Defective lease, no legal responsibility for maintenance - do I need a Deed of Variation?

shak_ka

Hi folks, some advice please if you can -

I'm a FTB in the process of buying a leasehold flat in London (Victorian conversion with 3 flats in the building total). The building is insured by the freeholder, but repairs and management are taken care of by a management company comprising the three leaseholders. The problem is, this management company is not named on the original lease nor the regranted lease that extended the terms of the lease for my seller's flat, meaning there is no party to the lease that is responsible for repairs.

My solicitor has advised that in the current situation the lease is defective, the property is likely unmortgageable, and to rectify it, a deed of variation is required that names the management company on the lease with the freeholder as a signatory. However, the estate agent / seller are reluctant to agree because of the time and money involved and their solicitors have suggested a solution involving a deed of covenant without involving the freeholder.

-- is there any other way forward, or is my solicitor correct that a DoV is necessary? 

Thanks in advice.

eddddy

So just to clarify - are you saying that the lease does not make anyone responsible for maintenance and repairs?

That seems very unlikely, but if it's the case, that would definitely be a defective lease.

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But what seems much more likely (and normal) is...

• The lease makes the freeholder responsible for maintenance and repairs

• But the Freeholder has agreed that the management company (created by the leaseholders) can do all the maintenance and repairs on behalf of the freeholder

In that case, the lease is not defective, and there should be no problem whatsoever for a mortgage lender.

Because if, for example, the management company folds or loses interest - the freeholder still has the ongoing responsibility for maintenance and repairs.

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I wonder if the problem is that an amateurish management company (and/or amateurish freeholder) gave a weird/confusing reply to your solicitor's pre-contract enquiries about maintenance and repairs.  And based on that reply, your solicitor says a DoV is required.

However, if the management company / freeholder explain the situation more clearly, you solicitor will be happy that no DoV is required.

(But obviously, that's just a guess.)

shak_ka

Thanks for your reply! That maybe sounds less challenging.

The Management Co. isn't a party to the re-granted lease (2016), but there is an 'association' (basically a ltd co.) named in the original lease (1980s) with the responsibility for repairs and maintenance. My solicitor's view is that the regranted lease doesn't leave anyone responsible for repairs or insurance because the association wasn't party to the regrant, and suggests that freeholder, management co. and lessee all need to sign something to bring management company into the agreement to enforce the terms of the lease.

I don't know enough to say whether the default position would be that the freeholder is now responsible or not, but my solicitor doesn't seem to think so...

eddddy

shak_ka said:

Thanks for your reply! That maybe sounds less challenging.

The Management Co. isn't a party to the re-granted lease (2016), but there is an 'association' (basically a ltd co.) named in the original lease (1980s) with the responsibility for repairs and maintenance. My solicitor's view is that the regranted lease doesn't leave anyone responsible for repairs or insurance because the association wasn't party to the regrant, and suggests that freeholder, management co. and lessee all need to sign something to bring management company into the agreement to enforce the terms of the lease.

I don't know enough to say whether the default position would be that the freeholder is now responsible or not, but my solicitor doesn't seem to think so...

OK - that does sound more complex and difficult to solve.

It sounds like the original lease was tripartite (i.e. between 3 parties)...

• 1. The freeholder - who wasn't responsible for building management
• 2. The 'association' - who were responsible for building management
• 3. The leaseholder 

But when the lease was regranted, the regrant was only signed by 2 parties...

• 1. The freeholder - who wasn't responsible for building management
• 2. The leaseholder

I don't know if that's legitimate - or if

1. it makes the regrant invalid,
2. or if it means the 'association' are still responsible for building management,
3. or if nobody is responsible for building management.

Depending on whether option 1, 2 or 3 is the case, there are probably different approaches to resolving the problem - but either way, it sounds like it's something the seller has to sort out. And I doubt it's a quick easy fix.

(I'm guessing that the seller did something like got an informal lease extension without using a solicitor, and it got messed up.)

shak_ka

Yes, my solicitor thinks whoever did the regrant was negligent. Sounds like a deed of variation is probably required...