Buying house with missing lease

lionel_hutz

My daughter is buying her first house and had encountered the following problem. Had anyone else had any encounters with this or sny solutions before she pulls out of the sale?

Messsge from my daughter.

the solicitor has encountered a problem, they said the property has the freehold title but the seller can’t demonstrate that they hold the leasehold title, they have issued an insurance policy instead to say that if someone comes along to claim the land that the insurance policy will cover us up to a certain amount. The solicitor seems to think it’s a major problem and was basically insinuating that we should pull out if my attitude to risk is low (which it is) but I don’t know if it’s worth it because it is highly unlikely someone would come and claim the leasehold isn’t it?

Sorry I should add the reason the solicitor thinks it is such a big problem is because he thinks it would cause issues to sell it in the future if people know we don’t own the freehold and if we wanted to build an extension the value of that extension might not be covered in the insurance policy 

Mark_d

Is this a leasehold house?  Typically houses are freehold but some modern houses can be leasehold.

user1977

lionel_hutz said:

if we wanted to build an extension the value of that extension might not be covered in the insurance policy 

Then you can get extra insurance. Pretty commonplace when you come to sell as your existing policy probably won't cover the new value of the property.

gm0

An indemnity policy is against legal costs of a challenge.  Someone turning up with this historic lease in hand. Asking for their rights from you as freeholder.  Legal defense costs.

Title cruft exists.  The age of the title, when this was created.  And other aspects of what papers you can see, and what LR have, play in.  Is it better to have title without cruft. Yes.  And on a very modern house it is a reasonable expectation and buyers don't like it.   

But good luck with that on a midcentury and earlier 18xx property with conveyances and covenants all between the now long dead - but not worded as a lawyer "today" would say was the desired forms.  Or old farms that got split up in stages.  Utilities, wayleaves, covenants, access, title plan ambiguities one to another. Cruft aplenty.  No sensible way to fix it.  Indemnity possible for some things. Not possible and/or not worth it for others.    No path to "zero" risk.  You take a view.

theartfullodger

Missing lease?  Then you won't know what you think you expect to buy.

Risks can be reduced....

gm0

Leases can be found. Or they cannot. LR have it or they don't.  Ditto current seller.

And the conveyancing history may imply via who sold what to who when - but not prove outright - how we got to here if many but not all papers are available.  To know it exists implies a reference.  Which may include a date and who between. Which may tie to older sales history.

This lease - when and who between xyz or lease of date x - must appear somewhere - referenced as existing -  for it to have become an issue at conveyancing. Or there would be no problem as nobody would know about it.  

A freehold title and plan (from LR) is being sold by seller to buyer.   A lease long ago even from when the property was unregistered - could have existed, exist meaningfully no longer and be in landfill and you would be none the wiser.  Depends on the age of the property and its title plan as to how feasible that is to have happened.

Context is all as to whether this is "nothing much" - indemnity policy as sticky plaster.  Or a bigger issue.  

Your lawyer is not going to assume the risk themseleves - however low - that it isn't fine by telling you that it is.  
You have to make that judgement after the legal explanation and reading the documents and the context of what this may (once) have been.  

If its the former - a missing old document someone failed to tidy decades past - then asking the vendor to "fix it" as a paperwork glitch of 50 years ago - is often to ask for the impossible with some kinds of title cruft. 

And they will refuse and you are back to "buy" or "do not" after some paid for solicitor's letters.

If you don't like the risk - you walk. 

If you don't like title cruft in general. Don't bother looking at old property or rural property or converted property with complex access, utilities etc.  Stick to newish build - where all the papers will be available.  Or hit the LR download button early in your screening process.

I would not buy it with a missing lease if it was recent. Suspicious.  Or if older the history doesn't support a story of leasehold and freehold getting unified and the then unified owner just failing to tidy up when they had both. They had no incentive to spend money on doing so.  And when they sold the freehold the next time - maybe nobody cared - at that point.  But now - someone does.

Yorkie1

It seems to me that there are two separate issues:
1) Has the seller got the legal right to sell the leasehold
2) What are the terms of the lease which any owner of the property will be bound by?

Has the seller or your daughter's solicitor given any advice on resolving 2)? If it s a reasonably recent development then there may be other copies of the lease for nearby properties, which may be similar or identical.

user1977

Yorkie1 said:

It seems to me that there are two separate issues:
1) Has the seller got the legal right to sell the leasehold
2) What are the terms of the lease which any owner of the property will be bound by?

I think you've misunderstood the problem. They are buying the freehold, apparently with vacant possession. But there's still a lease kicking about. The risk is that a third party turns up claiming they are the leaseholder.