Victorian house in Sheffield is freehold but subject to a lease

anathematician

Update from vendor's solicitor (via the estate agent):

"Further to our telephone conversation the lease is unfortunately unavailable from the Land Registry, this is likely due to it’s age (1899) and the fact the freehold for the property has been registered since 1986.  With this in mind we can offer the buyer a Missing Document Indemnity Insurance Policy. 

As you are aware the buyer’s solicitor is requesting we remove the lease from the freehold title.  This is not necessary nor really recommended as a lease is noted on a freehold title when there are still easements applicable to the property.  If the lease was removed then the buyer would not have the benefit of these easements (albeit we cannot clarify what these are as the lease is not available to be reviewed but in any event the buyer still has the benefit of these).  The covenants contained in the lease will no longer be applicable as the owner of the property is effectively their own landlord and covenants in a lease are only valid when the freehold and leasehold are owned separately."

Am I right in thinking that the wording of this makes it sounds like the vendor owns the leasehold ('the owner of the property is effectively their own landlord')?

AdrianC

They're working on the assumption that the vendor owns both freehold and leasehold, yes. But they can't prove it.

greatcrested

AdrianC said:

They're working on the assumption that the vendor owns both freehold and leasehold, yes. But they can't prove it.

Yes.

But I don't see how that would help/work if a leaseholder later turned up with good title to the lease? They would have rights too!

AdrianC

And since the lease was valid, even adverse possession would be no use.

It's certainly a good demonstration of exactly why to cancel the lease if you buy the freehold to your previously-leasehold property...

OP - none of this helps you, of course.
You have two choices.
1. Accept the risk, buy the property, and - as owner - work towards correcting this anomaly.
2. Walk.

I think I'd be inclined towards 1, but with the prospect of a healthy discount to the unblighted-title value, to cover me for risk/expense/time/blood-pressure in the future. If the value was not open for discussion, I'd be leaning towards 2.

greatcrested

Plus the indemnity insurance too. As explained, that protects you financially, but not from the loss of the home with all the inconvenience, emotional upheaval etc.

davidmcn

greatcrested said:

Plus the indemnity insurance too. As explained, that protects you financially, but not from the loss of the home with all the inconvenience, emotional upheaval etc.

On the other hand, indemnity insurance would only be available because the insurers think the risk is sufficiently minuscule to cover it for a one-off premium of a couple of hundred quid. In practice, any would-be leaseholder who appears from the woodwork is hardly likely to actually want occupancy of the property, they'll just want enough cash to shut them up.

AdrianC

davidmcn said:

greatcrested said:

Plus the indemnity insurance too. As explained, that protects you financially, but not from the loss of the home with all the inconvenience, emotional upheaval etc.

On the other hand, indemnity insurance would only be available because the insurers think the risk is sufficiently minuscule to cover it for a one-off premium of a couple of hundred quid. In practice, any would-be leaseholder who appears from the woodwork isn't hardly likely to actually want occupancy of the property, they'll just want enough cash to shut them up.

Indeed.

Work backwards from the premium, and subtract tax, the solicitor's mark-up, the marketing and admin costs... and you're left with a good indication of how unlikely they know it is to ever pay up.

anathematician

Thanks all. The EA is saying that 'the lease is now void as the house is freehold and the freehold over rides the lease and the freehold is owned by the seller.' I'd love that to be true, but from what you're all saying it's not that simple.

I suppose it comes down to a calculated risk on my part. It's annoying, because I've already tried buying a leasehold flat on two separate occasions, both of which fell through. I assumed buying a freehold house would be straightforward. If anything this is the most complicated of all of them.

greatcrested

anathematician said:

Thanks all. The EA is saying that 'the lease is now void as the house is freehold and the freehold over rides the lease and the freehold is owned by the seller.' I'd love that to be true, but from what you're all saying it's not that simple.

I suppose it comes down to a calculated risk on my part. It's annoying, because I've already tried buying a leasehold flat on two separate occasions, both of which fell through. I assumed buying a freehold house would be straightforward. If anything this is the most complicated of all of them.

Maybe things work differently up north, but that sounds like either an ignorant EA, or a deliberately misleading one who just wants to allay your fears so the sale moves forward.

Every leasehold has an asociated freehold!

The freeholder owns the land, and the strucural bricks and mortar of the building.

The leaseholder owns the right to live inside the building (or in the case of a block of flats, in one of the flats within the building, for a period of time.

The freehold does not 'over ride' the lease.Indeed arguably the other way round. The lease over rides the freeholder's right to occupy the building (or part of the building).

I agre with David and others above in that if a leasholder did appear, the chances are they'd want paying off rather than sudenly wanting occupation. My example was worst case.....

davidmcn

anathematician said:

Thanks all. The EA is saying that 'the lease is now void as the house is freehold and the freehold over rides the lease and the freehold is owned by the seller.' I'd love that to be true, but from what you're all saying it's not that simple.

I suppose it comes down to a calculated risk on my part. It's annoying, because I've already tried buying a leasehold flat on two separate occasions, both of which fell through. I assumed buying a freehold house would be straightforward. If anything this is the most complicated of all of them.

You should of course be taking advice from (your) legal expert, not (the vendor's) used-house salesperson, who in this instance is talking rubbish.

And assuming that insurance is provided, it's really the insurers' (tiny) risk, not yours.