Leasehold extension problem

StuWebb

Hi

This is my first time posting, apologies if this is in the wrong section. We have owned our flat since 2006 and are in the process of extending the lease as it is nearing the 80 year mark. We have had a leasehold valuation carried out to calculate how much it will cost. During the valuation the valuer has found a bankruptcy clause within our lease which he says is not acceptable to mortgage companies. He goes on to say that mortgage companies will not lend whilst this clause remains. We have been advised that it needs to be removed at considerable cost to us.

As our property was built in the early 1970's this clause has been there for at least 50 years or so. My question is this, how were we able to secure a mortgage on this property in 2006, and then switch lenders several times over the last 18 years? No mortgage company has ever raised this as an issue, and we were not advised of this when we bought the property. Furthermore the previous owner extended the lease up to 99 years before she sold it to us. We do not understand how this has passed through so many solicitors and mortgage companies, and it is only an issue now. We feel this should have been picked up somewhere by the solicitors whose job it is to check the lease for issues, or by underwriters who agreed the mortgage. Any guidance would be appreciated.

amnblog

Have the checked the title yourself on the small chance the valuer has made an error, mixing up properties?

Have the contacted the original solicitor you used when making the purchase? If there is a Bankruptcy clause on the lease and you were not made aware of it that could be negligent.

eddddy

Just looking from the Lease Extension perspective...

Do you need to remortgage in order to finance the lease extension?

If not, even with the bankruptcy clause...

• Your current mortgage lender cannot object to a Statutory Lease Extension

• In theory, your current mortgage lender could object to an Informal Lease Extension - but it would seem silly to do that. The mortgage lender is already exposed to the risk from the bankruptcy clause.

You could try to negotiate a deal with the freeholder along the lines of... "I'll offer you £x for the lease extension and removal of the bankruptcy clause." 

The legal costs should be lower than if you do each thing separately.

Have you raised the topic of the bankruptcy clause with the freeholder yet? What is their response?

StuWebb

Thank you for your replies. We tried contacting the solicitor that acted for us when we purchased, they no longer hold records for the case as the acted 18 years ago. Waiting to hear from our currently solicitor as to how to proceed. To the best of my ability I have checked the original lease document from 1970 when the property was built, the clause is buried in there. Trouble is, it just seems to disappear over time, as our current lease does not mention it.

We do not need to remortgage to fund the lease extension, and are unable to negotiate as freeholder appears to be absent. We will see what our solicitor has to day.