Special Condition?

goodValue

In my purchase contract, a special condition has been added:

The transfer to the buyer shall contain a provision that the covenant by the seller under section 4(1) (b) of the Law of Property

(Miscellaneous Provisions) Act 1994 is modified so that the seller is not liable for any subsisting breach of a condition or lessee's obligation relating to the physical state of the property which renders the lease liable to forfeiture.

Could someone please explain what this means, and are there any important implications.

davidmcn

For starters, presumably by this stage you've been told what the lease says - so is there "any subsisting breach of a condition or lessee's obligation relating to the physical state of the property"?

eddddy

If the solicitor has specifically added that condition, I suspect there might be a specific reason.

i.e. The seller has or hasn't done something which breaches the lease - and could result in the lease being forfeited (i.e. the freeholder could repossess the flat).

It could be that they haven't maintained/repaired the flat as required by the lease; or they've altered the flat in contravention of the lease; or they haven't laid carpet; or something else.

If you don't already know what they are referring to, perhaps ask your solicitor to make a pre-contract enquiry along the lines of  "Is the seller aware of any subsisting breaches of any conditions or lessee's obligations in relation to the lease?"

goodValue

It was the vagueness of the phrase that threw me.

Thanks for the excellenct advice.

eddddy

Just another thought - is the property being sold by somebody who has never lived in the property - like an executer or lender?

In that case, it may be because they don't know anything about the property and maybe haven't inspected the property thoroughly, and so can't be sure if anything has been done that breaches the lease.

In that case, it would be up to you to inspect the property and check.
 

goodValue

The vendor has lived there for ten years.

goodValue

Having read the Condition a number of times now, it seems to be saying:

if the seller has done something wrong, and has not yet been caught, then the buyer becomes responsible and can lose his/her lease

If so, why would a buyer agree to such a condition?

davidmcn

goodValue said:

Having read the Condition a number of times now, it seems to be saying:

if the seller has done something wrong, and has not yet been caught, then the buyer becomes responsible and can lose his/her lease

If so, why would a buyer agree to such a condition?

Because in general, that's what's happening anyway - you're buying the property with any problems which it already has. You're becoming the leaseholder. I think all that's saying is that you won't have the right to, in turn, get the vendors to reimburse you because of their default. Which might not be all that useful a right in practice anyway.

The question is firstly are there any such breaches?

eddddy

goodValue said:

Having read the Condition a number of times now, it seems to be saying:

if the seller has done something wrong, and has not yet been caught, then the buyer becomes responsible and can lose his/her lease

If so, why would a buyer agree to such a condition?

Yes - in theory, that's correct.

But you could say that in practice, it means...
If the seller has done something which breaches the lease, and if the freeholder finds out (perhaps because a neighbour complains), and if the freeholder decides to start enforcement action, you will have to discontinue the breach. If you refuse to discontinue the breach, the freeholder might take legal action, and if you still refuse, ultimately you could lose the lease.


So for example,

• If the breach was taking up carpets and laying laminate floors, you'd have to discontinue the breach re-laying carpet. (Some people might decide that they're happy to take that risk. i.e. Stick with the laminate floor and hope that nobody complains.)

• If the breach was failing to maintain or repair the flat according to the lease - you'd have to do the required maintenance/repairs

• If the breach was doing alterations/improvements without the freeholder's consent - you'd have to either get consent, or undo the alterations. (This can be a bit of a complex area. It depends on what the lease says, and what alterations/improvements have been done.)

But that still involves cost and hassle. So it's worth making the pre-contract enquiry I mentioned in the previous post, asking about breaches of the lease - and checking the lease versus the property yourself.

goodValue

I had already asked the solicitor to make an enquiry about this, though they previously had not been very helpful in explaining the issue.

I think I am beginning to understand the situation better now. When I realised that forfeiting the lease meant that you could lose the entire purchase price, the condition seemed non-sensical.

However, the new owner would have the opportunity to correct the breach before losing the property - is that correct?

I can see that the condition may have use for minor breaches, but is very one-sided if there is a breach that would be very costly to remedy.

I know I will now have to look up the conditions in the lease, but are there any particular breaches that have proved difficult/impossible to remedy?

davidmcn

goodValue said:

I know I will now have to look up the conditions in the lease, but are there any particular breaches that have proved difficult/impossible to remedy?

In reality no, people don't go around having their leases forfeited.