Absent Freeholder

swatts2011

Hi everyone, 

I am currently going through the purchase of a flat within a converted house. 

I have been informed that the freeholder is absent and the vendor is going to pay for indemnity insurance which will cover building insurance and if the freeholder comes back wanting ground rent, service charges etc. My solicitor stated it just won’t cover maintenance of road, parking area etc if needed, which seems normal. They have confirmed the insurance can pass down the line to the next purchaser. 

My financial advisor and solicitor said it should be ok, but solicitor said only real risk is if lenders will lend. 

My concern is I am doing the right thing? 

As a 1 bed flat it is not a long term plan and if I decide to sell (as an example) 2 years time, would this effect a sale? 

eddddy

In a converted house, the lease will typically say that

• the freeholder is responsible for insuring the building and doing maintenance and repairs to the building
• the freeholder splits all the costs between all the flat owners (leaseholders) and sends them bills

(But check the lease, to see if that's correct in your case.)

If, for example, one flat owner (leaseholder) doesn't pay, the freeholder can take legal action against them to force them to pay.


If the freeholder is absent, the flat owners (leaseholders) can arrange buildings insurance, maintenance and repairs amongst themselves.

But if one of more of the leaseholders is uncooperative and/or refuses to pay their share - the others can't really take legal action against them to force them to pay.

There are ways of getting round this - like some/all of the leasholders can compulsorily purchase the freehold, or they can form a 'Right to Manage' company. But this also requires cooperation.