Offer on a house, wrong title

Mbrillow

Hi all,
thank you in advance for your help.
I am a first buyer and am putting an offer (likely to be accepted) for a coach house (4 years old).  I have a DIP with some lenders and contacted a few solicitors too.

I have been in contact with the EA and something came up. The property is a coach house with only one garage  (which is only for the owner of the house) and a driveway that leads to a small parking place, where 4 neighbours have their parking spots. Now, the house is supposed to be sold as freehold (no charge exists whatsoever) . However, the EA informed me that the previous solicitors had made a mistake and the title on the Land registry is leasehold, although the contract the current owner has, states it's a freehold. Now, I have queried this a lot, and he had come back saying that their current solicitors confirmed that the title is being rectified (supposedly in 2 weeks) and the  house will be sold as "complete freehold with right of way". Categorically excluding that the property is  a  flying freehold and leasehold. 
I have spoken with a couple of solicitors and they have just told me that they would need to start the application as a leasehold and change in due course. But I am not completely convinced and also don't know for what I should apply in terms of mortgage with lenders. The solicitors suggest that the EA should send across any paperwork that proves that the title is in the process of being corrected

Anybody can help on how it's best to proceed.  I am at the limit of my budget and  tempted to put  a conditional offer stating that I will complete the application for a mortgage and start solicitor and surveys only once the title is correctly transferred to freehold.  Anybody has experience on this?

Any other suggestions on what are the implications if the title is sold as leasehold and what would need to be done to rectify the title myself? 

Many thanks

AdrianC

What the EA say is a guideline. They don't do legals on the vendor's title. That's the buyer's solicitor's job.

What you are buying is what your solicitors turn up the true situation to be.

AnotherJoe

IANAL but seems to me, if there's a mistake and its put down as a leasehold when its a freehold, then acting as if its a leasehold and buying it and then changing it to a freehold seems "wrong", after all, you'd normally buy out the freehold - in this case, who from? And how could your existing solicitor go ahead buying a leasehold they know is wrong? My daughter recently bought a house. There was clear typo in the deeds, one bit referred to (say) section 28.1 when it clearly was 26.1 both from context and since there wasnt a section 28 let alone a sub clause 28.1. Her solicitor insisted on the sellers rectifying that first. Yours is much more serious..

So I'd be strongly inclined to go with the "rectify a mistake' route.

Also, as a FTB  you are likely  in a reasonable position to wait so just let the sellers solicitor get on with it?

pbartlett

When you get the contract to sign it will say what you are buying - the freehold or the leasehold. Talk to your solicitor and if you are minded to wait until the draft contract is drawn up that might be a solution.

eddddy

Mbrillow said:

Now, the house is supposed to be sold as freehold (no charge exists whatsoever) . However, the EA informed me that the previous solicitors had made a mistake and the title on the Land registry is leasehold, although the contract the current owner has, states it's a freehold. Now, I have queried this a lot, and he had come back saying that their current solicitors confirmed that the title is being rectified (supposedly in 2 weeks) and the  house will be sold as "complete freehold with right of way". Categorically excluding that the property is  a  flying freehold and leasehold. 

Are you sure you've got all this right? Is this a modern property?

I can believe that a dopey seller might be confused about which one of the following options they own:

1. A freehold building comprising of a coach house and garages
2. A leasehold coach house and garage
3. Both of the above 

But what you describe above is difficult to believe.

Could it be something to do with the seller originally owning just the leasehold coach house, then they bought the freehold of the building?  and either:

• They want their solicitors to merge the freehold and leasehold. (i.e. Extinguish the lease)?
• Or the freehold transfer hasn't been registered with LR yet?

What do you mean by "no charge exists whatsoever"? And did anyone mention a "flying freehold" or is that something that you came up with?

Mbrillow

Thank you all for the replies.
The EA told me  : " there was a clerical error and the title was registered to the land registry as leasehold. However this the new built was sold to him at freehold".  He assured me that indeed there was no ground rent, no maintenance charges or any other expenses associated. In  the following days  he came back to me saying that their solicitors were working in rectifying this and checking who owned the underpass. So at First he came back to me saying that there  it was  likely a flying freehold. At which I said I did not want to pursue and that it looked weird that there was no ground rent. Then the very next day he told me that the solicitor  had gone back to him and were sure is " a full freehold with a right of way". They also started some kind of process to rectify this, but he did not specify what.  Please note that the coach house  has only a garage (owned) and an underpass. no other garages.

My idea is to make a conditional offer so that I apply to the mortgage  and start paying the solicitors only once the land registry is rectified. 

davidmcn

You might be better to instruct your solicitors now if you want to make some sense out of the story, as at the moment it seems all you've got is Chinese whispers with a bit of spin by the EA. You can't just accidentally turn freehold into leasehold by a "clerical error".

Mbrillow

just to clarify , the driveway is an underpass

greatcrested

The seller is 'recifying' the mistake and the LR will action this 'in two weeks'.

So wait two weeks and then let your solicitor progress your purchase which will be on the basis of it being freehold.

If, on the other hand, it turns out it is in act leasehold (the EA may well be wrong), you can then either buy the lease, or walk away.

But getting involved in progressing buying a title that may or may not get changed, and may or may not change in 2, 3 or 12 weeks, seems daft.

rainbow_fountains

Make the offer, wait 2 weeks before you start ordering surveys etc and check the leasehold business has been sorted, if it hasn’t then find out what’s happening and withdraw your offer of necessary.

offers aren’t legally binding, you can withdraw them at any time, especially in the early stages

Mbrillow

I have been able to receive some additional paperwork from the estate agent, namely the contract of sale between the owner of the property and the developers. 
Basically what happened is the following: 

• the contract was signed with an additional provision (rider  I think it's called )  which clearly states that the builder would pass the freehold of the plot to the buyer on completion
  
• this was signed etc but  was never enforced when the sale happened and was registered, apparently human error. The owner never noticed because he did not pay any service charge, nor maintenance so realised only now
  
• both the owner and the developer (Bellway) solicitors who were in the original sale have left or retired therefore they are not able to speak to them
  
• however there is a contract and trail of paperwork confirming that sale was with transfer of freehold (for the whole plot, no flying freehold)
  

Now,  I understand the implications of this up to a point . In my mind I have different options

• depending on the implication of the above, I can go through with the sale  if you think this is feasible, and I will have the freehold once the mistake is fixed
• same as above but ask for a discount first to deal with the fact that is a leasehold and the transfer will happen in the future
• just  cancel the offer and move on 
  

The above will also have implications on the amount I can borrow I assume.  I am not even sure any lender will be open to this

Any advice?