Vendor Buying The Freehold First

JamesStam

Good morning everyone,

I have had an offer accepted on a house.

The house is currently a 900+ year leasehold and sits on a freehold.

The freehold is owned by a well known Estate in North Wales.

My offer was conditional on the vendor purchasing the freehold. I don't want to purchase a leasehold.

The vendor's freehold purchase can be done informally as the Estate is willing to sell the freehold to the vendor.

My own Land Registry research reveals the current leasehold sits on a large portion of land that has several leasehold detached houses on it.

Therefore, the sale of the freehold to the vendor would first require a "split" (I think).

I understand this transaction is ongoing and I am told it will be done in a "number of weeks".

I have some questions;

• Has anyone had any experience in this?
• Can anyone foresee any problems?
• Should I suggest to my solicitor that the freehold transfer from the Estate could go to me rather than the current vendor to save the number of Land Registry transactions?

I have had the memorandum of sale but not had anything since - no contract or other paperwork yet.

I am reluctant to get involved in the freehold purchase so the whole process can be kept as simple as possible.

Any advice from anyone?

Neither the vendor, nor I, are in chains so in that sense the pressure is off.

The house I am buying is currently unoccupied.

With thanks,

James

Bigphil1474

If I was the vendor, I wouldn't let the freehold go to you if it's being done pre-exchange and completion. The sale may fall through, and then you own the freehold for a property you don't own. The correct way would be either for the vendor to buy it and then sell it to you as part of the property deal, or for you to buy the leasehold property and then buy the freehold after completion. There may be another way, and your solicitor would be best placed to advise on that - presumably it can all be tied in with the contract of sale.

eddddy

The more usual way to do this would be to for you to buy the leasehold from the seller, and the freehold from the freeholder at the same time.

Your solicitor would make them linked transactions, so one cannot happen without the other.

You seem to think that this will make the process more complicated - but I think it might make things simpler. For example, your solicitor can deal directly with the freeholder's solicitor about your requirements for the freehold title - rather than having to go through the seller's solicitor.

You also need to decide whether you want to merge the freehold and leasehold title, or leave them as 2 separate titles. Ideally, you need to do decide this before applying for a mortgage.

There could be a lot of extra legal fees associated with doing all this. Maybe you should tell your solicitor all your plans, and get a quote in advance for doing for the whole lot.

Edit to add…

This will require a lot of cooperation from the freeholder - if the freeholder won't cooperate it won't be possible.

eddddy

Bigphil1474 said:

 The sale may fall through, and then you own the freehold for a property you don't own. The correct way would be either for the vendor to buy it and then sell it to you as part of the property deal…

As mentioned above, a better approach might be to link both transactions (the leasehold purchase from the seller and the freehold purchase from the freeholder) - so one can't happen without the other.

• So if the leasehold sale falls through, neither party will be left with a freehold that they don't want.
• And if the freehold sale falls through, the OP won't end up with the leasehold property and no freehold.

Bigphil1474 said:

…

or for you to buy the leasehold property and then buy the freehold after completion.

That would be a bit risky. The freeholder might change their mind about selling, or drastically increase the price - meaning the OP would have to take the 'Statutory Enfranchisement' route, which is likely to have much higher fees.

Also, that would be much messier if the OP wants to merge the titles and is buying with a mortgage.

(Linking the transactions is like when people buy and sell at the same time - the transactions are linked meaning that one transaction cannot happen without the other.)

JamesStam

Thanks for the comments.

I'll have a think about what to do.

Thanks.