Deed of Surrender & Regrant

camparisoda

We live in a house converted into three flats, the three owner-occupiers have shared freehold. The basement is being sold and at the last moment the other two flats were sent a Deed of Variation and a Deed of Surrender and Regrant by a solicitor and told to sign. There was no explanation and it took a few days to work out what it was about, it turns out that under the front path is a storage room (probably the old coal storage) that is accessed through the basement bathroom, but is not on the deeds to the basement. Apparently the buyers' solicitor have made it a condition that the basement's deeds be redrawn to include the room. None of us know much about the law and were worried that signing might be to the detriment of the value of our shared freehold, although having done a little research it appears 'Surrender & Regrant' means the replacing of one lease with another our legal illiteracy made it sound like we were giving away a parcel of land that was owned by the three households. We asked if we could just keep the status quo where the basement have use of the room without our signing, and have been given a firm no.  As the room has no practical use to the other two flats we wonder if this is a formality and we should just sign, but as we read the contract it's all in legal language and we worry that there might be a 'surprise' in there. At the moment it would be difficult for us to raise the money for a good solicitor to properly read the contract. Just wondering if anyone has experienced this before and worried about walking into something we haven't 100% understood!

dogshome

Enter Management company are claiming my cellar belongs to them into the search box at the top of this page, and then scroll down to Page 3 - The fact that the newly offered lease wants to take over your bathroom which is the only entrance to the cellar, speaks volumes

Salemicus

Gosh, at first I thought this was about Tudor policy in Ireland.

It certainly sounds like you need independent legal advice. You are right to worry about the implications of what you are signing, including for purposes of mortgages, tax, etc. The owner of the flat being sold is the one who needs you to take an action here, and who has cash coming in from the sale, so you should require her to pay for an independent solicitor to advise you on this. If she won't, then I suggest politely declining to sign any papers that would affect your legal rights.

greatcrested

I too advise caution. Do not sign till you fully understand the practical, financial and legal implications. 

it would be difficult for us to raise the money for a good solicitor to properly read the contract.

Get a quote. Send it to the current basement owner and/or their solicitor, and request advance payment by them. This Surrender/Regrant is of absolutely no benefit to you, but potential huge benefit to the basement seller, so they should pay your costs. Arguable they should also pay to 'buy' the coal store. They are making their lease larger. The money would go to 'The Freeholder', so in reality would then be divided equally between the 3 flat owners who jointly own the freehold. How much? I can't say - you might need a surveyor to value it (again at the basement ownr's cost).

We asked if we could just keep the status quo where the basement have use of the room without our signing, and have been given a firm no. 

Of course you can keep the status quo. Simply by not signing. What the 'No' response means is that the basement owner will have difficulty finding a buyer willing to accept the status quo, or perhaps their buyer will have difficulty finding a mortgage lender willing to lend.

The fact that the newly offered lease wants to take over your bathroom which is the only entrance to the cellar, speaks volumes

Does not seem to apply. My understanding is that access to the underground 'coal store' is via the basement bathroom, so in practice the basement flat is the only one with access. Nonetheless, caution before formalising this.

sent a Deed of Variation and a Deed of Surrender and Regrant by a solicitor and told to sign.

'told' or 'asked'? If 'told' - very cheeky!

And are the terms of the re-grant identical other than inclusion of the coal store? Or are they also slipping in an extended lease length for example.......?

princeofpounds

Just to be clear, you are NOT the vendor of the basement right? You are one of the other two leaseholders who own shares in the freehold?

This is a serious legal contract - even if about relatively small matters - and you should seek advice before signing. It's unlikely to contain a surprise, but it could do. The vendor of the basement should pay your (as in you the freeholders) legal fees, as it is for their benefit alone. 

Yes, it is giving away something owned by the freehold, and technically it is giving away some value. But the value is likely utterly minimal, as it's a space that cannot be accessed by anyone except the basement flat, and you have been happy with their use for some time now. You and your neighbour can choose to a) give it away, b) refuse to give it away, or c) require a payment to give it away.

Option B will leave you with a basement neighbour who can't sell their property and hates your guts. Option A will leave you with a happy basement neighbour who will disappear into the sunset. Option C is fair but may still create a little friction. I'd choose A or C, and if you choose C, don't be greedy, and perhaps spend the money on improvements to communal areas so it benefits all the leaseholders.

This kind of situation isn't that unusual, but it's a shame that it's been approached in this manner by the vendor's solicitor.

camparisoda

Appreciate the good advice you have offered. Yes, we are the residents of the other two flats and not the vendors. The pressure from the vendors has intensified every day this week (although we only got the contract, minus explanation, at the end of last week when one of us was in hospital). We have taken the route of saying that we will not seek any financial incentive but that we will need them to pay for an independent solicitor to read, tell us the implications and confirm that it is ok to sign.

eskimalita7

Hi camparisoda
do you mind me asking how this progressed, please?