Buying property with VERY short Lease & Section 42 Notice Assignment

Schwarzwald

Situation

I am looking at a leasehold property with a VERY short remaining lease of less than 12 months.

The asking price reflects the very low lease. I dont need a mortgage.

Section 42 Notice has been served by the vendor, who has owned the property for more than 2 years, and the rights under the notice will be assigned to the buyer.

Freeholder has not reacted to the Section 42 Notice yet.

Question

If I ended buying the property and the rights under the notice are assigned to me, I know there are certain time scales in place by law [under which] the freeholder has to respond, but could the freeholder just be deliberatley slow and drag his feet until the lease has fullt expired (in less than 1 year)?
Or is it the situation that once the Section 42 Notice process has been commenced, offers have been made, communication is back and forth that the time timeframe is effectively “suspended” (for a lack of a better word) and even if we do not finish the lease extension process by the end of the lease, I have a legal right / can sue in courts that I must be allowed to extend the lease as the process was commenced WHILE there was still time remaining under the lease?

Thank you!

DullGreyGuy

Not discrediting the knowledge of the people on here but this is a question you need to be asking to your solicitor such that if the answer is wrong and the property reverts to the freeholder you have someone you can go after for your losses from their bad advice. 

eddddy

So you're saying that the lease has less than 1 year left to run. So they'll only be one chance at getting this right.

My assumption would be that "the clock stops" when a valid s42 notice is served - so you should be OK. 

The freeholder could have a huge amount to gain by frustrating your lease extension application.

I wouldn't be surprised if their legal team go through everything with a fine-tooth comb, and try every possible trick, to stop the lease extension happening.

You should probably look for a top-notch lease extension solicitor to deal with this - so you don't make any mistakes, or fall for any tricks.

The starting point is to check that the s42 notice is 100% correct. Minor technical errors can make a s42 notice invalid.

Schwarzwald

eddddy said:

So you're saying that the lease has less than 1 year left to run. So they'll only be one chance at getting this right.

yes, that is correct.

eddddy said:

My assumption would be that "the clock stops" when a valid s42 notice is served - so you should be OK. 

The freeholder could have a huge amount to gain by frustrating your lease extension application.

That is the question and if this is an ASSUMPTION or LEGALLY correct? I dont know and whenever i read up on S42 notices, this is not mentioned/confirmed.

eddddy said:

You should probably look for a top-notch lease extension solicitor to deal with this - so you don't make any mistakes, or fall for any tricks.

The starting point is to check that the s42 notice is 100% correct. Minor technical errors can make a s42 notice invalid.

agree, this is a typical "overspend on critical experts" situation, ie need a top-notch lease extension solicitor who can also fight it in court, and the purchase needs to be priced so it leaves enough room for: PP+Extension Costs+Legal Fees < value.

DullGreyGuy said:

Not discrediting the knowledge of the people on here but this is a question you need to be asking to your solicitor such that if the answer is wrong and the property reverts to the freeholder you have someone you can go after for your losses from their bad advice. 

would not rely on anybody here, this is clearly a "proceed at own risk" situation, but if people KNOW whether the S42 stops the clock or not or could hint me towards the appropriate legal language / clause that would be v helpful as i couldnt identify it BEFORE i proceed to instruct a solicitor.

eddddy

In my experience, when I've phoned lease extension solicitors to say I'm looking for a solicitor to deal with a lease extension - they'll have a 5 minute chat with me to discuss the process (and gently try to convince me to choose them).

I would ask them your "1 year" question during that chat.

Obviously, you can't rely on their answer, but you can get a feeling for the consensus between 2 or 3 or 4 solicitors.


(But I suspect most of them will have never come across that scenario before. And solicitors I deal with never seem to say "I don't know". Instead they try to deflect/avoid the question.

And occasionally solicitors have told me things at the outset that later prove to be wrong.)

anselld

From Lease-advice.org ...

The landlord’s counter-notice

The landlord must serve their counter-notice by the date stated in the tenant’s notice. The counter-notice must do one of the following.

• Admit your right to the new lease and accept your terms (or propose different terms).
• Not admit your right and give the landlord’s reasons for this. The county court will then decide whether you have the right to the new lease.
• Claim the landlord has the right to redevelop. The landlord can refuse to grant the new lease if they can prove to a court that they intend to demolish and redevelop the building. This only applies to applications where the remaining period of the lease is less than five years from the date of the tenant’s notice.

It sounds like you may be open to the Freeholder claiming the right to redevelop.

Schwarzwald

anselld said:

From Lease-advice.org ...

The landlord’s counter-notice

The landlord must serve their counter-notice by the date stated in the tenant’s notice. The counter-notice must do one of the following.

• Admit your right to the new lease and accept your terms (or propose different terms).
• Not admit your right and give the landlord’s reasons for this. The county court will then decide whether you have the right to the new lease.
• Claim the landlord has the right to redevelop. The landlord can refuse to grant the new lease if they can prove to a court that they intend to demolish and redevelop the building. This only applies to applications where the remaining period of the lease is less than five years from the date of the tenant’s notice.

It sounds like you may be open to the Freeholder claiming the right to redevelop.

thanks, v helpful, also the website.

out of the 3 outcomes above,
1- would be the goal
2- I would be prepared to go to court, if i can get the property at very low price
3- i guess they could make the "claim", but the harder bit is the "proof of intentionl to demolish and redevelop", especially if there are other leaseholders in the property, but ultimately also a questions of how "itention" is defined and what proof they would need to submit to court ...

i contacted 3 lease extension specialist solicitors, will hear them out and then decide on how to proceed