Selling Property With A Deed of Variation & RMG Being Difficult

Rolybear

Hi 👋 

I’m hoping someone has been through similar and they can advise what happened in their situation. It’s a long one so I’m sorry in advance.

I’m selling my 3 year old freehold new build which I bought from new from Taylor Wimpey. On the property is a deed of variation that relates to the management company RMG, Taylor Wimpey and myself. My buyers lender has come back and said that they want the wording of the deed changing as it refers to a rent charge or something. Im sorry I don’t fully understand.

Taylor Wimpey have said they will redraft this but it needs approval from RMG as it relates specifically to them. My solicitor says this is common and they deal with this wording change frequently and they deal with RMG on a regular basis.

This was sent over to them 10 working days ago and they haven’t responded or looked at it. Now normally I’d appreciate these things take time but my chain is about to fall through as we want to complete no later than the 16th of February. I emailed RMG pleading with them explaining that I was desperate and my sale was going to fall through and was there anything they could do at all to help speed up the process etc. I heard nothing so yesterday I emailed some senior members of the business pleading with them if there was any way they could help at all. 

I got a response back from the woman in charge of this process and she essentially said it would take as long as it takes. Today they have advised that they want to seek legal advice which will take 6-8 weeks and they want me to pay £600+vat for it. My solicitor said she has never known them need to seek legal advice on this and she’s dealt with them in the same issue on a number of properties. 

My chain won’t wait that long so I’m going to lose the sale. It seems like I’m personally being penalised. Probably because I emailed. I don’t see how they can seek legal advice on some cases and not others. 

Has anyone been in the same boat and have any advice please? My solicitor has gone back and asked why they need to seek legal advice and if there is anything they can do to prevent them needing the advice like alter the wording etc. She says though they are entitled to seek legal advice so there isn’t anything I can do. 

How are they allowed to do this? I’m devastated.

Shaztastic3000

They are allowed to do this because you have agreement with them you now want to change.

sucks I know, but not worth getting upset over - just hope it gets sorted ASAP 

princeofpounds

What you have is an estate rentcharge. That is basically a covenant on a freehold house that allows someone to collect money to pay for management of the communal parts of the estate.

It is analogous, but not the same as, service charges on a leasehold property. Confusingly it is NOT the same as a 'regular' rentcharge, which is just a fixed sum of money payable to a rentcharge owner and the legal implications are very different. 

Estate rentcharges have been used for many years as a mechanism to pay for this kind of communal management. In practice they mostly worked ok, although they had one problem in that there was no effective regulatory/judicial oversight of how they functioned. In the case of a service charge for leasehold properties, you can always appeal to a Tribunal if you think you are being charged inappropriately. Many estate rentcharges are actually owned by a Residents Association, so there was little incentive to mismanage in those cases, but some were owned by third party corporations, not all of whom were above-board.

However a bigger problem then arose as a result of a legal case - Roberts v Lawton (2016) aka 'the Morgoed case'. Morgoed bought a bunch of estate rentcharges and looked for instances of non-payment. They then took someone who had not paid and then attempted to take legal possession of a title to their home on the basis of some clauses in the Law of Property Act 1925 (Section 121 specifically). For decades no-one really thought the courts would allow this, but it turns out they decided it was the law, even though they described this as 'draconian'.

So, over the following years, mortgage lenders started to realise this issue and increasingly they now refuse to lend on properties unless those Section 121 powers are modified/removed. The specific problem is that the mortgage lender has no opportunity to be notified of any non-payment. In a leasehold property, they must be told - to protect their security, they would then pay the service charge or ground rent themselves, add it to the mortgage, and hit the borrower with penalties or even take possession themselves. They don't get to do that with an estate rentcharge, so they could end up with a mortgage that isn't being paid and no opportunity to repossess the property.

That is why the DoV in your situation is critically important for your buyers.

RMG have you over a barrel and they know it. They are highly likely to approve the DoV but will want to take something for the privilege. You can bet that this solicitor they take advice from will be from a sister company. I may be wrong but I'm not aware of any compulsion on them to change things, so it's all a bit arbitrary that they want to shake your down but have not done so with others. In the handful of cases I am aware of the rentcharge owner did not ask for compensation but the managing agent wanted a fee for the legal work. It's actually fair enough as it's not for their benefit. I don't know if RMG is the managing agent and/or the rentcharge owner - do you? Your solicitor should push back on this but ultimately you do want to get it done.

Complain to your MP about this. It's been 5 years now and nothing has been done. God knows what the civil servants are doing, sitting on their hands when there is an obvious problem and an obvious solution that a sentence of legislation could fix. Same goes for many of the leasehold reforms that keep getting previewed but never actually appear (although some of those are more material and contentious issues to be fair).

peter3hg

princeofpounds said:

Complain to your MP about this. It's been 5 years now and nothing has been done. God knows what the civil servants are doing, sitting on their hands when there is an obvious problem and an obvious solution that a sentence of legislation could fix. Same goes for many of the leasehold reforms that keep getting previewed but never actually appear (although some of those are more material and contentious issues to be fair).

Not sure why you are putting the blame on civil servants. It is for the government to schedule the appropriate time in the parliamentary timetable, or for a backbencher to raise it as a Private Member's bill.
There is nothing the civil service can do to resolve it.

princeofpounds

peter3hg said:

princeofpounds said:

Complain to your MP about this. It's been 5 years now and nothing has been done. God knows what the civil servants are doing, sitting on their hands when there is an obvious problem and an obvious solution that a sentence of legislation could fix. Same goes for many of the leasehold reforms that keep getting previewed but never actually appear (although some of those are more material and contentious issues to be fair).

Not sure why you are putting the blame on civil servants. It is for the government to schedule the appropriate time in the parliamentary timetable, or for a backbencher to raise it as a Private Member's bill.
There is nothing the civil service can do to resolve it.

The problem right now is not parliamentary passage of a bill. We are nowhere near that in the case of estate rentcharges/Section 121. It is all the stuff that happens before it ever gets there - consultations, drafting and so on.

Typically, but not always, government legislation gets its start in Ministries with civil servants. MPs usually don't come up with this stuff themselves. The links below outline how important they are to this process - in their own words in one case.

https://civilservice.blog.gov.uk/2015/11/20/parliament-the-legislative-process-and-the-secrets-of-good-teamwork/
https://eprints.lse.ac.uk/15571/

As for leasehold reform, it's a bit further along the track but a similar story. The civil service and the law commission started work on this iteration of reform in 2017. The only visible legislative product we have seen four years later is the Leasehold Reform (Ground Rent) bill which was produced in May of last year, and basically is just a 'teaser' piece of legislation doing a limited range of things like setting future ground rents to zero. Parliament has moved it through all the stages and is in the final stage before Royal Assents. So I'm guessing this will have been done within a year.  https://bills.parliament.uk/bills/2864

The main bulk of the leasehold reform legislation hasn't even surfaced yet.

Now leasehold reform is a far bigger and more complicated issue than Section 121. I think they have taken too long but that's a matter of opinion.  But the hold-up is NOT in parliament and has nothing to do with parliamentary time.

My particular gripe is that things that could be fixed simply and without political controversy, like this Section 121 issue, just take forever as they go to the back of however the civil service run their legislative drafting queue. There really should be an expedited process for items of this nature, so that government is responsive where it can be.

You see it in local government too, where simple things that everyone agrees with are subject to the same meandering bureaucracy as the contentious stuff, because someone in an office says 'that is the process'.

Responsiveness of government (as opposed to The Government) is a hugely under-rated feature of governance in my opinion.

Thrugelmir

Rolybear said:

I got a response back from the woman in charge of this process and she essentially said it would take as long as it takes. 

That's the real world. Complaining doesn't mean that you'll be placed ahead of other matters being dealt with already in the queue. There's no priority treatment in this world unfortunately. The more that people complain the less the amount productive work that actually is achieved. As resources are always finite. 

Michelle_jackson2

Rolybear said:

Hi 👋 

I’m hoping someone has been through similar and they can advise what happened in their situation. It’s a long one so I’m sorry in advance.

I’m selling my 3 year old freehold new build which I bought from new from Taylor Wimpey. On the property is a deed of variation that relates to the management company RMG, Taylor Wimpey and myself. My buyers lender has come back and said that they want the wording of the deed changing as it refers to a rent charge or something. Im sorry I don’t fully understand.

Taylor Wimpey have said they will redraft this but it needs approval from RMG as it relates specifically to them. My solicitor says this is common and they deal with this wording change frequently and they deal with RMG on a regular basis.

This was sent over to them 10 working days ago and they haven’t responded or looked at it. Now normally I’d appreciate these things take time but my chain is about to fall through as we want to complete no later than the 16th of February. I emailed RMG pleading with them explaining that I was desperate and my sale was going to fall through and was there anything they could do at all to help speed up the process etc. I heard nothing so yesterday I emailed some senior members of the business pleading with them if there was any way they could help at all. 

I got a response back from the woman in charge of this process and she essentially said it would take as long as it takes. Today they have advised that they want to seek legal advice which will take 6-8 weeks and they want me to pay £600+vat for it. My solicitor said she has never known them need to seek legal advice on this and she’s dealt with them in the same issue on a number of properties. 

My chain won’t wait that long so I’m going to lose the sale. It seems like I’m personally being penalised. Probably because I emailed. I don’t see how they can seek legal advice on some cases and not others. 

Has anyone been in the same boat and have any advice please? My solicitor has gone back and asked why they need to seek legal advice and if there is anything they can do to prevent them needing the advice like alter the wording etc. She says though they are entitled to seek legal advice so there isn’t anything I can do. 

How are they allowed to do this? I’m devastated.

The same has happened to us today. We have 2 weeks or our chain collapses. Please give me some hope and tell me it didn't take 6-8 weeks?

Waunakee

The original poster hasn’t logged in since the beginning of February so I’m not so sure you will get a direct response