Leasehold and freehold on house

LisaPeters

I am at the point of signing the contract for a house sale, the house was advertised as freehold, it transpires that it is freehold but also has a lease with 15 years left. The lease is missing and the seller has provided an indemnity for this. Should this have been picked up by my conveyancer earlier? Should I be very concerned by the lease?

Titus_Wadd

If you're buying the freehold the lease will just time-out in 15 years; but you must be sure that you are buying the freehold (and ideally the leasehold).  All leasehold properties also have a freehold, usually owned by someone else to whom the property will revert when the lease runs out.

davidmcn

LisaPeters said:

I am at the point of signing the contract for a house sale, the house was advertised as freehold, it transpires that it is freehold but also has a lease with 15 years left. The lease is missing and the seller has provided an indemnity for this. Should this have been picked up by my conveyancer earlier? Should I be very concerned by the lease?

What advice has your solicitor given on this? Are you buying the leasehold too or is it in the name of a third party? Does the lease give you any rights which aren't included in the freehold?

LisaPeters

David, the solicitor has not mentioned anything about this prior to sending the documents to me to sign so it was a bit of a shock!

LisaPeters

Titus_Wadd said:

If you're buying the freehold the lease will just time-out in 15 years; but you must be sure that you are buying the freehold (and ideally the leasehold).  All leasehold properties also have a freehold, usually owned by someone else to whom the property will revert when the lease runs out.

I thought the house would revert to the ownership of the leaseholder at the end of the lease?

LisaPeters

davidmcn said:

LisaPeters said:

I am at the point of signing the contract for a house sale, the house was advertised as freehold, it transpires that it is freehold but also has a lease with 15 years left. The lease is missing and the seller has provided an indemnity for this. Should this have been picked up by my conveyancer earlier? Should I be very concerned by the lease?

What advice has your solicitor given on this? Are you buying the leasehold too or is it in the name of a third party? Does the lease give you any rights which aren't included in the freehold?

David, the solicitor has not mentioned anything about this prior to sending the documents to me to sign so it was a bit of a shock!

Titus_Wadd

The lease just gives the lease-owner rights for that remaining period - the right to dwell in the house, but the freeholder owns the plot of land and anything built on it.  If you are only buying the 15 year leasehold, that's how long you can live in the house for the purchase price.  If you're buying the freehold the missing lease may not be an issue but ask your solicitor what it all means.  Will the missing lease hold up the purchase of the freehold?  (Don't buy a leasehold with only 15 years remaining without finding out how much it would cost to extend the lease).

LisaPeters

Titus_Wadd said:

The lease just gives the lease-owner rights for that remaining period - the right to dwell in the house, but the freeholder owns the plot of land and anything built on it.  If you are only buying the 15 year leasehold, that's how long you can live in the house for the purchase price.  If you're buying the freehold the missing lease may not be an issue but ask your solicitor what it all means.  Will the missing lease hold up the purchase of the freehold?  (Don't buy a leasehold with only 15 years remaining without finding out how much it would cost to extend the lease).

Solicitor has just said 'You will be purchasing the freehold subject to a lease' and 'most likely at some point the leaseholder bought the freehold, the freehold was then registered but the leasehold remained unregistered and subsequently the lease has been lost. On expiration of the lease term the interest will cease and you will own the freehold which will no longer be subject to the lease.

m0bov

Should have been picked up at the start of the process. Should ne in the legal pack. Ask why.

davidmcn

LisaPeters said:

Titus_Wadd said:

The lease just gives the lease-owner rights for that remaining period - the right to dwell in the house, but the freeholder owns the plot of land and anything built on it.  If you are only buying the 15 year leasehold, that's how long you can live in the house for the purchase price.  If you're buying the freehold the missing lease may not be an issue but ask your solicitor what it all means.  Will the missing lease hold up the purchase of the freehold?  (Don't buy a leasehold with only 15 years remaining without finding out how much it would cost to extend the lease).

Solicitor has just said 'You will be purchasing the freehold subject to a lease' and 'most likely at some point the leaseholder bought the freehold, the freehold was then registered but the leasehold remained unregistered and subsequently the lease has been lost. On expiration of the lease term the interest will cease and you will own the freehold which will no longer be subject to the lease.

Right, so you're not buying the leasehold, and they've got the indemnity insurance to cover the risk of the leaseholder appearing out of the woodwork and wanting to reoccupy the property. Would be good to know more about the history i.e. how long ago did the lease stop being transferred with the freehold, though if they've managed to get insurance then at least you know they've convinced the insurers that the risk is minimal.

AdrianC

LisaPeters said:

Titus_Wadd said:

If you're buying the freehold the lease will just time-out in 15 years; but you must be sure that you are buying the freehold (and ideally the leasehold).  All leasehold properties also have a freehold, usually owned by someone else to whom the property will revert when the lease runs out.

I thought the house would revert to the ownership of the leaseholder at the end of the lease?

Other way round...
The freeholder owns the land, the building, etc.
The freeholder can grant a lease to a leaseholder, giving them the right to occupy subject to the terms of the lease, for the duration of the lease.
When the lease expires, the leaseholder's interest in the property ceases, and it reverts to the freeholder.

You, by the sound of it, are buying the freehold.
Somebody else may or may not own the leasehold for the next 15 years.
There's an indemnity policy in place to cover the small risk of them coming forward.
Indemnity policies tend to be dirt cheap, open-ended, and still profitable for the insurer behind it... which tells you all you need to know about the risk of them needing to pay out.

Are you buying with a mortgage? Are the lender happy with the situation?