What documents should I expect when I've purchased my buildings rent charge?

FrankFalcon

Hi all

Didn't really know which category to put this in, so if it's wrong, i apologise and ask an admin to move it.

THIS IS A COMMERCIAL MATTER ON A FACTORY MY FAMILY OWN.

My family have owned a factory for many years. For as far as I personally know, (at least 25 years), the company has paid £35 per year ground rent to an elderly gentleman down South. Recently, we received an offer to buy the rent charge for £750, which we did. In return, the elderly gentleman/company simply sent us a copy of our land registry entry and confirmation of monies received. My question is…Is that it? Are there any records that need updating with land registry etc? I should add, that the company we bought it off is a one man band in his 90's who lives hundreds of miles away. He is a lovely guy, who we have dealt with for over 30 years and he has always been a tad eccentric. When we rang a few months back one of his grandchildren answered the landline and told us the gentleman was of ill health. Whilst this information (about the gentleman) may seem irrelevant I am of the opinion that in his poor health state, he may not get round to completing the formalities at his end.

With this in mind, I'd be grateful if somebody in the know could tell me what are the steps that need to be taken by the seller and the vendor in this situation. Who needs to notify who of what?

Thanks in advance.

silvercar

You need the freehold in your name, as you have now bought it. You also need the lease cancelled as you can’t own both the leasehold and the freehold. When the offer was made, it should have stated clearly who was responsible for the legal costs of doing this.

Our resident advisor @Land_Registry may be able to say whether it is possible to do this yourself or whether you need professional help.

poseidon1

https://forums.moneysavingexpert.com/discussion/6673595/what-documents-should-i-expect-when-ive-purchased-my-buildings-rent-charge

An interesting situation.

What you have not mentioned is how long was your remaining lease on the factory prior to the 'contract' to buy out the Freeholder.

I mention this on the basis that your freeholder may well have substantially undervalued what he was selling having regard to any ' marriage value' accruing to the freehold in relation to the remaining term of your lease. The Freeholder appears to have sold for a very small premium above the investment value of the £35 annual ground rent.

It appears neither you or he involved solicitors in the transaction so apparently no formal pre or post contract due diligence of any kind conducted by either party. Specifically, if you have seen no indication that a TR1 was executed by the freeholder in your favour, then he remains the owner on title

Given the gentleman is now ailing, this lack of formal post contract conveyance of the legal title may leave you as the purchaser vulnerable if the gentleman dies and you then have to seek the assistance of his executors to complete the conveyance. Such a request to executors may well reopen the whole basis for the original 'valuation' and worse case for you reopening and renegotiating the entire deal.

If your family did not originally engage a solicitor to handle your side of the transaction ( a surprising oversight for a business ), then you should certainly be seeking their advice now rather than prevailing on an anonymous forum for DIY guidance on an important business matter.

In passing, you may also wish to explore whether the conveyance of the freehold markedly increased the factory's value. If so, that would be a further indication of a potential disposal at undervalue which coincidentally could have CGT implications on the vendor.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/82044712#Comment_82044712

I don’t see how the gentleman could reopen negotiations; he may have been naive in his negotiations, but this is a business transaction he chose to make.

I also don’t see any CGT implications, given the parties are not connected.

sherlock228

https://forums.moneysavingexpert.com/discussion/comment/82044841#Comment_82044841

the scenario being referred to is clear
vendor may have died before any paperwork is registered, at which point your word against a deceased person is not going to get very far, hence possible need to start again

re CGT yes the OP has no liability, but the vendor may, (which is what Poseidon said)

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6673595/what-documents-should-i-expect-when-ive-purchased-my-buildings-rent-charge

Presumably you used a solicitor to deal with the acquisition? Sounds like you purchased the freehold having already owned the leasehold. At a minimum the change of freeholder would need to be registered but others may want to merge the titles to remove the leasehold.

Its also possible the title hasn't changed and instead there as just been an amendment to the lease to remove the ground rent.

Really need to speak to your solicitor who should be guiding the process through.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/82044895#Comment_82044895

Again, no CGT for either party if no profit was made. I was addressing the under market value potential deal, as the parties are not connected it is the amount paid that does count not the market value.

As for starting again, OP has evidence of money paid and received.

eddddy

There seems to be a lot of confusion in this thread.

The OP says they had a "rentcharge" - that implies that the OP owns a freehold property.

I think some people are confusing a "rentcharge" with "ground rent", and assuming that the OP owned a leasehold property and was buying the freehold.

Assuming the OP is correct, and they owned a freehold property with a rentcharge…

I'm no expert on this, but I believe that you and the rentowner (i.e. the 90 year old man) must sign a "Deed of Release" for the rentcharge, and then you must notify Land Registry - so that your freehold title is updated to make it clear that there is no longer a rentcharge.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82045439#Comment_82045439

Thanks for spotting the distinction which I now see was obvious from the original thread title.

None of what I outlined refers to the rent charge regime applicable to otherwise unencumbered freehold interests, and therefore should be ignored in its entirety.

The guidance below seems to be in point for Rent charges-

https://www.gov.uk/guidance/rentcharges

Land_Registry

https://forums.moneysavingexpert.com/discussion/comment/82044532#Comment_82044532

We'd always advise seeking legal advice/assistance re such matters. Your starting point from a registration point of view is confirming the registered information re the property and rentcharge to see if the rentcharge is noted or registered under it's own title.

If you've bought the rentcharge then it's usually determined by way of a deed of release by the rentowner. Drawing up a legal deed invariably requires professional help hence the legal advice suggestion