Leasehold problem on Townhouse Selling

marcopolo22

We have lived in a leasehold townhouse that we are now selling and have had no problems. Now we are selling the property a totally unexpected issue has arisen. Basically the leasehold currently states that if the yearly leasehold payment is missed that the freeholders can take control of the property without having to inform the mortgage company and without the normal 28 day notice period. We have never had an issue as we have always paid on time.

We were not aware of this situation and it was never flagged by our solicitor when we purchased the property so it has only just come to our attention during the sales process.

Now we are selling the property the buyers solicitors are insisting on and 'require a Deed of Variation' to correct this issue, we think it may be the mortgage lender that is wanting this adding. We have been told that we will have to pay for this but believe that this should have been flagged when we bought the house as we also required a mortgage but we were not made aware of this potential problems.

Also we believe the freeholder and his solicitor are taking advantage of the situation and being unreasonable with their fees, we have been quoted almost £3000 to insert this new deed of variant that seems to be split between the freeholder and his solicitor.

Finally we suggested to the buyers solicitor that we thought the costs were unreasonable and our solicitor advised that we suggest we would pay for an idemnity insurance policy to protect the buyers which we would pay for, but they refused this offer.

I would be grateful if anyone could give me some advice on this matter.

Regards Mark

Flugelhorn

it sounds a bit like some of the deeds of variation done locally on an estate where I live, not exactly the same as the properties are freehold but the management company could make the property leasehold  / take control if management fees not paid. Mortgage companies don't like this but are happy if there is a DoV where notice is to be given to the mortgage company etc if there are arrears so the taking over of the property can be avoided. We got the vendors to pay for this but I gather the going rate is about £300

marcopolo22

Thanks Flugelhorn 'the going rate is £300' - was this an indemnity insurance policy? Thanks

NameUnavailable

Can you buy the freehold? Might not be any costlier!

Flugelhorn

marcopolo22 said:

Thanks Flugelhorn 'the going rate is £300' - was this an indemnity insurance policy? Thanks

This was to draw up the DoV - have it signed by the relevant people (in this case us, the developers and the management company) - then it was registered at the Land Registry when the property sale was registered.

Obviously yours is different but the issue of someone having a charge over the property that the mortgage company don't agree with is the same

WorriedKirkels

I suppose it also depends on how quickly you need to rectify it. Are you already at the point of exchange as this might dictate what you need to do to satisfy your buyer and stop the chain collapsing. I don’t have any experience on this subject but might be something to consider I.e. time versus cost. Regardless I would still be seeking recompense from you previous purchase / solicitor if your current solicitor thinks this is an option. Good luck!

Flugelhorn

 I think that the issue of such things in the deeds / lease / covenants being a problem only came to light in about 2016/18 ish - not sure it was considered a problem beforehand - it was when the mortgage companies started getting concerned about it that things had to change 

Racky_Roo

Is your ground rent over £250 (over £1,000 in London)? If so, then the lease falls within the Housing Act 1988 and will be an AST which as you've said, means the freeholder can repossess the house if the ground rent isn't paid. An indemnity policy isn't accepted by most mortgage companies so either you buy the freehold or pay for the deed of variation and the freeholder can charge what they like for this change to be inserted - remember, they are forfeiting the right to repossess the house if the ground rent wasn't paid so of course they won't do this for a nominal sum. This can take a while if you have a big freeholder, there was a couple of threads on here recently about how long it would take and it's usually a couple of months by the sounds of it.

marcopolo22

Thanks for the replies

I will look into buying the leasehold but think it will be higher cost than the 3k.

Thanks Flugelhorn for reply.

WorriedKirkels - thanks yes we are asking our solicitors now, why they didn't spot this or enquire about it, but they are not responding to calls or emails

Yes racky - the amount is about £400 a year - oh dear that means any chance of hitting the stamp duty date is also gone so that is yet another cost added because of this.

Thanks again

Mark

AlexMac

marcopolo22 said:

...the leasehold currently states that if the yearly leasehold payment is missed that the freeholders can take control of the property without having to inform the mortgage company and without the normal 28 day notice period. ...

We were not aware of this situation and it was never flagged by our solicitor when we purchased the property so it has only just come to our attention during the sales process.

Now... the buyers solicitors are insisting on and 'require a Deed of Variation' to correct this issue, we think it may be the mortgage lender that is wanting this adding. We have been told that we will have to pay for this but believe that this should have been flagged when we bought the house...

I agree. And it's not fair, but...

While it seems that your original solicitor failed to alert you sufficiently firmly when you bought,this may be difficult to prove?  It might be worth looking back and recalling whether they gave you the usual "report on title" and briefed you on key points of the lease. (in the past, the best local briefs I've used have done this orally as well as in writing) or if they just bunged you the lease to interpret yourself.

It might be worth dredging through the original paperwork, but it could be tricky to prove £3k's worth of negligence now; which doesn't prevent you from suggesting some recompense, and hinting or threatening them with their Complaints procedure  now; especially if you're using the same solicitor for the sale?  (google how to complain about your conveyancing solicitor ). And if they ain't answering calls or emails, add that to the eventual list of complaints if all else fails.

However, as regards "we believe the freeholder and his solicitor are taking advantage of the situation and being unreasonable..." 
Sadly, they are not.  Their solicitor is doing her job of protecting them, and in their place, I'd expect the vendor (you) to fix it at their own cost .  The most gimlet-eyed solicitor I used to use  (in fact, she wasn't a lawyer but only a conveyancing assistant, but very experienced) spotted a much lesser problem with one of our past leasehold purchases, despite this passing unnoticed in previous sales over 0 years.  She demanded a Deed of variation, at the seler'scost!

I hope you work it out; good luck

Racky_Roo

I don't think you'll have a case against the conveyancer for your original purchase as like Flugelhorn says, this has only been an issue in the last couple of years. I questioned this when I was selling as it hasn't been flagged to me when I purchased by flat and I was told exactly that.