Messy situation with leasehold loft - advice appreciated

Cloth_of_Gold

eddddy said:

As you suggest, perhaps it would have been better to suggest to the buyers at the outset that they don't mention the 'informal' use of the loft to their solicitor.

And a formal letter/report from a solicitor will often present the 'worst case scenario', which might scare the buyer. (e.g. Legal action by the freeholder, cost of reinstatement, forfeit of lease, etc.)

Assuming you have a good estate agent, it's probably worth getting them to have an 'informal chat' with the buyer to talk through the risks, the potential benefits, etc, associated with the loft. That might get better results than a formal letter from a solicitor.

If I was buying a property and the seller said 'Don't mention X to your solicitor' I would think it very odd and it would make it even more likely that I would mention it!

eddddy

Cloth_of_Gold said:

eddddy said:

As you suggest, perhaps it would have been better to suggest to the buyers at the outset that they don't mention the 'informal' use of the loft to their solicitor.

And a formal letter/report from a solicitor will often present the 'worst case scenario', which might scare the buyer. (e.g. Legal action by the freeholder, cost of reinstatement, forfeit of lease, etc.)

Assuming you have a good estate agent, it's probably worth getting them to have an 'informal chat' with the buyer to talk through the risks, the potential benefits, etc, associated with the loft. That might get better results than a formal letter from a solicitor.

If I was buying a property and the seller said 'Don't mention X to your solicitor' I would think it very odd and it would make it even more likely that I would mention it!

Yep - I'm sure that would be some people's reaction.

I guess it depends how well the issue is explained to the buyer, and how well the buyer understands the wider issues.

The problem is that the solicitor also represents the mortgage lender. So if you volunteer information to your solicitor, they are duty bound to pass that information to the mortgage lender.

(If no mortgage lender is involved, there's generally no problem with sharing this type of information with the solicitor.)



In simple terms, the way an estate agent might present this to a buyer is something like this...

"You are buying the flat - it doesn't include the loft. The loft belongs to the freeholder.

However, the current owner has been using the loft for storage for many years, and nobody has ever complained.

So you will probably be able to use the loft for storage as well (as a kind of freebie), unless/until somebody complains and/or the freeholder finds out and/or the freeholder decides they want to use the loft for something else. In that case, you would have to stop using it.

If you want to use the loft on this informal basis, it's best not to tell your solicitor, as your solicitor might tell the mortgage lender and/or  the freeholder might become aware. This might cause delays, and the result might be that you're told you can't use the loft at all. 

If you don't want to use the loft for storage, there's no issue."

viper_987

The problem is that the solicitor also represents the mortgage lender. So if you volunteer information to your solicitor, they are duty bound to pass that information to the mortgage lender.
(If no mortgage lender is involved, there's generally no problem with sharing this type of information with the solicitor.)

This particular buyer is a cash buyer.

Is there any good reason for them not to accept the indemnity policy?

eddddy

viper_987 said:

This particular buyer is a cash buyer.

Is there any good reason for them not to accept the indemnity policy?

If an insurer was prepared to offer an indemnity policy, it would typically cover the following...

If the freeholder finds out that the flat owner is using the loft and forces the flat owner to stop using the loft and remove the boards etc... The policy should cover...

• The cost of removing the boards
• The reduction in value of the flat, as a result of it no longer having a loft

So, for example, if the loft is really, really, really important to the buyer - they might say "I don't want the risk of losing the loft, even if I get paid compensation for loss in value as a result of losing the loft."


For example, the buyer might be secretly hoping to do a loft conversion to get an extra bedroom. In that case, an Indemnity Policy is probably no good to them.

NameUnavailable

eddddy said:

I'm not really sure how the letter described would help the buyers - and it could cause you problems.

If the freeholder finds out the loft is boarded, the buyers just say the loft was like that when they bought the flat (they don't need to show a letter). How could the freeholder prove otherwise?

If you provide a letter, and the buyers show the freeholder your letter, that just makes it really easy for the freeholder to sue you for damages. 




(I doubt the lease explicitly says "The leaseholder must not board the loft" or equivalent, so it probably can't be treated as a "breach of lease".

But if it is a "breach of lease", the letter won't help the buyer in any way. They would still be liable for the breach of lease, whatever the letter says.)

I'm just thinking a letter from the vendor would show the freeholder that the alterations to the loft were not made by the new buyers, if it ever came to light. If they weren't using the loft and the freeholder wanted access for some reason, saw the boarding etc., and told them to remove it at least they could show that it was done by the previous occupant and none of their business or doing, and not responsible for removing/rectifying.

markin

Buy a £60 cordless drill/driver and strip it out in 3hrs.

It would be more valuable if you could buy the loft so it can be converted, after you have restored it.

Herzlos

What did the loft access look like from the flat before/after you did any work? Is restoring it just a case of terminating the wiring and changing the hatch?

Assuming you haven't replaced the hatch with stairs, I'd be inclined to remove mention of the loft from the listing and tell the buyer that the loft has nothing to do with you beyond there being access for the leaseholder if required. After at least 15 years I doubt the leaseholder or their management company/contractor will have any idea of what it should look like.

viper_987

markin said:

Buy a £60 cordless drill/driver and strip it out in 3hrs.

I need to check whether it's nailed in or screwed. If nailed it will probably require a crowbar and more than 3 hours.

viper_987

Herzlos said:

What did the loft access look like from the flat before/after you did any work? Is restoring it just a case of terminating the wiring and changing the hatch?

Assuming you haven't replaced the hatch with stairs, I'd be inclined to remove mention of the loft from the listing and tell the buyer that the loft has nothing to do with you beyond there being access for the leaseholder if required. After at least 15 years I doubt the leaseholder or their management company/contractor will have any idea of what it should look like.

Before the work was done, it had no boarding or lights. Restoring it is a case of removing all the boards and lights, as well as the pull-down ladder that was installed to the hatch.
The hatch itself is the same, it's just had a ladder attached.

There are another 60+ apartments in the development, so they could find out what it would have looked like originally, if they wanted.

propertyrental

Herzlos said:

.... tell the buyer that the loft has nothing to do with you beyond there being access for the freeholder leaseholder if required. After at least 15 years I doubt the freeholder leaseholder or their management company/contractor will have any idea of what it should look like.

A common mistake on the forum but worth correcting as getting the terminology wrong could cause confusion......