Lack of and/or defective mortgage protection claus

fullrloveuk

Hello

I have a share of freehold/leasehold on a flat. We do not have a landlord just a managing agent that sorts of the maintenance accounts. I am currently selling the property and the buyers solicitor has asked me to pay out £376 to cover the mortgage lenders because of this clause. When I've read up about what it protects, it goes into details about the landlord being able to repossess the property if bills are missed, but there is no landlord and there aren't any bills, ground rent per se. 

Im just a bit confused as to why I need to pay this being share of freehold, I understand there's still a lease but there's certainly no one able to repossess things.

New to all this so excuse my lack of knowledge, any advice would be appreciated.

Thank you

DullGreyGuy

What's your solicitor advising? 

What percent share do you have of the freehold? You say there are no ground rents or bills "per se" but you have a managing agent and so there are bills to be paid. Is there actually ground rent too or does the lease have no ground rent (not on a per se basis but on an actual basis)

user1977

There is a freeholder. The leaseholder might own a share in the freeholder company (assuming it is a company), but in theory the freeholder can still enforce their rights.

But as above, you're paying your solicitor to give you advice, so haven't you asked them to explain what's going on?

saajan_12

fullrloveuk said:

Hello

I have a share of freehold/leasehold on a flat. We do not have a landlord just a managing agent that sorts of the maintenance accounts. I am currently selling the property and the buyers solicitor has asked me to pay out £376 to cover the mortgage lenders because of this clause. When I've read up about what it protects, it goes into details about the landlord being able to repossess the property if bills are missed, but there is no landlord and there aren't any bills, ground rent per se. 

Im just a bit confused as to why I need to pay this being share of freehold, I understand there's still a lease but there's certainly no one able to repossess things.

New to all this so excuse my lack of knowledge, any advice would be appreciated.

Thank you

"this clause" - which clause? Please quote. 

With share of freehold. the leaseholders also own a share in a company which owns the freehold, so the landlord is yourselves as a group. There would be no point in each leaseholder paying ground rent to the company which then distributes it in the same % back to the share owners. However that company is what makes decisions etc. 

DullGreyGuy

saajan_12 said:
There would be no point in each leaseholder paying ground rent to the company which then distributes it in the same % back to the share owners. However that company is what makes decisions etc. 

There would be no point in it but if the lease still states it should be paid then a risk exists. 

Also not all "share of freeholds" are all leaseholders; a previous development we looked to buy had most units as share of freehold but others were straight leasehold having not been involved in the buyout. 

Tiglet2

fullrloveuk said:

Hello

I have a share of freehold/leasehold on a flat. We do not have a landlord just a managing agent that sorts of the maintenance accounts. I am currently selling the property and the buyers solicitor has asked me to pay out £376 to cover the mortgage lenders because of this clause. When I've read up about what it protects, it goes into details about the landlord being able to repossess the property if bills are missed, but there is no landlord and there aren't any bills, ground rent per se. 

Im just a bit confused as to why I need to pay this being share of freehold, I understand there's still a lease but there's certainly no one able to repossess things.

New to all this so excuse my lack of knowledge, any advice would be appreciated.

Thank you

Is it a Forfeiture Clause in your lease??

A forfeiture clause gives your landlord (or Freeholder) the right to terminate/forfeit the lease. This means that they can take possession of your property.

Forfeiture usually happens if the service charge or ground rent has not been paid within the timeframe set out in the lease, often 21 days of being demanded by the Landlord (or Freeholder).

The Landlord (or Freeholder) can also forfeit the lease if any covenants (clauses which restrict you from taking certain actions) are breached.

Leaseholders and their lenders can protect themselves by getting a Mortgagee Protection Clause included in the lease.

A Mortgagee Protection Clause forces your Landlord (or Freeholder) to give your lender 28 days’ notice before they take steps to repossess the property.

The Leaseholder's lender contacts the leaseholder and either rectifies the breach themselves or asks the leaseholder to do so.

A Mortgagee Protection Clause is often required by lenders.  It is likely that the buyer's lender will not lend on this property without a mortgage protection clause in place.

eddddy

fullrloveuk said:

We do not have a landlord...

You do have a landlord.

The set-up is probably like this:

• You own a leasehold flat
• A company owns the freehold building - therefore that company is your landlord. You are a shareholder in that company

Because of the wording if the lease, there might be a theoretical possibility that your landlord (i.e. the company) could repossess your flat if you don't pay ground rent (or if you breach the lease in some other way).

(And there might be a possibility that the company sells the freehold building to somebody else, so somebody else might become your landlord, and they might try to repossess your flat.)


So the buyer's solicitor is probably asking for 1 of 2 things:

• Either you buy an insurance policy for £376, which will pay out if the flat is repossessed 

• Or the company that owns the freehold (i.e. the landlord) signs a Deed of Variation which modifies the wording of the lease.

The £376 insurance policy is probably quicker and cheaper than arranging a Deed of Variation.