Freeholder blackmailing me on previous owners internal changes

Flipjango

Hi, I am in the process of selling a leasehold flat. When I bought it the copy of the lease I was given was very poor and the floorplan contained in it was feint and barely readable. Now I'm selling my solicitor has provided a much clearer digital copy from the land registry that shows the floorplan more clearly, and it has become clear than previous owner must have made some changes to the flat which were not noticed when I bought due to this poor quality plan. It involves a stud wall being erected to move the bathroom. We have asked to freeholder to allow a deed of variation on the lease to change this floorplan, and they are effectively trying to blackmail me over it and (via their solicitor) have said: 

"My client is willing to consider granting a retrospective Licence for Alterations in respect of the unauthorised alterations to your clients flat as an alternative to requiring it to be reinstated. In this regard, I am instructed to invite your client to put forward a proposal as to the terms she is willing to put forward for such a Licence, bearing in mind the substantially enhanced value of the flat with the benefit of the unauthorised alterations."

I have not financially benefited from the changes to the flat as I bought it with the changes made and haven't made any profit on them. I'm unsure what to do and my solicitor is basically useless and isn't giving me advice, and just keeps saying that the lease is in breach and referring me back to the covenants. I've done a bit of reading on it and I'm aware that there is often a clause in leases where the landlord cannot unfairly withhold consent, but in this case I cannot find such a clause. The only relevant clause I can find is one covenant that says the leasee cannot make structural changes. But the change is that they've moved the bathroom by creating a room out of stud walls - I don't believe this constitutes a structural change as they didn't remove any walls or change the structure of the building. But as my buyers are insisting on the lease plan being changed, I'm left stuck between a rock and a hard place. 

Can anyone offer any advice please? I really don't know what to do and I can't really afford to make any kind of financial offer other than maybe £500 or something small.  

I've posted the lease below in case anyone cleverer than me can see anything. Thank you

RiskAverse100

On the basis of what the lease says, and as long as the alterations were wholly non-structural, then I do not believe that any consent was required under the lease for them.

You have correctly identified that the relevant clause is 3(1)(f).  This says that if you want to carry out structural alterations and structural additions then you need the freeholder's consent.  However, it says nothing about changes which are non-structural and so the obvious conclusion is that no consent is required for these.

So why is the freeholder's solicitor claiming that the alterations were 'unauthorised' and suggesting that if terms are not agreed for retrospective consent then you will have to reverse the changes?

The solicitor either hasn't read the lease or, more likely, they are aiding their freeholder client in trying to take advantage of the fact that you are trying to sell the flat and want to avoid anything that might put a spanner in the works.

I would like to put the freeholder's solicitor on the spot and ask him which clause he thinks means that retrospective consent is necessary.  Indeed, I am puzzled why your solicitor doesn't seem to have done this.  You have done a better job at interpreting the lease than he has, which is disappointing when he is the professional and you are paying him money to act in your best interests!

Indeed, it may also be that your buyers' conveyancer hasn't advised them properly if the buyers are insisting on a new lease plan being prepared (something which is wholly unnecessary in any event!)

If the freeholder's solicitor knows that what he is saying is legally incorrect then this is pretty appalling.  Yes, the freeholder is his client, but if he knows what the lease says and so is telling you things that he knows are not true then there are probably some professional conduct rules which could be being breached!

I would insist that your solicitor goes back to the freeholder's solicitor and queries everything that he is saying.  I would like to think that this will result in somewhat of a climbdown and an admission that, after all, the previous owner didn't need to get any consent for the changes made and so they don't need you to propose terms for retrospective permission.

Indeed, the idea that the solicitor was apparently trying to get you to offer a sum of money for this consent is also pretty appalling.  Any half-decent solicitor will know that, if a lease says that alterations can be made to a flat as long as consent is required, then the freeholder is acting unfairly if he demands some kind of payment (i.e. a premium) over and above legitimately requiring that legal and other relevant costs are paid.

I am really shocked that all the professionals involved in your sale don't seem to be doing their jobs properly.

eddddy

Flipjango said:

We have asked to freeholder to allow a deed of variation on the lease to change this floorplan, and they are effectively trying to blackmail me over it and (via their solicitor) have said: 

Perhaps the solution is not to ask the freeholder for a deed of variation.

Whilst the freeholder cannot charge you a premium for consent for alterations (because no consent is required), the freeholder probably can charge you a fee/premium for agreeing to a deed of variation.

The current lease plan hasn't been an issue for you, so it shouldn't be an issue for your buyer.


(But if you have a nasty freeholder, now you've highlighted the issue, the freeholder might kick-up a fuss
with your buyer - which might worry the buyer.)

chalky_white_2

If drainage has been moved, as you suggest the movement of a bathroom, then that could be deemed structural.

I would also highlight, the freeholder’s solicitor has not referenced a deed of variation, but a licence for alterations. A licence would be formal consent to the alterations, likely with reference to the plan, but is not a variation to the lease (because the lease permits variation with consent)

Doozergirl

chalky_white_2 said:

If drainage has been moved, as you suggest the movement of a bathroom, then that could be deemed structural.

I would also highlight, the freeholder’s solicitor has not referenced a deed of variation, but a licence for alterations. A licence would be formal consent to the alterations, likely with reference to the plan, but is not a variation to the lease (because the lease permits variation with consent)

As a builder, I would say that structural occurs when a structural engineer/building control should be involved.  

You'd move drainage to reconfigure a kitchen - that's not structural.  It's a fairly simple DIY.  

I wouldn't refer to erecting a wall to create a bathroom as structural either.  I can see how some might interpret it that way as it alters the layout, but the structure of the building and therefore the right to support and protection for the other leaseholders remains intact.  

Grumpy_chap

It seems as though everyone has gone down a rabbit hole here - all because none of the Solicitors can read the lease (or didn't bother to read the lease)

Flipjango said:

previous owner must have made some changes to the flat which were not noticed when I bought due to this poor quality plan. It involves a stud wall being erected to move the bathroom. We have asked to freeholder to allow a deed of variation on the lease to change this floorplan, and they are effectively trying to blackmail me over it and (via their solicitor) have said: 

"My client is willing to consider granting a retrospective Licence for Alterations in respect of the unauthorised alterations to your clients flat as an alternative to requiring it to be reinstated. In this regard, I am instructed to invite your client to put forward a proposal as to the terms she is willing to put forward for such a Licence, bearing in mind the substantially enhanced value of the flat with the benefit of the unauthorised alterations."

The only relevant clause I can find is one covenant that says the leasee cannot make structural changes. But the change is that they've moved the bathroom by creating a room out of stud walls - I don't believe this constitutes a structural change as they didn't remove any walls or change the structure of the building.

IF that is the full extent of the change - creating a stud wall - and there were no original walls taken out, then it certainly appears as though no structural alterations have been carried out and, therefore, no deed of variation / licence required for the alteration.

If I were the OP, I would write back to my Solicitor along the following lines:
"With reference to the query raised by XXX concerning the floor plan and a deed of variation / licence for the changes, I understand that no such agreement is required.  The deed of variation / licence will only be required under the lease clause 3(1)(f) if there are structural alterations to the flat.  As I understand it, the change to the bathroom does not constitute a structural alteration and, hence, no deed of variation / licence or other consent is required.  I would be grateful if you would review and confirm (or otherwise) your agreement with my understanding.  Assuming you are in agreement, I trust you will be able to bring this to a swift resolution via both the Purchaser's Solicitors and the Freeholder's Solicitors.  Kind Regards, OP."

It does seem as though this whole scenario is only created because the legal representatives for all parties (Vendor, Purchaser, Freeholder) have failed to properly understand the situation.  

If, indeed, it is the OP (and this thread) that have misunderstood, the OP's Solicitor should revert back after the communication suggested above with rationale and clear legal reference as to why a deed of variation / licence / consent is required for the stud wall bathroom.  

Assuming that the changes really did not have any structural element.  That is something for the OP to check, perhaps by referencing current plan against the original (and now clear) plan in the first instance.

eddddy

Grumpy_chap said:

If I were the OP, I would write back to my Solicitor along the following lines:
"With reference to the query raised by XXX concerning the floor plan and a deed of variation / licence for the changes, I understand that no such agreement is required.  The deed of variation / licence will only be required under the lease clause 3(1)(f) if there are structural alterations to the flat.  As I understand it, the change to the bathroom does not constitute a structural alteration and, hence, no deed of variation / licence or other consent is required.  I would be grateful if you would review and confirm (or otherwise) your agreement with my understanding.  Assuming you are in agreement, I trust you will be able to bring this to a swift resolution via both the Purchaser's Solicitors and the Freeholder's Solicitors.  Kind Regards, OP."

It does seem as though this whole scenario is only created because the legal representatives for all parties (Vendor, Purchaser, Freeholder) have failed to properly understand the situation.  

It sounds like it was the OP who requested the Deed of Variation - not the freeholder, or anyone else.

And the OP doesn't mention a buyer. My assumption is the OP proactively requested a Deed of Variation because they hoped it would smooth an eventual sale.

So perhaps the OP's next step is to say to the freeholder words to the effect of:

"Oops - I didn't read the lease properly. Now I've read the lease, I see I don't need a Deed of Variation."


(And hope that the Freeholder doesn't try to use this as an unjustified way of derailing an eventual sale.)

Grumpy_chap

eddddy said:

It sounds like it was the OP who requested the Deed of Variation - not the freeholder, or anyone else.

And the OP doesn't mention a buyer. My assumption is the OP proactively requested a Deed of Variation because they hoped it would smooth an eventual sale.

Well, the OP said:

Flipjango said:

Hi, I am in the process of selling a leasehold flat.

my buyers are insisting on the lease plan being changed

The timeline I assumed was:

1. Flat marketed for sale and offer accepted (SSTC)
2. Buyer noticed the change of floor plan and Buyer's Solicitor requested OP's Solicitor to get the lease revision in place.  
3. Buyer's Solicitor should have read the lease and realised deed of variation not required - this may have happened (we don't know).  The Buyers may have still said "please ask - we'd feel more comfortable if it was normalised".  Equally, the Buyers / Buyer's Solicitor may not have known whether or not the changes are structural.
4. OP's Solicitor should have read the lease and challenged the request (or sought clarification from OP) - seems this did not happen.
5. OP's Solicitor passed on the request from Buyer's Solicitor to OP and recommended OP request the deed of variation.
6. LL's Solicitor received the request for licence / consent and simply assumed the consent must be required under the lease - no reason for the LL to doubt the request assessed as required by a.n.other (OP).
7. LL has agreed in principle to the request, subject to a financial agreement representing betterment of value.
8. OP has posted here, with a clearer reading of the lease than OP's Solicitor.

Perhaps, the OP can confirm the order of events.

eddddy

Grumpy_chap said:

Well, the OP said:

Flipjango said:

Hi, I am in the process of selling a leasehold flat.

my buyers are insisting on the lease plan being changed

Yep, you're right - I missed the reference to "my buyers".


(But the OP also says things like "We have asked the freeholder" - which makes it sound like the OP asked the  freeholder directly  - instead of the Buyer's buyers solicitor asking the OP's solicitor asking the freeholder etc, which would be more usual.)

Flipjango

eddddy said:

Grumpy_chap said:

If I were the OP, I would write back to my Solicitor along the following lines:
"With reference to the query raised by XXX concerning the floor plan and a deed of variation / licence for the changes, I understand that no such agreement is required.  The deed of variation / licence will only be required under the lease clause 3(1)(f) if there are structural alterations to the flat.  As I understand it, the change to the bathroom does not constitute a structural alteration and, hence, no deed of variation / licence or other consent is required.  I would be grateful if you would review and confirm (or otherwise) your agreement with my understanding.  Assuming you are in agreement, I trust you will be able to bring this to a swift resolution via both the Purchaser's Solicitors and the Freeholder's Solicitors.  Kind Regards, OP."

It does seem as though this whole scenario is only created because the legal representatives for all parties (Vendor, Purchaser, Freeholder) have failed to properly understand the situation.  

It sounds like it was the OP who requested the Deed of Variation - not the freeholder, or anyone else.

And the OP doesn't mention a buyer. My assumption is the OP proactively requested a Deed of Variation because they hoped it would smooth an eventual sale.

So perhaps the OP's next step is to say to the freeholder words to the effect of:

"Oops - I didn't read the lease properly. Now I've read the lease, I see I don't need a Deed of Variation."


(And hope that the Freeholder doesn't try to use this as an unjustified way of derailing an eventual sale.)

You're right, it was me that requested the deed of variation, but it was because the buyers solicitor has requested it annoyingly. Not sure how to get out of it now. 

Flipjango

Grumpy_chap said:

eddddy said:

It sounds like it was the OP who requested the Deed of Variation - not the freeholder, or anyone else.

And the OP doesn't mention a buyer. My assumption is the OP proactively requested a Deed of Variation because they hoped it would smooth an eventual sale.

Well, the OP said:

Flipjango said:

Hi, I am in the process of selling a leasehold flat.

my buyers are insisting on the lease plan being changed

The timeline I assumed was:

1. Flat marketed for sale and offer accepted (SSTC)
2. Buyer noticed the change of floor plan and Buyer's Solicitor requested OP's Solicitor to get the lease revision in place.  
3. Buyer's Solicitor should have read the lease and realised deed of variation not required - this may have happened (we don't know).  The Buyers may have still said "please ask - we'd feel more comfortable if it was normalised".  Equally, the Buyers / Buyer's Solicitor may not have known whether or not the changes are structural.
4. OP's Solicitor should have read the lease and challenged the request (or sought clarification from OP) - seems this did not happen.
5. OP's Solicitor passed on the request from Buyer's Solicitor to OP and recommended OP request the deed of variation.
6. LL's Solicitor received the request for licence / consent and simply assumed the consent must be required under the lease - no reason for the LL to doubt the request assessed as required by a.n.other (OP).
7. LL has agreed in principle to the request, subject to a financial agreement representing betterment of value.
8. OP has posted here, with a clearer reading of the lease than OP's Solicitor.

Perhaps, the OP can confirm the order of events.

Yes, absolutely spot on, this is exactly what has happened. My solicitor has turned out to be a total idiot, and forwarded an email from the buyers solicitors onto the landlords agent without my permission, where they requested the deed of variation. They then sent this to the landlords solicitor and its all kicked off. I'm not sure how to untangle things now.