Section 121 of the law of properties act 1925

marksmen10

We are selling our freehold property built in 2007 which has a management company and we have come across this hurdle. It would appear that our buyers mortgage company have identified this section in the deed and as a result we have to pay £1600 to have this written out. How were these management companies ever allowed to formulate in the first place and how were they allowed to include these ridiculous deeds that stipulate they can possess your house if you don't pay the service charge. They rip you off at every turn, £450 for a management pack etc. Thanks Mark 

Emmia

marksmen10 said:

We are selling our freehold property built in 2007 which has a management company and we have come across this hurdle. It would appear that our buyers mortgage company have identified this section in the deed and as a result we have to pay £1600 to have this written out. How were these management companies ever allowed to formulate in the first place and how were they allowed to include these ridiculous deeds that stipulate they can possess your house if you don't pay the service charge. They rip you off at every turn, £450 for a management pack etc. Thanks Mark 

It's pretty standard on leasehold properties - so an element of your property must be a lease of some sort for managing the estate / surroundings to where you live.

35har1old

Emmia said:

marksmen10 said:

We are selling our freehold property built in 2007 which has a management company and we have come across this hurdle. It would appear that our buyers mortgage company have identified this section in the deed and as a result we have to pay £1600 to have this written out. How were these management companies ever allowed to formulate in the first place and how were they allowed to include these ridiculous deeds that stipulate they can possess your house if you don't pay the service charge. They rip you off at every turn, £450 for a management pack etc. Thanks Mark 

It's pretty standard on leasehold properties - so an element of your property must be a lease of some sort for managing the estate / surroundings to where you live.

Who is receiving the £1600

Emmia

35har1old said:

Emmia said:

marksmen10 said:

We are selling our freehold property built in 2007 which has a management company and we have come across this hurdle. It would appear that our buyers mortgage company have identified this section in the deed and as a result we have to pay £1600 to have this written out. How were these management companies ever allowed to formulate in the first place and how were they allowed to include these ridiculous deeds that stipulate they can possess your house if you don't pay the service charge. They rip you off at every turn, £450 for a management pack etc. Thanks Mark 

It's pretty standard on leasehold properties - so an element of your property must be a lease of some sort for managing the estate / surroundings to where you live.

Who is receiving the £1600

Probably the freeholder or management company. It's in the contract and was in the contract when the OP purchased their property.

eddddy

Emmia said:

marksmen10 said:

We are selling our freehold property built in 2007 which has a management company and we have come across this hurdle. It would appear that our buyers mortgage company have identified this section in the deed and as a result we have to pay £1600 to have this written out. How were these management companies ever allowed to formulate in the first place and how were they allowed to include these ridiculous deeds that stipulate they can possess your house if you don't pay the service charge. They rip you off at every turn, £450 for a management pack etc. Thanks Mark 

It's pretty standard on leasehold properties - so an element of your property must be a lease of some sort for managing the estate / surroundings to where you live.

Section 121 of the Law of Property act relates to Rentcharges on freehold houses.

Typically, the OP's situation is because they signed a deed agreeing to contribute to the upkeep of the estate land around their freehold house.

The management pack will contain info about the contributions, whether the seller is up to date with payments etc. (£450 does sound excessive.)

Emmia

eddddy said:

Emmia said:

marksmen10 said:

We are selling our freehold property built in 2007 which has a management company and we have come across this hurdle. It would appear that our buyers mortgage company have identified this section in the deed and as a result we have to pay £1600 to have this written out. How were these management companies ever allowed to formulate in the first place and how were they allowed to include these ridiculous deeds that stipulate they can possess your house if you don't pay the service charge. They rip you off at every turn, £450 for a management pack etc. Thanks Mark 

It's pretty standard on leasehold properties - so an element of your property must be a lease of some sort for managing the estate / surroundings to where you live.

Section 121 of the Law of Property act relates to Rentcharges on freehold houses.

Typically, the OP's situation is because they signed a deed agreeing to contribute to the upkeep of the estate land around their freehold house.

The management pack will contain info about the contributions, whether the seller is up to date with payments etc. (£450 does sound excessive.)

Unfortunately I think for any form of leasehold/rent charges £450 sounds pretty much par for the course.

We've recently paid £75 for someone to look at a picture of a potential replacement door which is identical to the current one (no guarantee of approval), and £500 to assess window replacement, again on a like for like basis.

eddddy

marksmen10 said:

We are selling our freehold property built in 2007
....
How were these management companies ever allowed to formulate in the first place and how were they allowed to include these ridiculous deeds that stipulate they can possess your house if you don't pay the service charge. 

I'm not sure that it was the management company's intension to be able to possess your house.

My understanding of the history is something like this:

• Developers required house buyers to sign a deed promising to pay towards the upkeep of the estate. Everyone was happy about this, including buyers and mortgage lenders.

• In around 2016, a sneaky company looked at those deeds, and looked at the Law of Property act and thought "Those fees look like Rentcharges. And a Rentcharge owner can take possession of of a house, if the Rentcharge isn't paid."

• So that sneaky company gave it a go - and tried to take possession of people's houses. There were a bunch of court cases, appeals etc in 2016 - but in the end the court very grudgingly said something like "It's shocking, but the sneaky company is correct" 

The result of that court case in 2016 was panic amongst Mortgage Lenders, Conveyancers and Home Owners.

And as a result of that 2016 court case, Mortgage Lenders now insist on Deeds of Variation.