I’m missing something, very happy to be corrected if I’m being thick!

AdrianC

Are you looking at the right property?
The registered title for the other flat will be leasehold, though.