Buying a property with 2 titles

Gwalker

I have had an offer accepted for a property and information provided by my conveyancing solicitors has shown the property has two land registration titles.

Looking at the plans, originally the house was freehold. Then the vendors granted a leasehold after they bought the house. Currently the freehold property is owned by a bank and the sellers own the leasehold property. However there is no value attached to the leasehold property as it's attached to the freehold's.

The seller's solicitors only offered us contract for the leasehold property, which obviously we won't take it. Our solicitors has been chasing them for weeks and demand for the freehold contract as well, but they haven't heard anything back.

Does anyone probably know how a bank ended up being a freeholder and the vendor is only a leaseholder? Is this some kind of mortgage? And also how come the value of the property is attached to the freehold property. I thought normally it's attached to the leasehold, otherwise how can they sell a property with no value?

I am so confused. Please help. Thank you.

AdrianC

Gwalker said:

However there is no value attached to the leasehold property as it's attached to the freehold's.

This bit makes no sense, because - as you say - surely it's just a typical leasehold property...? Unless the lease is somehow different to normal. How long is it?

How the freehold ended up owned by a bank is a historical-interest question, as much as anything. Perhaps it was used as security for a loan and repossessed?

If you want to buy the house leasehold, then you negotiate with the nominal vendor.
If you want to buy the house freehold, then you negotiate with both nominal vendor and bank.
The leaseholder cannot sell you the freehold, the freeholder cannot sell you the leasehold.

davidmcn

Do you mean two titles as in two different areas of ground which (presumably) join up? Or do you mean it's the same property, but with a leasehold title as well as a freehold?

If you're confused it's probably best you talk to your solicitor, as at least they've seen the titles and we haven't. It would be fairly uncommon for a bank to actually own a (residential) property, are you sure you're not just looking at a mortgage?

eddddy

Gwalker said:

Looking at the plans, originally the house was freehold. Then the vendors granted a leasehold after they bought the house. Currently the freehold property is owned by a bank and the sellers own the leasehold property. However there is no value attached to the leasehold property as it's attached to the freehold's.

Do you mean, by any chance, that somebody bought some freehold land, built some houses - which they sold on leaseholds?
And the freehold of the whole development was then sold to a financial institution (investment bank?) as an investment?
And you are now potentially buying one of the leasehold houses?

If so, that's not particularly unusual - although you should check that the terms of the lease are satisfactory (ground rent etc).

greatcrested

If a bank owns the freehold, and you want to buy the freehold, you will need to make an offer to the bank - which may or may not want to sell to you.

I you want to buy the leasehold which seems to be what the 'sellers' own, then you agree a price for that, which may be less than you were originally willing to pay when you believed you were buying the freehold.

there is no value attached to the leasehold property as it's attached to the freehold's.

No idea what ou mean. The value of the leasehold is whatever you think it is worth. Obviously the lengthof the lease is relevant. Buying a lease of 40 years has little value. Buying a lease of 999 years is worth a lot more.

As for why the freehold is owned by a bank, that is irrelevant - the fact is, it is, so unless the bank wants to sell, you cannot buy it.

AnotherJoe

I'd go for the simple life, tell the EA you are withdrawing their offer and the owners can come back to you as and when they sort out what they are selling and are in a position to sell you it freehold.

SDLT_Geek

Is this a straightforward sharia financing structure?  The Bank would have acquired the freehold then granted the individual a long lease so that the individual pays rent, not interest.  I understand one would normally negotiate a purchase of the property with the individual.  The individual has an option from the Bank to acquire the freehold and so can arrange for both interests to be transferred.

greatcrested

SDLT_Geek said:

Is this a straightforward sharia financing structure?  The Bank would have acquired the freehold then granted the individual a long lease so that the individual pays rent, not interest.  I understand one would normally negotiate a purchase of the property with the individual.  The individual has an option from the Bank to acquire the freehold and so can arrange for both interests to be transferred.

Good grief! The lengths people go to in their attempts to pull the wool over a deity's eyes! (S)he must really have a good belly-laugh - assuming (s)he's there that is.

Gwalker

AdrianC said:

Gwalker said:

However there is no value attached to the leasehold property as it's attached to the freehold's.

This bit makes no sense, because - as you say - surely it's just a typical leasehold property...? Unless the lease is somehow different to normal. How long is it?

How the freehold ended up owned by a bank is a historical-interest question, as much as anything. Perhaps it was used as security for a loan and repossessed?

If you want to buy the house leasehold, then you negotiate with the nominal vendor.
If you want to buy the house freehold, then you negotiate with both nominal vendor and bank.
The leaseholder cannot sell you the freehold, the freeholder cannot sell you the leasehold.

The lease is for 99 years. We have asked this to their EA and they asked the vendor about the leasehold land registry title, but they insisted that their property is freehold. I just don't get it.

Gwalker

davidmcn said:

Do you mean two titles as in two different areas of ground which (presumably) join up? Or do you mean it's the same property, but with a leasehold title as well as a freehold?

If you're confused it's probably best you talk to your solicitor, as at least they've seen the titles and we haven't. It would be fairly uncommon for a bank to actually own a (residential) property, are you sure you're not just looking at a mortgage?

It's the same property with 2 titles. Our solicitor is still trying to get more information but they haven't heard anything back from the vendors solicitor.  I am curious too is this some kind of mortgage? But instead of doing the conventional mortgage, they made the bank as the freeholder of their house. 

davidmcn

Gwalker said:

davidmcn said:

Do you mean two titles as in two different areas of ground which (presumably) join up? Or do you mean it's the same property, but with a leasehold title as well as a freehold?

If you're confused it's probably best you talk to your solicitor, as at least they've seen the titles and we haven't. It would be fairly uncommon for a bank to actually own a (residential) property, are you sure you're not just looking at a mortgage?

It's the same property with 2 titles. Our solicitor is still trying to get more information but they haven't heard anything back from the vendors solicitor.  I am curious too is this some kind of mortgage? But instead of doing the conventional mortgage, they made the bank as the freeholder of their house. 

As somebody else has suggested above, yes perhaps it is, in which case they would be able to sell the freehold when the mortgage is redeemed.