Confusion of share of freehold ownership

malwoden24

We purchased a share of freehold maisonette (in a block of 2) several years ago, at the time two other people were listed as co-freeholders and it was thought they jointly owned the remaining flat in our block. However, it has since transpired that only one of these was the owner of the other flat, and the remaining freeholder listed in fact owns a flat in a similar building (of 2 maisonettes) next door. There are separate freehold titles for each of the blocks of two flats, however, in the past these were owned by a single company. We have now established that the previous leaseholders of 3 of the 4 flats purchased the two freehold titles from a single owner nearly 20 years ago. It appears they wanted to split the freehold for the four flats equally across the three individuals and so did this by having all three parties being named on each of the 2 separate freeholds. We think they wanted to each own one flat and a one third share in the final flat.

Since then both flats in our block have been resold, while ownership of both flats in the other block have not changed. This has now left us in the position that we have three separate parties listed on our title for just 2 flats. This recently led to the sale of the other flat in our block falling through as it was not apparent how the freehold should be partitioned on the TR1 form. The buyers assumed they would get 50% of the freehold, but then that would push us to split the remaining 50% with the other co-freeholder. The other co-freeholder has been very hesitant to explain the historical situation to us and have said they will not be removed from the freehold. This is despite them never claiming any responsibility or contributing to any maintenance/insurance etc for any part of our building and not owning any of the leases in our building.

We now want to sell our flat, but we do not know how to proceed given the current state of the freehold. It appears that previous sales all went ahead because of the incorrect assumption that the other people listed were the freeholders for the other respective flat in the block. We have a very long lease on our flat (>900 years) so we are hoping that the share of freehold has less impact on potential buyers for our flat.        

Can anyone please offer advice on how problematic it is to have three separate parties listed on the freehold for only two flats, and how it might be possible to move forward with attempting to sell our flat given these circumstances and if the co-freeholder refuses to be removed from the title?

eddddy

Just to clarify - it sounds like you almost certainly own 2 things:

• 1) You own a leasehold maisonette
• 2) You jointly own the freehold building that the flat is in, with 2 other people. (I guess you each own 1/3rd)

And you tried to sell both these things to a buyer, but they walked away because they wanted to:

• 1) Own the leasehold maisonette
• 2) Jointly own the freehold building that the flat is in - but they wanted to own 50%, not 1/3rd

Did they explain why only owning 1/3rd of the freehold building was an issue for them?  Other buyers might not see that as an issue.

(Or was there some kind of legal complexity?)



A alternative approach for you could be:

• Sell you leasehold maisonette to somebody
• Sell your 1/3rd share of the freehold to your joint freeholders

So then you'd be marketing it as a leasehold maisonette, rather than a share of freehold maisonette. You'd have to ask local estate agents how much that would affect it's saleability and value.

malwoden24

Thanks for the response, just to say the sale that fell through was not ours, so we do not know the full details there. But I think the issue was that the previous TR1 forms (and the one we were all asked to sign) included the details ‘tenants in common with equal shares’ and therefore the conveyancer who was handling the process advised it would not be possible to proceed unless the other freeholder was removed.

We have considered your suggested option of selling as a leasehold only, but I think this would affect the saleability and value as you say – so we would definitely need to get this looked into.

eddddy

malwoden24 said:

...therefore the conveyancer who was handling the process advised it would not be possible to proceed unless the other freeholder was removed.

FWIW, depending on the context, that might still mean... it's not possible to proceed because the buyer is adamant that they won't proceed unless the third freeholder is removed.

Even though there is no legal reason why the third freeholder must be removed.

If that's the case, another buyer might not be so adamant about having the third freeholder removed.


(So it might be worth trying to find out whether the buyer was unable to proceed, or unwilling to proceed.) 

malwoden24

Thanks again for the useful insight, all really helpful points and lots for us to consider.