Freehold + Leasehold Maisonette

bobbyfishmonk

I live in a ground floor maisonette. The ground floor has a freehold and a leasehold both in my name. The upstairs has a freehold only. When I bought my house, my mortgage lender approved my mortgage so under a leasehold. The freehold was transferred to me towards the end of the process. Actually, my solicitors at the time didnt even realise the freehold title was included in the purchase - but it was tacked on to the end of the transaction.

I'm now trying to sell my house. The upstairs is uncooperative in rewriting the titles, and it seems not a possibility.

I had a buyer who approached several lenders. They tried to get a lender to approve a mortgage on the freehold but was denied. Should they have instead gotten the lender to approve a mortgage on the leasehold, since I have both?

Am I allowed to sell my property as a leasehold - even though I have both the freehold and leasehold, given its difficult for lenders to approve the freehold? 

Albermarle

The upstairs has a freehold only.

Seems a bit odd.
Are you sure that is the case ?
If so, is it a shared freehold with you ?

ThisIsWeird

Is this in England, Bobby?

It does sound strange - I suspect/hope a misunderstanding of the true situation.

Maisonettes and flats are almost always (always always?) Leasehold, but it's possible for the owners to also own the overall Freehold for the building, either solely or shared, the latter usually done via a FH Management Co where each Leaseholder is a 'director'.

So, the most likely explanation is that you do, indeed, have a Leasehold maisonette, but that you also own either a share of the Freehold for the whole building, or possibly own the whole FH outright (that would be quite cool...)

So, have a looksee through your Lease, and also the one of the flat/maison upstairs, and see what it says.

What about your conveyancing solicitor - do you have one yet?

eddddy

I wonder if you've got things slightly wrong, and perhaps you confused your buyer, who then gave the wrong information to their mortgage lender?

It's much more likely that the set-up is one these options...

Option 1

• You own a leasehold maisonette/flat
• Your upstairs neighbour owns a leasehold maisonette/flat
• You and your neighbour jointly own the freehold of the whole building

Option 2

• You own a leasehold maisonette/flat
• Your upstairs neighbour owns a leasehold maisonette/flat
• You also own the freehold of the whole building

 
Both of those set-ups are 'normal' and wouldn't be a problem for mortgage lenders.

But if your buyer told a mortgage lender it was a 'freehold maisonette or flat', that's likely to be an instant rejection.

bobbyfishmonk

Thanks for your quick responses - this has been such a headache and a long process so I really appreciate any help. I used the same conveyancer when I was a buyer and am now a seller. The current conveyancer said in one email:

• The property is a detached house which at some point in the past has been split into two separate flats. There are no common parts.
• A Lease was granted for the downstairs flat, however no lease has ever been created for the upstairs.
• Somehow the each flat has a separate freehold title, so both are freehold flats at present.
  

When I search HM land registry:

• 2 titles are present for my downstairs flat: freehold and leasehold. both titles are in my name.
• 1 title is present for the upstairs flat: freehold. this is in the name of the upstairs owner.
  

An attempt was made to rewrite everything as a "criss-cross lease" to satisfy the lender,  but due to the upstairs being uncooperative, this didnt work out.

I'm now trying to figure out what my options are as the owner and seller of the downstairs flat. I wonder if this is a case where things were unnecessarily overcomplicated from the very beginning and taken me down a path that shouldnt have been explored.

My main question is, am I allowed to advertise the flat as a leasehold (to satisfy lenders) and then transfer the freehold to the buyer later.

bobbyfishmonk

ThisIsWeird said:

Is this in England, Bobby?

It does sound strange - I suspect/hope a misunderstanding of the true situation.

Maisonettes and flats are almost always (always always?) Leasehold, but it's possible for the owners to also own the overall Freehold for the building, either solely or shared, the latter usually done via a FH Management Co where each Leaseholder is a 'director'.

So, the most likely explanation is that you do, indeed, have a Leasehold maisonette, but that you also own either a share of the Freehold for the whole building, or possibly own the whole FH outright (that would be quite cool...)

So, have a looksee through your Lease, and also the one of the flat/maison upstairs, and see what it says.

What about your conveyancing solicitor - do you have one yet?

Yes, this is in London. When I bought the property it was advertised to me as "share of freehold". It seems to me the two freehold titles are in separate names - theres no company in which both upstairs and downstairs hold shares.

bobbyfishmonk

eddddy said:

I wonder if you've got things slightly wrong, and perhaps you confused your buyer, who then gave the wrong information to their mortgage lender?

It's much more likely that the set-up is one these options...

Option 1

• You own a leasehold maisonette/flat
• Your upstairs neighbour owns a leasehold maisonette/flat
• You and your neighbour jointly own the freehold of the whole building

Option 2

• You own a leasehold maisonette/flat
• Your upstairs neighbour owns a leasehold maisonette/flat
• You also own the freehold of the whole building

 
Both of those set-ups are 'normal' and wouldn't be a problem for mortgage lenders.

But if your buyer told a mortgage lender it was a 'freehold maisonette or flat', that's likely to be an instant rejection.

I think neither of these options apply, since the upstairs flat has no leasehold on HM land registry - just a freehold. Only my flat has both a leasehold and a freehold title.

What should the buyer have told the lender?

bobbyfishmonk

Albermarle said:

The upstairs has a freehold only.

Seems a bit odd.
Are you sure that is the case ?
If so, is it a shared freehold with you ?

It seems to be the case - as per HM land registry and titles I downloaded. There is no indication of anything being shared in the freehold - this is what the conveyancer said in an email too, that they are separate freeholds.

eddddy

bobbyfishmonk said:

I think neither of these options apply, since the upstairs flat has no leasehold on HM land registry - just a freehold. Only my flat has both a leasehold and a freehold title.

Just to make sure...

Normally, when you do a Land Registry search for 2 flats in a converted house, you would expect to see something like this:

Flat 1, 23 Acacia Avenue (i.e. the downstairs flat)

• 1) Leasehold Title
• 2) Freehold Title

Flat 2, 23 Acacia Avenue (i.e. the upstairs flat)

• 3) Leasehold Title
• 4) Freehold Title

But items 2 and 4 are the same title. It's the same title listed twice.

(And you won't see item 3 if that flat hasn't changed ownership since 1990)


So...

• Has the upstairs flat changed ownership  since 1990? If it hasn't, the leasehold might not have been registered on Land Registry.

• Have you downloaded the freehold title for the upstairs flat? Is it the same freehold title as your flat? Does it show you as the owner?

• Absolutely don't go for a criss-cross lease. That would be a nightmare.

• How long ago did you buy the flat? If what you say is correct, when you bought your flat, your solicitor should have informed your mortgage lender, and your mortgage lender would almost certainly have refused to lend

bobbyfishmonk

eddddy said:

bobbyfishmonk said:

I think neither of these options apply, since the upstairs flat has no leasehold on HM land registry - just a freehold. Only my flat has both a leasehold and a freehold title.

Just to make sure...

Normally, when you do a Land Registry search for 2 flats in a converted house, you would expect to see something like this:

Flat 1, 23 Acacia Avenue (i.e. the downstairs flat)

• 1) Leasehold Title
• 2) Freehold Title

Flat 2, 23 Acacia Avenue (i.e. the upstairs flat)

• 3) Leasehold Title
• 4) Freehold Title

But items 2 and 4 are the same title. It's the same title listed twice.

(And you won't see item 3 if that flat hasn't changed ownership since 1990)


So...

• Has the upstairs flat changed ownership  since 1990? If it hasn't, the leasehold might not have been registered on Land Registry.

• Have you downloaded the freehold title for the upstairs flat? Is it the same freehold title as your flat? Does it show you as the owner?

• Absolutely don't go for a criss-cross lease. That would be a nightmare.

• How long ago did you buy the flat? If what you say is correct, when you bought your flat, your solicitor should have informed your mortgage lender, and your mortgage lender would almost certainly have refused to lend

I see this in HM land registry:

Flat 1, 23 Acacia Avenue (i.e. the downstairs flat)

• 1) Leasehold Title (AABB1)
• 2) Freehold Title (AABB2)

Flat 2, 23 Acacia Avenue (i.e. the upstairs flat)

• 3) Freehold Title (CCDD1)

I also have all of the documents that could be downloaded.

The two freeholds are different - they have different title numbers and different names. Item 2 has my name only, and Item 3 has the name of the upstairs only. In my freehold title (AABB2), the charges register contains an entry: 

• A Conveyance of Flat 2, 23 Acacia Avenue dated 01 October 1958 made between (1) John Smith and (2) Joe Bloggs contains restrictive covenants. NOTE: Copy filed under CCDD1.

I bought my property in 2011, and upstairs bought their property in 2006.

I'm not sure what it means exactly - or what I should do? My solicitor has spent the last 1+ years trying to negotiate a criss-cross lease with an uncooperative upstairs owner.

loubel

It sounds like your solicitor messed up when you first purchased, as they should have noticed that the freehold is split between the properties.  I hope you aren't paying them to help you resolve this!

Is the other freeholder a party to your lease in any way or is there a deed of covenant between them and you relating to the maintenance of the building?