Leaseholder Deed of Variation for extension - do I have to sign?

granta

A leaseholder in my block (we have share of freehold between 4 of us) has recently completed a roof extension/closet wing extension under a licence to alter and the completion license has been granted. The Freeholder’s solicitor is now drafting a Deed of Variation for each of us. This is the text form the licence.

"On completion of the Alterations and Landlord Improvement Works the Landlord will enter into deeds of variations with the remaining leaseholders at the Building to amend the service charge proportions to 20% per flat (save for the Lease for the Premises which will be 40%) and maintenance responsibilities in respect of the new mansard roof extension of the Building which shall be that of the Tenant under the new lease and the Tenant will pay the Landlord’s reasonable and properly incurred costs"

My question is whether I am obliged to sign this and what are the consequences of not doing so?

The reason is because the leaseholder who did the works offered each flat owner a premium for a storage cupboard that was built in the communal area as part of his offer to us to get us to agree to the works, i.e. he would buy the cupboard from us. But nothing was put in the licence to alter and the solicitor has said we have to agree this between ourselves. I had verbal/email agreement from him a year ago but I suspect he will now decline to buy the cupboard. I know he has agree to buy the cupboard from one of the other flat owners but as relationships between us all is minimal, I have no insight into how he got him to agree.

So, I want to know what options I have to negotiate this and whether I can withhold signing the new lease until he honours his offer.

Also, do I have to get permission from my mortgage lender for the deed of variation?

poseidon1

On the variation issue and your mortgage lender, it does not appear to adversely affect your property. Indeed, if it was the case your service charge percentage was originally 25% and is now reduced to 20% won't you  in fact benefit from a lower charge?  Can't see such a change adversely affects  your mortgage lender's security, but surely this is a question for the solicitor representing the rest of you in exactly the same position?

As to what might happen if you refuse to sign the variation, again only your solicitor can advise based on exactly how your particular freehold reversionary title was structured and if there was any provision for 'deadlock' or absent co -freeholder situations. 

 A sensible freehold structure would have been a company with all relevant matters relating to the administration of the company covered in the Articles and Memorandum of Association. Can't see how anyone here can second guess your set up.

granta

Thanks, agree re there being no adverse effect. I just wasn't sure if I have to notify the lender or they would have to do any legal work to update any documentation. So I don't need to tell them?

I will be enquiring with the solicitor next week but they are unresponsive to individual queries from leaseholders but you've given me a steer to ask about freehold title and making an enquiry about that. 

eddddy

Your mortgage lender would need to approve any lease variation - and they will probably want you to instruct a solicitor to deal with this.

Ideally, you should instruct your own solicitor, and not rely on what somebody else's solicitor says.

Presumably, your legal fees will be paid by the tenant who's done the extension.

You generally cannot be forced to sign a Deed of Variation - unless you have previously agreed that you will sign it.

Has the leaseholder converted some/all of the roof space / loft? If so, did the roof space / loft belong to that leaseholder (i.e. was it demised to that leaseholder)?  Or was it jointly owned by the 4 joint freeholders?



Are you being asked to contribute 20% towards the cost of maintenance of anything that the other leaseholder has changed or has built?

If so, the risk is that the other leaseholder has used 'cowboy' builders to do a botch job of removing walls, building new walls, putting in new windows, etc - and the botched work will need expensive repairs to put it right in future years, and you have to pay 20% of the cost.