Advice needed before exchange - pressure tactics from vendors?

Ash8765

Dear all,

I'm a first-time buyer, nearing exchange of contracts on a leasehold property in London and in need of advice. The vendors (who are buy-to-let landlords and also property conveyancers) have been very uncooperative and slow to respond to enquiries. There are three outstanding enquiries that are with them which I have outlined below.

The estate agent e-mailed this morning saying these additional enquiries have made the vendors 'lose confidence in the sale and lean toward renting out the property instead'. The EA was saying I should consider withdrawing the enquiries to give the vendor 'reassurance'. This has given me real cause for concern because I don't know why they would refuse to answer legitimate queries unless they are hiding something? 

I have put these questions to my conveyancers as well, but I'm hoping some experienced forumites might help shed some additional light on the level of importance/risk attached to these issues so that I can decide how to position myself in going back to the EA.

1. Apportionments. In the contract, the vendor has excluded Standard Condition 6.3.5 (apportionments) from applying. My conveyancers advised me that this could leave me with liability for arrears during the sellers period of ownership. The 6.3.5 condition states:

"when a sum to be apportioned is not known or easily ascertainable at completion a provisional apportionment is to be made according to the best estimate available. As soon as the amount is known, a final apportionment is to be made and notified to the other party.”

How unusual is this and why would the vendor remove this condition? Is there any other reasonable explanation, or could it be that they are hiding some unpaid charge?

2. Floorplan in the original lease is different to the property as it is now. Original lease is from 30 years ago. Stairs and bathroom changed with the addition of a second bedroom. Vendors were asked to provide confirmation of the landlord's consent for alternations made to the property. The lease states "the lessor must not at any time make alterations in or additions to the Demised Premises or any part thereof or cut maim, alter or alter the Landlord’s fixtures therein without first having made written application and received consent”.

What's the risk to me if this isn't provided? I have heard some conflicting things about what would be considered permitted development. The conveyancers suggested to me that even re-decorating requires permission but in fact the lease states that the tenant must maintain the premises in good state of 'repair and decoration' which implies the opposite. There's no list of fixtures in the lease...

I am a bit concerned that I might not be able to make alternations to the property myself. At a minimum the flat needs new kitchen and bathroom, but now I'm concerned that even this would require permission? Surely modernisation is allowed? 

2. Request to include an Indemnity policy because there is no mortgage protection clause.

Again, this was on the advice of the conveyancers. However the ground rent is a peppercorn so I'm not sure under what circumstances the freeholder could forfeit the lease...

Trying to figure out whether these issues are significant enough to walk away from the sale and therefore communicate that position to the EA.

Thank you!

Hoenir

Sounds as if the vendors might not be a professional outfit.  The reason for them considering letting the property. Is at the moment it's not in a saleable mortgageable position and they know it. 

ThisIsWeird

Modifying a staircase, moving a bathroom, and adding a bedroom are pretty significant alterations that would certainly have required the FreeHolder's express permission. That permission should definitely be evidenceable. If they cannot, then assume permission was not requested, and most likely not given.
Serious? I'd have thought so. The FH could most likely force it to be returned to the original layout if minded to do so. Fail to do this would be a serious breach the terms of the lease, with the ultimate consequence being you could forfeit the flat. (Of course, you'd reach some sort of resolution before that nuclear option, but 'just sayin'). And, what about matters such as insurance; how many bedrooms are recorded as being on the communal buildings policy?
Ok, it could be that everything carries on as before, and no-one says anything, but this is a breach, and should at the very least be indemnified against; in the worst case scenario, the policy should cover the cost of reinstatement to a 1-bed, and the resulting loss of value to the property.
(Don't worry about matters such as replacing kitchens and stuff - I doubt you even need permission, tho' it would be courteous to advise. And use professional builders, fully insured, in case you have leaks and stuff.)
If it all works out and you buy, then add comprehensive Legal Protection to your contents policy.

FlorayG

I would be very, very suspicious of any 'pressure from vendors' over any matter at all. Better to walk away and start again than to buy a pig in a poke

eddddy

You say a leasehold "property" - do you mean a flat or a house? 

You mention "stairs" - which suggests a house. But your previous posts talk about a flat.

There's a lot to unpack from your post - but as a starting point:

Ash8765 said:

1. Apportionments. In the contract, the vendor has excluded Standard Condition 6.3.5 (apportionments) from applying. 

Explain to the estate agent that this Condition 6.3.5 is a standard condition. Ask the estate agent why the vendor wants it removed. Is it because they are worried about something?

You can't rely on whatever the estate agent answers - but the question reinforces the point that you are being "normal" and the vendor is being "weird".

Ash8765 said:

2. Floorplan in the original lease is different to the property as it is now. Original lease is from 30 years ago. Stairs and bathroom changed with the addition of a second bedroom. Vendors were asked to provide confirmation of the landlord's consent for alternations made to the property.

Assuming you need a mortgage, now your solicitor is aware of this issue - you cannot simply withdraw the enquiry. 

Your solicitor will inform your mortgage lender, and they are very likely to withdraw your mortgage offer.

Do you know when the alterations were done? If the freeholder hasn't given consent, you might be able to get indemnity insurance for this, which might satisfy your mortgage lender.

But it's still possible that the freeholder could force you to undo the alterations - but the indemnity insurance might cover the resulting costs/losses.

Ash8765 said:

2. Request to include an Indemnity policy because there is no mortgage protection clause.

Again, this was on the advice of the conveyancers. However the ground rent is a peppercorn so I'm not sure under what circumstances the freeholder could forfeit the lease...

The freeholder could (probably) forfeit the lease because of any breach of the lease. You need to read the lease to see what those include - but typical examples of breaches include...

• Non payment of service charges
• Making alterations without consent
• Sub-letting without consent
• Keeping a pet without consent
• Operating a business from the property
• Obstructing the communal areas
• Doing something that invalidates the buildings insurance 

(But realistically, forfeiture would only happen if you breached the lease, and you refused to undo the breach - even when a court has warned you that you risk forfeiture.)

Beeblebr0x

I'd prefer to walk away from this rather than lose sleep worrying about a major commitment which you might sorely regret for years to come. They don't sound like people I'd want to get legally entangled with.

EssexHebridean

Just ignore what the agents are saying on this - they are well out of their lane advising you in this way.  Instead be lead by your solicitors - if the enquiries weren't needed they wouldn't have raised them in the first place! 

If the agents start putting pressure on you in this way again, just smile politely and tell them that you're dealing with the solicitors on the legal aspects. 

ThisIsWeird

EssexHebridean said:

Just ignore what the agents are saying on this - they are well out of their lane advising you in this way.  Instead be lead by your solicitors - if the enquiries weren't needed they wouldn't have raised them in the first place! 

If the agents start putting pressure on you in this way again, just smile politely and tell them that you're dealing with the solicitors on the legal aspects. 

Yes, relax. Let your conveyancer earn their keep.
Just make sure you have secure answers and/ or solid indemnity from the vendor before proceeding. Let them pull out if they really want to.
(Some of these issues could clearly significantly affect the value of this flat if unresolved or not indemnified against, so should be declared to all subsequent potential buyers.)
Meanwhile, keep looking at other properties.)

saajan_12

The pushback in itself isn't inherently that alarming, the seller is likely just impatient wiht the progress. Re whether you push the queries or drop them:
1) apportionment -> this is about the service charges for the current year.. the simpler way to do it is you just pay any bills during your ownership, but the more precise way is to identify costs that apply to the period before your purchase, but which are billed later. Its up to you, and probably based on how large this difference is likely to be. Eg in the past, for a leasehold property I was buying, the service charge was paid monthly and the annual charge was fairly stable, so I figured not worth scrutinising as the hassle and solicitor's fee to deal with an apportionment was likely to be higher than the money I'd regain. So not wholly unreasonable, but equally you could suggest that if the selelr just wants a quick exchange, they could just agree to your way which is standard. 

2) floorplan changes -> do you have an idea how long ago the changes were made? Also ask your solicitor what they need for the lender. If the lender needs it then that's your answer. If they don't, and if the changes were long enough ago, you might take the view that its unlikely there's any enforcement suddenly if it hasn't already been enforced. This might take longer to resolve if the proof has since been lost, making this one a bit trickier. 

Ash8765

Thanks everyone for your really helpful responses. Particularly in terms of dealing with the EA . I'm not even sure how much truth there is in what he is saying to me. His allusions to them 'reconsidering' and trying to get me to drop queries have startled me and made me think there's something really dodgy going on, but I haven't had quite the same impression from the conveyancers. Do you think it's likely they would suddenly pull out and decide to let it (they'll need to invest quite a bit into the refurbishment if so), when we're this close to completion?

1) On apportionments, my conveyancers said they'll make sure I will only be liable to pay any charges (mainly buildings insurance it seems) from the date of completion. This seem
2) Indemnity insurance: they've explained this is a non-negotiable for the lender, so that's easy enough.
3) floorplan changes - interesting point @saajan_12. The changes may well have been made a long time ago - I don't know. I do worry that it would cause marketability issues for me in future however (if I am asking this as a buyer, future buyers will too?). Conveyancers have suggested we could seek indemnity insurance for this instead - that sounds like a reasonable solution. Any thoughts on this?

Thank you all!

NameUnavailable

There was another thread on here not so long ago where someone found that their flat had been altered from the original plan because they were trying to sell and the freeholder had seen photos on Rightmove - they were imposing a significant fee for retrospective permissions.

Personally I would want to have confirmation from the freeholder that they had given permission for any changes. If that means the vendors have to go to the freeholder now for retrospective permission then that's what I would want, otherwise you're kicking a potential problem down to road until it rears its ugly head again! Why take on someone else's problem?

Most leases allow for simply refitting a kitchen/bathroom but not carrying out structural changes (although you need to read the actual lease to confirm).

Tell the EA that all enquiries and responses must go via your solicitors - it's important you do this because you then have protection if something isn't as you were told it should be later on.

If the vendors pull out of the sale because of your solicitors attempts to protect you/your mortgage co's interests then see that as a definite sign that you avoided a problem!