Deed of variations of lease date

niloufar69

Hi
I’m purchasing a flat (long lease)
My solicitor has emailed me and emailed me the below:

As you are aware, the lease for the Property has been extended and varied and the documentation refers to the incorrect date of the lease. As we act for both you and your lender, we referred the same to your lender for their consideration and they have today confirmed to us that in order for them to be comfortable to proceed they require a deed of variation to be entered into to correct this defect in the lease and subsequent variations.  We did originally ask if they would be willing to proceed on the basis of an indemnity but they are not agreeable to same.  I have therefore referred to the seller’s solicitors to obtain this.   This deed of variation will need to complete either before or simultaneously with the purchase in order to accord with the lender’s instructions.  

 

I cannot confirm that the seller will be willing to enter into such a document but we shall let you know when we hear further from the solicitors. 

My question is, is this something that the seller would agree with? Is this a normal request? 

Can the exchange and completion be done quickly? I only have 3 days left to the deadline which has been given to us by the seller and his solicitor. 

user1977

What sort of "deadline"? Something rational or a date they've plucked out of the air? They're not going to get something agreed and signed up with the freeholder within three days.

niloufar69

user1977 said:

What sort of "deadline"? Something rational or a date they've plucked out of the air? They're not going to get something agreed and signed up with the freeholder within three days.

Just a random date which the seller has asked his solicitor. Basically he cannot afford paying towards the service charge anymore.

But as the solicitor has mentioned can both the deed of variation be done simultaneously with the purchase of the flat?  Or we need to wait for the deed to be updated and verified before we can complete?

Should i let the seller know that i am happy to pay for the legal costs of this deed of variation, to make him to go ahead and accept! 

eddddy

niloufar69 said:

Just a random date which the landlord has asked his solicitor. Basically he cannot afford paying towards the service charge anymore.

But as the solicitor has mentioned can both the deed of variation be done simultaneously with the purchase of the flat?  Or we need to wait for the deed to be updated and verified before we can complete? 

The deadline sounds like it might be the stamp duty holiday end-date.

The challenge might be getting the freeholder to do the lease variation quickly (or at all) - as there's probably no real benefit for the freeholder.


Some freeholders might even ask for a chunk of cash in return for their co-operation - especially if they know it's holding up a sale. They know the flat owner will be desperate to sell, so they ask for an extra big chunk of cash to get the variation done.

If that's the case, there might be a long and painful negotiation period.

user1977

niloufar69 said:

user1977 said:

What sort of "deadline"? Something rational or a date they've plucked out of the air? They're not going to get something agreed and signed up with the freeholder within three days.

But as the solicitor has mentioned can both the deed of variation be done simultaneously with the purchase of the flat?

Well, that's what the email says. If you don't understand your solicitor's advice, talk to them. It's what you're paying them for.

niloufar69

Hi all, 

Following to deed of variation which is now being prepared by seller solicitor, there is one point which the solicitors have not come to a conclusion as of now. 

Buyer solicitor 

“Please arrange for the deed of variation to also include the requirement for the landlord to step in should the maintenance trustee referred to fail to comply with their obligations for completeness.”

Seller solicitor 

“This is not agreed - the landlord will not agree to such insertion.”

Buyer solicitor cannot advise on what could be the other alternatives.

Can you please advise what are the other alternatives? This is mainly for my own knowledge. 

eddddy

Is it a tripartite lease - i.e. a lease between 3 parties: the leaseholder, the freeholder/landlord and the management company?


It sounds like the lease mentions a "maintenance trustee" who is probably responsible for maintaining the building. It's probably a management company.

So if the management company go bust - there's the question of who takes over maintenance of the building. Your solicitor was suggesting that the freeholder should, but your freeholder doesn't want to.


So I think the other possible option is that the leaseholders take over management of the building (through an RTM company) - and probably hire a new management company to do all the work for them.

niloufar69

eddddy said:

Is it a tripartite lease - i.e. a lease between 3 parties: the leaseholder, the freeholder/landlord and the management company?


It sounds like the lease mentions a "maintenance trustee" who is probably responsible for maintaining the building. It's probably a management company.

So if the management company go bust - there's the question of who takes over maintenance of the building. Your solicitor was suggesting that the freeholder should, but your freeholder doesn't want to.


So I think the other possible option is that the leaseholders take over management of the building (through an RTM company) - and probably hire a new management company to do all the work for them.

Yes you are well right,
so complicated.

what if after the purchase of this flat i ask if i can buy the lease and become a freeholder, is this option possible? 

To avoid any of these issues happening in future? 

eddddy

niloufar69 said:

Yes you are well right,

so complicated.

what if after the purchase of this flat i ask if i can buy the lease and become a freeholder, is this option possible? 

To avoid any of these issues happening in future? 

You can't own the freehold of a single flat. 

But the leaseholders can all group together and buy the freehold of the building that contain the flats.

With 2 party leases - that would mean the leaseholders would become responsible for the maintenance of the building.


But with a tripartite (3 party) lease that doesn't happen. The management company are still a party to the lease, so they still maintain the building.


So the leaseholders have to do something else instead - or as well. The leaseholders have to form a 'Right To Manage' company, to take over the maintenance of the building. (They can do this without buying the freehold, if they want to.)




Edit to add...

But don't get too excited about the leaseholders taking over responsibility for maintaining the building... they might be a bunch of 'amateurs' who have no idea what they're doing.

It might be good if they hired a proper, professional management company to do everything for them.