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Now I'm being asked to buy the freehold...

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VannaB | 12:30 Sat 24th Feb 2007 | Law
5 Answers
Ok, so as a recap...my flat has 2 owners of freehold, both have been ansent landlords and never been in touch. One is an individual, the 2nd is the company that built the flats (2 flats in one block with peppercorn ground rent). When getting them to transfer freehold to me, the individual did so freely-the building company who never even knew they were down as landlords, have said they will only sign it over to me if I pay �1000 plus legal fees!!

My solicitor has said no to them. Now as the existing lease for both flats has a missing clause in MY copy and not theirs, causing confusion about who insures building (each their own or shared cost). My solictor is telling the Building Company they must now act as landlords (They've never been in touch in the 4 years I've lived there)and rewrite the lease at their own expense.

I'm desperate to exchange. Do you think my buyer will accept that we have now found absent landlords (they orgininally refused to exchange until we traced them to solve lease issue) and exchange, resolving lease issue once she's moved in? Or do you think she's gonna chance her arm and insisit that WE ensure lease is re-written BEFORE exchanging? If this scenario, how long does that take?

Is there an indemnity insurance I could pay for that would mean they'd exchange and then sort it themselves? if so what are the costs.

Am SO stressed now-tthis has come at a time when I am having major work issues/stress too (hmmm, must do a post about my boss actually)

Please if you wou wouldn't mind helping with advice and ideas again? Thank you

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OK, which Lease is registered at the Land Registry? is the copy they have signed by all parties? I would assume the one you have as tenant registers on purchase.

Which clause do you have, that landlord insures or that tenants share the cost? Is a proportion of the insurance premium recoverable from the tenants by the landlord if the former? It is usual the Landlord insures the building and claims the relevant proportion of the premium back from the tenants.

What your buyer would want to bear in mind if she purchased the freehold is her insurance liability on purchase as this could differ significantly between insuring the whole building or sharing with the other tenant (bearing in mind the consequences of there isn't one at any point). It could also be raised as an issue if there is insufficient protection in the other tenant's lease for insurance eg if the flat was unoccupied or not insured etc...

If the freehold isn't purchased pre-completion from the building company:

I'd check the lease which is registered and whether the building co's have a valid counterpart lease signed by all parties. If not you may be able to play hardball and say the Lease registered at the Land Registry goes. Get your solicitor to check with the Land Registry though and preferably get their advice in writing though as this could open a can of worms.

Another way to resolve this, if both parties have signed valid Leases and if the only clause in question is the insurance could be by Deed of Variation/Rectification/Agreement (previously agreed by the sellers and their lender if any) which is sent to the Land Registry with an explanation that there are conflicting Leases and that the parties have come to an agreement (by deed) as to what should be in the Lease then this would be registered for the Land Registry fee (�40).
The executed Deed and confirmation could be given to the seller on completion (solicitor can do it by undertaking to hand it over on completion with any deeds etc...) who could register it with their purchase avoiding the additional fee.

I would also get advice from the Land Registry here though as to what they will accept in the circumstances.

Time does depend on who is acting for the freeholders and how bothered they are to get it done quick, they will more than likely want costs for this too. Time could be saved if your solicitor drafts the deed for their approval and does most of the work which may reduce their fees (get them agreed in advance) If theythere are mortgages over the freehold or leasehold this may delay things if consent is required.

Another possible solution and far quicker and possibly cheaper solution to get rid of the property is to put the situation to your buyer (through solicitors) as to whether she is willing to pay the �1,000.00 plus costs (get an agreed limit on fees if poss from freeholder's sols as they will probably ask for an undertaking for fees).

If she buys the freehold then the defective Lease issue will be insignificant as it will no longer exist as I explained in your first post.

You may be able to come to some kind of agreement between you to share the cost somehow so you can get it over and done with. This could be done by an alowance on completion (ie less money is transferred to you on completion to compensate).

Beware though, they may look into whether there is a similar defect in the other flat Lease if she is becoming their Landlord, I would.
As a general point I'd make sure you are aware of any additional fees your solicitor may charge you for any extra work. Check your initial letter setting out fees and charging rates and such.

They may have given an estimate only or there may be scope in it for charging for additional work. if not and fixed fee was quoted, keep schtum and query their ability to charge more if they do on completion. Any change should be notified to you in writing.

I hope this helps, it's difficult to advise without having all the details in front of me but hopefully it will give you an idea.
Question Author
Thanks for the advice.
There are 2 flats-the missing clause is in my lease. It's related to insurance-my buyer says we should share the cost of the building insurance according to the lease whereas myself and upstairs have always done it seperately (and upstairs have already refused to share the cost with my buyer as they can't be bothered with the hassle, hence us needing to contact the absent landlords).That's what started this all off. We pay the landlords nothing but a peppercorn rent, and even that hasn't been collected by either of them.

My concern is that the landlord who wanted �1000 plus costs (The other landlord freely signed his part over to me) would drag his feet in sorting this as obviously he'd rather I buy it off him. Also, if the one who signed his share over gets wind that the others are charging for their half, he may do the same.

I took a drop of the asking price, threw in my washing machine and paved the patio at a cost of �500 because my buyer said she wanted a quick sale by beginning of Feb at the latest. Now I think that they are dragging their feet (the solicitor for my buyer is her friend so seems extra picky).

I'll email my solicitor and ask him to consider all ways of making this move quickly and at least getting an exchange of contracts signed so I have some peace of mind. The costs I was quoted for my sale/purchase were standard and it did say that there may be variations if complications arise, but no one has told me what these costs are. God, I'm gonna go bankrupt selling this flat!!!

If we do a Deed of Rectification, do we have to get upstairs involved? They move slowly too and I dont want even more people involved in all of this!
Question Author
Update...

I offered landlord �500 for freehold and he agreed. Contracts were exchanged FRiday and I move Tuesday.

Thaks for your advice

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