Leasehold with share of freehold- what does it mean?

[sti5brigade]

I am going through the process of buying a Maisonette with share of freehold. Its effectively a Maisonette (ground) and someone else has the upstairs

I've been given a whole wad of papers by my fairly unheldful solicitor

This includes

1. A leasehold document... This was set out in 1970 on 99 years and has 67 years to run. There is a £20 annual rent and insurance
Solictor stated that it was fairly academic and that to have a share of freehold you needed (for legal simplicity) to have a leasehold contract as well - that I'm stumped by

Why do I need to have a leasehold contract?

When the property was split into maisonettes the 2 property sections freehold was granted to the upstairs and downstairs but the people doing this retained a leasehold interest...........?

The leasehold register is split into:

Property register (a) - the people named are the ones who started the lease in 1970, not the current owners
Proprietorship register (b) on title absolute is the person/peoplle who currently own the property

My solicitor tells me its all academic and that I own the leasehold and the freehold. The £20 will never be paid and that the person named from 1970 is simply historical and that I can extend the leasehold to 999 years but theres no point as it doesnt mean anything and it'll cost me about £500 in costs and land registry stuff

The upstairs has the same lease agreement

Theres a tonne of restrictive covenants but these seem to come from when the 1st purchase was done back 100 years ago

2. Then theres the freehold

This contains the following restriction in the title absolute which I dont understand

''No disposition by a sole proprietor of the registered estate (except a Trust coporation) under which capital money arises is to be registered unless authoirsed by an order of the court''

The charges register states as a last point

''The parts of the land affected thereby are subject to the lease set out in the schedules of leases hereto. The leases grant and reserve easements as therein mentioned'' - goobledigook

This also contains a tonne of restrictive covenants

3. Then theres some info on the lease clauses taken out in 1970. This effectively states that a fair share of costs be imposed. So if the roof needs repairing then I would have to share the cost..... seems a bit odd as the loft area has been converted.........

I guess I'm after some comfort that having a lease with SOF is normal and that I am the actual owner of the property and the land (50% at least anyway)

Is the leasehold taken out to cement the covenants of the SOF - is this the only way it can be done?

[jeffrey]

1. You are buying a LEASEHOLD. The register entries sound correct.
2. The FREEHOLD REVERSION, i.e. the freehold estate subject to both leases, might be in joint names of the two flats' leaseholders (i.e. your vendor + other flat)- see Proprietorship Register of freehold title- or in someone else's name [unlikely]. In the former case, the f/r wil be transferred so that your 50% share is reflected in the same way as your vendor's is.
The restriction simply means that, if one of f/r owners dies, his/her share does not pass to other one but, instead, into Deceased's estate- distributed under Will or on intestacy.
3. Service charge provisions demand that all maintenance/repair/insurance of structure is paid as to 50% by each flat.

Leasehold is one of the only two acceptable ways to divide a building horizontally. The only other way is called Commonhold.
Please contact me direct (see TOPIC EXPERTS page) if you need to know more.

[Richard Webster]

I've been given a whole wad of papers by my fairly unheldful solicitor

I am sad that you haven't had it all explained to you properly. I think you are entitled to go back and ask for proper explanation such as Jeffrey has given.

This is part of the problem that people have when buying - they don't know how much stuff will be explained to them - and when buying for the first time don't know the kind of stuff that will need to be explained. Some solicitors cut corners by not really trying to explain this kind of thing at all. I don't know whether you had a factory conveyancer of a high street one but you really shouldn't be afraid to come back and ask more.

When I get people not understanding my explanations of stuff I regard it as a challenge to improve them so they do understand!

As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying clients

[Chris]

Hi, I am hoping for some advice.
I have been trying to buy a ground floor flat for MONTHS now, its been a nightmare. The flat has a share of freehold with the upstairs flat owning the other half of the freehold. The problem has been that the joint freeholder has enlisted the services of a very difficult licenced conveyancer (he isnt even a solicitor). I am hoping to do some works to the ground floor flat (if it ever goes through). The joint freeholders solicitor has issued a "Licence To Alter". We are refusing to agree to this. In this Licence to Alter, his client (the joint freeholder) is called "The Landlord" and the guy I am trying to buy from is called "The Tennant". Its wrong, they both jointly own the freehold. Apart from that, I have found out that this licence is really only for commercial premises, not residential flats. Is that correct? Despite the vendors solicitor sending this Licence back to the joint freeholders solicitor and telling him that it was inappropriate, he is insisting on going down this route. Its not as if I am planning on doing any major structural works. I am moving the kitchen and bathroom, some plumbing, re-wiring, decorating. I am hoping to move one doorway though, that is vaguely structural I suppose (its on a main suporting wall). I have told the joint freeholder that the building regulations surveyor from the local council will be checking out the works, but she is insisting on her own surveyor coming and checking everything (at my expense). Can she do this? Can her solicitor be so bullying and force his Licence to Alter on everyone like this?
How can we proceed if the joint freeholders solicitor is going to be so difficult?
Any help would be appreciated. Surely its fairly commonplace for someone to buy a flat in need of modernisation and not to have to endure these difficulties from a fellow joint freeholder? Can a joint freeholder be so difficult that it can obstruct a sale?
Thanks,
Chris

[Richard Webster]

Basically, if you going to have that level of hassle, don't proceed with the purchase. You are just going to have more trouble in the future and going in to the legal rights and wrongs is all very well, but it will cost a lot of money to go to court if you have further problems with the joint freeholder in the future.

This would be akin to a neighbour dispute and these generate tremendous amounts of heat and no light and cost a lot of money.

You do not have to buy the property. Walk away now...

[cmcbugg]

We have 3 flats in my building and we are all interested in purchasing the freehold. One flat occupies the top two floors, the other flat the ground floor and the third flat the basement - so basically the floor space (and service charge) is split 50%, 25%, 25%.

In terms of our individual costs towards the freehold purchase - I imagine this would be along the lines of what each of our individual long lease extensions would be (plus 1% or so extra for the freehold) - so the cost for the freehold would not be in the 50/25/25 proportion (also as we have different lease lengths that would not make sense).

However, what would be the split of ownership of the freehold - would it be 1 equal share (ie 33% each) - or would it be the 50/25/25% split - or something else?

[jeffrey]

1. Contributions to f/r purchase price are not governed by anything in leases, so the contributors have to agree how much each.

2. Really, the best way would be to consult a surveyor for fully-detailed breakdown of value of each flat:
a. at present, given the unexpired term for that flat individualy; and
b. in future, immediately the lease's term is increased to - say - 999 years.

3. Item b minus item a shows the total gain for the flat concerned. Add the three gains together (=T), then calculate % of T for each flat.

4. Apply each flat's % of T to total f/r price (inc. all fees- V's as well as the three Ps'. This will show how much each lessee ought fairly to pay.

[cmcbugg]

1. Contributions to f/r purchase price are not governed by anything in leases, so the contributors have to agree how much each.

2. Really, the best way would be to consult a surveyor for fully-detailed breakdown of value of each flat:
a. at present, given the unexpired term for that flat individualy; and
b. in future, immediately the lease's term is increased to - say - 999 years.

3. Item b minus item a shows the total gain for the flat concerned. Add the three gains together (=T), then calculate % of T for each flat.

4. Apply each flat's % of T to total f/r price (inc. all fees- V's as well as the three Ps'. This will show how much each lessee ought fairly to pay.

thanks for that - i'm getting the surveyor in next week to perform the valuation, but that's a good indication of what to expect.

what about the actual share of freehold ownership though - should it be equal ownership per flat (ie 1 share each in the freehold company) or should it be per % floor space (ie 2 shares for larger flat and 1 share each for the other two) .
It can't be based on the same % that is used to calculate the share of cost because one flat has a 86 year lease (hence much smaller contribution to cost) - the other flats which have 72 year leases (so larger contribution to cost)

[jeffrey]

What about the actual share of freehold ownership though - should it be equal ownership per flat (ie 1 share each in the freehold company) or should it be per % floor space (ie 2 shares for larger flat and 1 share each for the other two) .
It can't be based on the same % that is used to calculate the share of cost because one flat has a 86 year lease (hence much smaller contribution to cost) - the other flats which have 72 year leases (so larger contribution to cost)
Once the lessees have paid up the cost of f/r, percentages are largely irrelevant. The f/r will have its value reduced to almost nil, by grant of the enhanced leases.

If the f/r is held by the three lessees (see below*), the new rules will prohibit a lessee from transferring a leasehold flat unless- at the same time- that lessee + the other two transfer the block's entire f/r to that lessee's successor + the other two.

I therefore suggest that all three should have equal 'shares', but remember that these are of no practical consequence or value.

* - It is unnecessary to use a limited co. for the purchase (as the f/r can be held in all three individuals' names) but, if a co. is used, it should be Limited by Guarantee rather than by shares.

[animal]

It is unnecessary to use a limited co. for the purchase (as the f/r can be held in all three individuals' names) but, if a co. is used, it should be Limited by Guarantee rather than by shares.

Sorry to butt in, but could you elaborate on why the company should be 'Limited by Guarantee'?

Regards

[cmcbugg]

Sorry to butt in, but could you elaborate on why the company should be 'Limited by Guarantee'?I just looked into this based on jeffrey's reply - and it appears that a company limited by guarantee is a different type of company mainly used for Not for Profits - and hence I imagine has lower administrative costs than a normal company - so probably more appropriate for a small freehold ownership


What is a Guarantee Company?

A company limited by guarantee is an alternative type of incorporation used primarily for non-profit organisations that require corporate status. A guarantee company does not have a share capital, but has members who are guarantors instead of shareholders. The guarantors give an undertaking to contribute a nominal amount towards the winding up of the company in the event of a shortfall upon cessation of business. It cannot distribute its profits to its members, and is therefore eligible to apply for charitable status if necessary.

[jeffrey]

Sorry to butt in, but could you elaborate on why the company should be 'Limited by Guarantee'?

Regards
There are two reasons- one legal and the other practical.
1. If the 2002 Act's amendments to the 1993 Act are ever implemented (no commencement date still), a new definition of "RTE [Right to Enfranchise] Company" will demand Limited by Guarantee, without the option.
2A. Limited by Guarantee = nominal £1 per member payable if Co. is ever wound-up. Minimal paperwork re membership, initially and subsequently.
2B. Limited by Shares necessitates:
a. initial Share Certificate to be issued;
b. (so there's another item capable of being lost by lessee!);
c. associated Stock Transfer Form palaver on every occasion that leasehold interest is transferred; and
d. new Share Certificate each time.

[DaveukRN]

I have trawled various sites including lease-advice.org but cant find anything refering to my situation and therefore i hope some of the forum experts may be able to shed some light.
I own the leasehold to the upper flat in a victorian house conversion (there are only 2 flats). The freeholder has recently put forward the idea of selling me the freehold to my flat, ie. retaining himself the freehold of the downstairs flat so we own 50% of the freehold of the property each.
I have 123 years left of the leasehold, pay £400 pa ground rent and the flat is currently valued at £240,000.
The examples on the sites use multiplier values from tables i dont have, is there a way of calculating these mathematically? Or if anyone has the tables can they pass on the relevant multiplier values for the information i have given. Or even estimate the freehold cost.
Thankyou in advance.

[sgclacy]

To evaluate how much to pay I think you need to be clear as to what will happen to your ground rent going forward.

If the freehold owner of the ground floor flat has a ground rent reserved on his lease of £400 then I assume you will simply agree not to charge ground rent to one another. Hence you will have rid yourself of the obligation to pay a highish ground rent on a flat worth £240k. If that is the case the formula in is very simple in that it is a capilisation of the ground rent and this can be acieved (if the ground rent does not rise throughout the terms) as follows:-

Say capitilisation rate 7.5% = 0.075

£400 / 0.075 = £5,333

If the ground rent rises let me know and I will give you the capitilised value. Unless it rises more frequently than every 25 years I doubt it will make much difference as you will be some 23 years away from the next review.

In negotiating with the freeholder as he wishes to retain a 50% interest the market value of the other 50% would be considerably less than £5,000 if indeed he could find someone interested in it. As an investor in such things it holds no attraction to me whatsoever. This should help in your negotiations and I would start your offer in your case at around £3,700 (you do need to get rid of a £400 ground rent it is a problem (but not major)

[jeffrey]

I own the leasehold to the upper flat in a victorian house conversion (there are only 2 flats). The freeholder has recently put forward the idea of selling me the freehold to my flat, ie. retaining himself the freehold of the downstairs flat so we own 50% of the freehold of the property each...
I have 123 years left of the leasehold, pay £400 pa ground rent and the flat is currently valued at £240,000.
No- absolutely not ever. Do not even dream of splitting-up the freehold reversion; it must remain intact for the entire building.
Better to agree:
a. to transfer f/r (whole building) to joint names (= you + Mr X); and
b. on the same day, and immediately thereafter, to grant new lease of lower flat FROM you + Mr X TO Mr X alone.

[joanna_n]

Dear all,

We lease our flat with 95 years unexpired. Also, we own a share in the management company that owns the freehold to the flats.

We would like to extend our lease from approx 97 years unexpired to say 999 years.

All the leases in the building have the same term unexpired so hopefully there will not be any issues around differing lease end dates.

The question is what is the most cost effective way to do this? From a company perspective, if the owning company were to elect to change the lease term would this not give rise to a payment due from the lessee and as such potentially a tax bill?...or could the owning company grant a lease extension for a nominal value, say £1? If this were the case would the lessee end up with costs above standard legal fees?

I guess the question is, when you sit on both sides, as lessee and shareholder in the lessor, what is the cheapest way of extending the lease?

Luckily we have well over 80 years left so there are no marriage value considerations. The reason we want to extend the lease is that explaining a "share of freehold" on any sale can be very off putting to potential buyers so we would like to get this ironed out.

All help greatly appreciated.

Thanks and regards,

Joanna

[jeffrey]

Best way: freehold company F grants Deed of Surrender and Regrant to each lessee. This can be for any term (e.g. 999 yrs.) and shifts F's stored-up value on freehold into hands of lessees. The leaseholds are then newly registered at HMLR, so lessee can then sell/mortgage replacement 999-yr. term.

[paulpdk]

I am hoping that someone can advise on what can be done in this instance. We bought our 1 bed ground floor flat in 1988 the underlying lease was granted in 1981 for 99years. Ground rent £60 per annum never collected. The upper floor is a 2 bed maisonette which was sold the previous year by the same developers therefore the lease is very similar to ours.
Bizarrely both ours and the upper floor maisonette's outgoing owners held a share of freehold for their respective flats.
Unfortunately the solicitors acting for us and the owners of the upper floor maisonette failed to transfer the share of freehold title.
This is something both parties would ideally like and have previously consulted solicitors to try to resolve the matter. The problem we have encountered is that we have been unable to trace the previous owners.
What are our options. Can we easily apply for a share fo freehold or will that prove too costly? Or can we simply apply to get the lease extended as it is now languishing in the low 70's

[jeffrey]

1. Why did the error occur? Did you not tell the solictors to procure f/r Transfer? Did they not obtain information from HMLR and/or V's solicitors?
2. You + current neighbour are both in the same position, it seems, so why not enfranchise all over again?
3. Even though the registered proprietors of the f/r (for entirety of building) are untraceable, there is an "unknown owner" procedure in s.26 of 1993 Act. The two of you would have to apply for the Court to make a Vesting Order.
4. Doing nothing is not an option. Both leases need extending, no matter who owns the f/r.

[Corinne Tuplin]

Dear Paul,

It may be an idea to check the conveyancing paperwork again to ascertain whether the freehold asset was to be included in the sale of the flats. If necessary, discuss this with the solicitor handing the purchase on your behalf.

As Jeffrey said, you will need to act asap in order to prevent diminishing title.

In the event that there is no concrete evidence that a share of the freehold was to be transferred at the same time as the leasehold asset, a detailed freeholder trace must be undertaken. Providing that the search is inconclusive, you should be able to apply to the County Court for a Vesting Order of Sale.

In the event that you have proof that a share of freehold was to be transferred, take this up with the relevant law firm that assisted you with the purchase and see paragraph 3 above.

I hope this assists.

Kind regards,


CORINNE TUPLIN
SOLICITOR
PRO-LEAGLE
www.proleagle.com

[jeffrey]

It may be an idea to check the conveyancing paperwork again to ascertain whether the freehold asset was to be included in the sale of the flats. If necessary, discuss this with the solicitor handing the purchase on your behalf...

In the event that you have proof that a share of freehold was to be transferred, take this up with the relevant law firm that assisted you with the purchase.
But sale contract for leasehold could not oblige V to transfer f/r because that is owned by V + neighbour (or neighbour's predecessor).

[nirajshah]

Hi

need some help/advice

I bought a converted flat last year . The flat came with a 82 yr lease

The flat comprises of 2 units - i own the upsatirs unit now.

The freehold is owned by 2 people - the downstairs person and the person who owned my flat origanly - not the one i bought it from

My belief is when he sold the flat, the share of freehold never got transfered to my previous owner - and their is no forwarding address or contact details for him

i know the downstairs person and he believes i own the share of freehold - he is a very reasonable person...currently we insure the flat jointly and have shared repair costs - their has been no claim for ground rent as far as i am aware.

How do i get my share of the freehold transferred to me?


Many thanks

Niraj

[jeffrey]

The only ways are:
a. to trace X (the "ex-upstairs" lessee whose name still appears as a joint f/r owner);
b. to have X removed as a trustee of the trust of land implied by law, but this is messy; or
c. to exercise (jointly with Mr Downstairs) a fresh Right to Enfranchise, treating X as a landlord who cannot be found [s.50 of 1993 Act]. via a County Court's Vesting Order.

[benjamin73]

I purchased my flat 3 years ago now. It is in a building with 3 other flats and all the flat owners own the freehold. When I purchased the property, I did not purchase a share of the freehold but agreed with the Vendor I would purchase this in a couple of years time. The problem is, one of the other flats has been sold since, and the new owners purchased a share of the freehold and both of there names have been added to the title register. This means that 5 names are appearing on the title register and I have been advised that by law only 4 names can appear therefore when I purchase a share of the freehold my name will not appear on the title register but a trust deed will be setup holding my interst in the freehold. I am not entirely happy with this and think the Land Registry should sort this situation out as they made this mistake, but are refusing to. I would be most grateful for any advice. I do not know how a trust deed works and will it give me the same rights as if my name appeared on the title deed? Is it worth still purchasing this share of the freehold? I wish to rent out this property now but the leasehold says I will need written permission from the freeholder, this is the reason I wish to purchase a share of the freehold as the person whose share I am purchasing said he will not give permission and will cause me problems until I purchase his share. He also said he will deliberatlely make it difficult for me to re-mortgage etc. Please advise as to my rights and what the best course of action is. Thanks in advance, Ben

[jeffrey]

1. HMLR did not necessarily make a mistake. Someone applied to register in five names, but perhaps these appeared to be four people's names- surnames can resemble forenames.
2. If you are entitled (as of right) to be a co-owner of f/r, you need to send a solicitor's letter to the five people and explain why they are wrong based on the title deeds etc.
3. As the position is apparently quite wrong, and rectifying it may be messy, do not try this on your own. Amateur work has already wrought enough errors!

[charliewright]

Dear Everyone at this great website, this is a long story but would kindly appreciate any suggestions or thoughts on my problems mentioned below.

I purchased a property in a large Grade II listed building consisting of 7 flats in February 2007 and have been having propblems with the company secretary ever since.

Ever since I have bought the property, I have not been issued with a share certificate which should have been issued on completion and over 1 year later, despite legal threats made by 2 different solicitors, the company secretary has still decided not to issue me with this. My solicitor, i must say, has often pointed out to me that i will not be able to sell the property without this certificate and as i now need to sell my property,i am in a bit of bother to say the least.

As i refurbished the property to a high standard, this company secretary, who occupys the flat directly behind me often decides to poke his nose through my window with his partner and noticed that I had installed recessed speakers in the ceiling. Although, the speakers were well insulated and when played at a moderate-medium level, they could not be heard in any other flat in the building, this man decided to contact the council to complain of the damage I have caused to our listed building. The council asked me to remove the speakers as although the rest of my flat has been carefuly restored, they felt that the speakers damaged the character of the building!

Reluctantly, i removed all speakers and invited the council around, they were now satisfied with my flat and closed their enforcement case.

Since March 2007 , when i was denied my share certificate for the first time, i was told that until the speakers were removed, I would get no certificate by the company secretary. I ws also told a list of other demands from the company secretary about works I was doing to the flat. He wanted to see plans of the restoration, which i provided and a few other things. One Saturday, i got involved in a heated arguent wih the company secretary and was told that I did not belong here. As i am racially mixed, i took huge offence to this and walked back to my flat. I could now see that his problem with me was racial and there was nothing I could do about it as i cannot re-educate a grown man on his immens naiveity.

My solicitors felt that i should remove my speakers to comply with the council but still felt the company secretary does not have the right to withold my share certificate to confirm my share in the management company.

In Oct 2007 I attended a house meeting with the other directors in the management company and the issue oof service charge fees were mentioned. Prior to me purchasing the property, my conveyancing solicitor was told that my service charges would be £112 per month and that the charges would be used to upkeep the building and for overall maintenance. I still did not understand how this could be so high and was later told by the company secretary that the service charge payment would be reduced to £42 per month(Still prior to me completing the purchase). Hearing this, i felt comfortable with the purchase as i knew i would be able to afford the £42 per month. However, In this meeting I heard that the directors are planning a Driveway project where they require all directors, myself included to contribute extra funds to the service charge fund. I was not happy with their proposition of the increase and explained this in an email to the treasurer of the management company, by the way who is a very close friend with company secretary. The treasurer sent me an email saying that since Oct 07 i had gone into arrears with the management company by £1600. I could not at the time and still cannot understand how in 5 months my service charge payments can be £1600. I asked the trasurer to send me through a breakdown of all expenses on the company account for the last 6 years so i could see how much all the other directors were paying and what money has been spent. The treasurer ignored my request and i still do not have this information.

Anyway, the new monthly figure they are asking me to pay is an increase by 1000% from what I was told the service charge would be prior to me purchasing the property. I also found out in the meeting that the company has a balance of approx £20,000 in the company account. Last October I paid £934 in Service Charges to clear my arrears as I was threatened by the company secretary with a disenfrancisement notice and although i was reassured prior to me purchasing the flat that I would only pay £42 still overpaid by over £70 per month. Surely, is the service charge fund fee supposed to be a figure that all direcors agree on? The only maintenance i ever see here, is the rear garden maintenance. I have another story about this too:

As mentioned earler, I occupy the front of the ground floor and the company secretary and his family occupy the rear of the ground floor. The communal garden clearly looks as if it is a private garden for his flat and the front garden looks as if it is private to my flat. Every week the company secretary pays out of the company funds for the maintenance of the communal garden at the rear but ever since I purchased the property last Feb 2007, the gardener does not maintain the front garden. Although the front garen has a small section of lawn and a small paved patio, it is approximately 1:30 the size of the rear garden and would not takt too long to maintain. One day seeing the gardener mowing the rear communal garden, i asked him why he did not look after the front section too, he told me that ever since i moved into the front flat he was told not to maintain it anymore.

The worst thing about the situation is that no maintenance is EVER done in this building. Ever since, i moved here 13 months ago, no painting has been done, no guttering, abolutely nothing. As I occupy the ground floor flat which was painted white , i noticed the paint was flaking away and becoming discoloured, so i arranged for a tradesman to re paint white the exterior of my flat only. This was done and the company secretary rather than complementing me on the result told me that the exterior of the building is owned by the freeholders and i should have first seeked his approval. The reason why I didnt is because of the injustice I have received from this man, i can no longer speak to him or even communicate with him.

A few months ago when I was marketing my flat for sale, An estate agent was showing potential buyers around the communal garden when the company secretary decided to interrupt the viewing by commenting how disastroous my flat was and how she had experienced many burglaries during her occupancy and how we have a problem with delinquent youths sitting on our garden wall. During my time here, i have never experienced such things and naturally hearing this, the buyers lost complete interest in my flat.

I would really like advice from someone about my situation as I have spent over £1000 on solicitors fees so far demanding the issue of my share certificate although this still has not been issued and cannot afford to pay out money like this again as i am unemployed. How much if any service charge should i pay although nothing is done to maintain the building? How can I get access to the company account so i can see how much other directors/freeholders are paying as I do not trust any of them with such info.

Can i sue the company for refusing to issue me with the share certificate after 13 months and the fact that the company secretary and partner are putting potential purchasers off my flat with nasty, untruthful comments?

Cheers

Charlie

[LittleShip]

I am one of 4 leaseholders in a victorian terrace that has been converted to 4 flats. I own a share of the freehold along with 2 other leaseholders. The 4th leaseholder does not own a share of the freehold but has expressed an interest in acquiring a share, presumably to add value to their flat and to enable a lease extension to be obtained some time in the future. All 4 leases are identical and are for 99 years from 1987. The 3 freeholders flats are 2 beds - the leaseholder only flat is 1 bed. It's probably worth around £200k. The 3 freeholders manage the building themselves by concensus. There is no agreement (freehold is not held as a company). We all contribute the same amount to the maintenance fund and no ground rent is charged.

My question is - How do the 3 freeholders arrive at a fair price for a 4th share? Would it be reasonable for the new shareholder to pay the legal costs? Would it be appropriate (or desireable) for all the leases to be extended at the same time as redistributing the shares?

[jeffrey]

1. All four leases need re-granting for extended terms. Subject to item 2 below, all four will be granted on same basis; if person4 pays for share of f/r, no further premium (purchase price) required for leases.
2. Get a surveyor to advise re cost for person4 (who should certainly be made to pay all fees- on both sides- for gaining joint freeholdership).
3. Send pm if you want to assist professionally.

[beacon]

I am brand new to this forum, so apologies if I repeat old questions.

I am exactly the same position as Joanna.

Our collective purchase of the Freehold is due to go through in about a fortnight.

After that, all six shareholders (block of 6 flats) are in agreement that we would want to extend our current lease (90 years remaining) to 999 years.

Question:1

Can we write our own lease documents simply substituting the term of years.

Question: 2

If we can do that, are we allowed to deal with the Land Registry ourselves via our own RTE Management Co.?, or would we HAVE to have a solicitor do all of this?

Regards,

Gerry

[LongsufferingLeaseholder]

After that, all six shareholders (block of 6 flats) are in agreement that we would want to extend our current lease (90 years remaining) to 999 years.

Why not make it a 10,000 year lease to put the matter beyond any reasonable doubt within the period between now and when your home probably finally disappears beneath rising sea levels.

999 years is only one long lease duration convention and set on the basis that say William The Conqueror's heirs would be finally about to get your home back in 2065!

A 10,000 year lease would be freehold in all but name.

Also have you considered the possibility of instead converting to Commonhold so that no one can then any longer be demeaned by being called a tenant by lofty dinosaurs such as Leasehold Valuation Tribunal Chairpersons or indeed threatened by the possibility of forfeiture (by the company in which they own a share). But what is the relationship between a Commonhold flat and the LVT?

[sgclacy]

I believe I am right in stating that there are about a dozen (yes about 12!!) commonholds in the land...to date it has been a failure of spectacular proportions

You may well find in the short term that if the property was commonhold it would delay sales and in some cases some lenders will not lend as they are concerned that if they had to sell it in a forced sale scenario that it would be difficult and effect value.

I would advise that you extend the leases to a very long term, it would be cheaper and not require the consent all existing leaseholders and their mortgagees which you would need if you decide to go for commonhold

[jeffrey]

I believe I am right in stating that there are about a dozen (yes about 12!!) commonholds in the land...to date it has been a failure of spectacular proportions

You may well find in the short term that if the property was commonhold it would delay sales and in some cases some lenders will not lend as they are concerned that if they had to sell it in a forced sale scenario that it would be difficult and effect value.

I would advise that you extend the leases to a very long term, it would be cheaper and not require the consent all existing leaseholders and their mortgagees which you would need if you decide to go for commonhold
I agree. Also, leaseholder acquiring extended lease will usually need concurrence of mortgagee (= Lender), so old lease can be cleared-off and replaced by new Deed of Surrender and Re-grant. Mortgagee executes Deed of Substituted Security, as does mortgagor (= Borrower).

[nevillie101]

Hi,

I currently own 100% of the freehold which covers 2 flats, one which I own. The other flat owner has enquired about purchasing a share of the freehold. His lease still has around 94 years left.

Is there any advantages/disadvantages in selling a share of the freehold?
Would selling a share of the freehold adversely effect my property value?
As there is still 94 years left of his lease what roughly would be a fair price to ask for?

Any advice would be greatly appreciated.

Thanks.

[jeffrey]

1. Keep whole f/r intact. Never ever sever.
2. There should be no change in rights and responsibilities. Each party is already bound by what the other flat's lease stipulates.
3. Your receipt of premium for his lease extension should balance out the reduction in f/r value once his lease is extended.
4. Similarly placing the f/r in joint names is neutral financially; no real net gain or loss for you.

[The Eagle]

We are a small block of flats which all had a 999 year lease. In 1998 we all purchased a share of the freehold and set up a company. All 12 flats currently have an equal share as a member of the company.

Two questions please.
1 GROUND RENT.
Prior to 1998 some flats had deed of variation which increased the ground rent from £8.40 per annum to £75; there is a dispute among the leaseholders holders here if we should all still be paying ground rent as we now own the freehold; needless to say the ones who are paying £8.40 think EVERYONE should pay either the £8.40 or if appropriate (due to DOV) the £75

2 Since purchasing the freehold many of the original purchasers have moved on, when the new owner has purchased the property he has automatically become a member of the company and been issued a membership certificate.
One particular leaseholder continually breaks all the terms and conditions of the lease (I think we all know the type of person ..........does not pay maintenance charges on time, always in the arrears, leaves personal belongings in hallways, noisy, erects unauthorised sky dishes etc etc etc). Despite numerous letters to him he just doesn't seem to care a toss.

MY QUESTION is :-
Can this person be thrown out of the company, thus he forfeits his right of his share of the freehold and when he subsequently sells he can only sell it as leasehold (with NO share in the freehold).

Hope that makes sense.

TIA

[jeffrey]

A. Did everyone pay an equal amount on enfranchisement? Reall, the £75 people have less valuable leases than the £8.40 people, so a differentiation might have been approriate.

B. Each lessee's lease continues unaltered by f/r purchase. The covenants do too. Each leasehold sale is of only the leasehold (+ V's share in f/r company F).

C. F could- and, if leases have < 200 yrs. unexpired, SHOULD- grant replacement leases to extend term and delete ground rents entirely. If everyone paid same to enfranchise, the £75 people should pay more for the new Deed than the £8.40 eople.

D. Lessee in breach (X), however, is just as much a joint-shareholder in F as are all the others complying with leases. F's remedy is to enforce covenants against X.

[The Eagle]

Many thanks for your time and reply Jeffery.
Just to answer the questions:
A) when we bought the freehold although some people (4) were paying £75 ground rent,we all paid exactly the same (ie one twelvth) of the total.
B) thats how we are operating at the mo............no real change since buying freehold.
C) If we went ahead and got a replacement lease, the £75 leaseholders WOULD have to pay nine times more (than the £8.40) towards the costs of this.
D) Point taken about to enforce covenants against X. However as he is going to put his flat on the market I cannot see any real advantage and costs taking this action. However by throwing him out the company and him forfeiting his share of the freehold would certainly affect him. Is it possible to cancel his membership of the company etc.

[jeffrey]

Point taken about to enforce covenants against X. However as he is going to put his flat on the market I cannot see any real advantage and costs taking this action. However by throwing him out the company and him forfeiting his share of the freehold would certainly affect him. Is it possible to cancel his membership of the company etc.

No. His rights as shareholder (or equivalent) in F are unaffected by his default as lessee (UNLESS the Articles of Association of F, or the leases, say otherwise). In fact, proceedings against him might be a useful persuasive; he won't want his sale screwing up, will he?

[thevaliant]

I think Jeffrey means that if the management company takes legal action against the lessee, such ongoing legal action must be disclosed to any potential buyer (and I think the management company will be written to, to confirm this). A flat up for sale that has legal baggage around it is going to be a very unpopular purchase.

[jeffrey]

I think Jeffrey means that if the management company takes legal action against the lessee, such ongoing legal action must be disclosed to any potential buyer (and I think the management company will be written to, to confirm this). A flat up for sale that has legal baggage around it is going to be a very unpopular purchase.

Yep, that's it. V of any property has to disclose all disputes, Notices, etc.

[virna]

Hi!
2 years ago I bought a top floor flat. I share the freehod with the people living in the flat on the grand floor.
When I got into the flat I had a verbal agreement with people downstairs that I could take the carpet off from living room and bedroom. Last october they sold their flat. The new owners, after almost a year since they moove in, are now asking me to carpeting the all area. Have I got any rights? I know that sometimes if action are not taken in 6 month from the change-breach of a contract automaticly a verbal agreement takes place, which is as bonding as the written one. I spent quite a lot of money to do the floor and I can not afford any expense at the moment!
Any help is very appreciate!
Thank you!

[Lawcruncher]

I assume your lease contains a clause that says the floors must be carpeted. Any informal arrangement you had with the previous owner of the ground floor flat is not binding on the current owner. You ought to have done a formal deed of variation and had it noted at HM Land Registry. There may be an argument that the GFF owner has lost the right to enforce the covenant, but there is no hard and fast rule about time limits for enforcement.

[jeffrey]

I assume your lease contains a clause that says the floors must be carpeted. Any informal arrangement you had with the previous owner of the ground floor flat is not binding on the current owner. You ought to have done a formal deed of variation and had it noted at HM Land Registry. There may be an argument that the GFF owner has lost the right to enforce the covenant, but there is no hard and fast rule about time limits for enforcement.
Even if old GF leaseholders agreed, the informality of the agreement means that it does not bind their successors.

[mitchmike]

Hello, im really hoping someone can help with query.

We are 4 leaseholders in a block of 4 flats who are in the process of purchasing the freehold and the property to be transferred and registered with the land registry in all four of our names.

On the land registry form (TP1) on point 4 its says "property transferred then land and building erected there on including properties known as plots 33,35,34 & 36....."

My query on the above statement is that when i bought my property the leasehold included ownership of the front garden as well and this was checked and verified in writing by solicitor and also shown on the title deeds.

My concern is that when the freehold property is transferred to all of us, will the other leaseholders have an equal share of my garden or is the leasehold i have when i purchased my property treated as a seperate purchase and none of the leaseholders can have any claim to my garden whatsoever.


I am also confused on point 12 of the TP1 form where its say...

Declaration of trust and gives the following options in which you should put an X in which option you want, what is the difference with these options?, what will be the best option for us.

A). The transferees are to hold the property on trust for themselves as joint tenants

B). The transferees are to hold the property on trust for themselves as tenants in common in equal shares

C). The transferees are to hold the property

Many Thanks

[jeffrey]

On the land registry form (TP1) on point 4 its says "property transferred then land and building erected there on including properties known as plots 33,35,34 & 36....."

My query on the above statement is that when i bought my property the leasehold included ownership of the front garden as well and this was checked and verified in writing by solicitor and also shown on the title deeds.

My concern is that when the freehold property is transferred to all of us, will the other leaseholders have an equal share of my garden or is the leasehold i have when i purchased my property treated as a seperate purchase and none of the leaseholders can have any claim to my garden whatsoever.


I am also confused on point 12 of the TP1 form where its say...

Declaration of trust and gives the following options in which you should put an X in which option you want, what is the difference with these options?, what will be the best option for us.

A). The transferees are to hold the property on trust for themselves as joint tenants

B). The transferees are to hold the property on trust for themselves as tenants in common in equal shares

C). The transferees are to hold the property

Many Thanks
Re plots: see V's title plan re how much land these include. There should be a Schedule of Leases on HMLR entries, keyed to the plan by blue edging.

Re panel 12: use second option AND (preferrably) also prepare a Trust Deed between the four of you to define who does what and how disputes are to be resolved.

[andyz1]

Mitchmike,

Your retained surveyor should be able to help with this. You will need one to do a valuation for the freehold acquisition of course.

If you are looking for a specialist enfranchisement solicitor, go to the Association of Leasehold Enfranchisement Practitioners web site at www.alep.org.uk. If you have a solicitor and/or surveyor that aren't members, you might want to find out why.

[mitchmike]

Many Thanks Jeffrey and Andyz1 for your replies

Jeffrey i have an official copy of register of title from the land registry and on the last page it has the schedule of notices of leases in which the its shows my lease title and under the property decription it has my address and next to the address it says garden ground.

So when i bought the flat i bought the garden as well and that is not in dispute as my solicitor confirmed this at the time of the purchase and it also shown on my title plan.

Im just looking for clarification is that when all four of the flat owners purchase the freehold as "tenants in common", i want to be sure that i am not giving 3 quarters of my garden land to the other flat owners.

I was under the impression is that the lease i purchased when i bought the flat which included the front garden is completely seperate from the freehold purchase and what will be shared equally will only be the common areas.

The top floor flats have attic space instead of a garden so im sure i would not be able to make a claim on a share of that once the freehold is purchased.

I might be silly in thinking this but i just want to be sure im not giving my garden away or any of the flatowners can make a claim on it.

Thankyou.

[Markonee1]

Mitch or is it Mike ;)
Relax... If the garden is in your lease, then the other's rights over it will be no greater than already listed in the leases, eg emergency work. It will only change where the areas are in truth communal land listed as 'shared use of' rather than 'demised to'. Footpaths etc may be owned by one lessee but subject to rights of way of the others...

[talbot]

We live in a house divided into two flats. We share the freehold with our upstairs neighbours and both of us have long leases. Our neighbours say they have a prospective buyer for their flat. They have passed to us i) a copy of transfer form TR1; ii) a letter from their solicitor to them which says that this should be signed by us before exchange, although our neighbours are vague about when that might be and even whether the sale will go through in current conditions. The form TR1 does not give the name of the other Transferees, i.e. the purchasers of the flat, because, as the solicitor says,if this sale falls through, the name of the purchasers will change. We've been told the original TR1 will be given to us if we are happy to sign it.
Is it usual for such a form to be signed without the full names of all Transferees on the basis that a sale might or might not take place sometime in the future or should we hesitate before going ahead and, if so, why? Any help on this would be appreciated.

[TomMerralls]

To be on the safe side, I would suggest you go back to the solicitors who sent the TR1 to you and state that you are unhappy to sign the TR1 until such time as the document is complete. Otherwise, anyone's name could be inserted afterwards, albeit this is unlikely.

Also, when they are in a position to send to you a completed TR1, ask them for their undertaking to forward to you, upon completion of the TR1 not only a copy of the dated version but also office copies of the freehold title when the TR1 has been registered.

[rajeshk4u]

I have a share of freehold on a leasehold flat, which has less than 80 years on the lease.

Last year, we received a letter from the director (residential) to say that if we wanted to extend the lease to 125 years, it would cost £700 (in legal fees), but no cost to extend the lease plus they would vary certain conditions in the lease.


My question: Is it worth extending the lease, if I have share of freehold? Is there any benefit?

I am relunctant due to the legal costs? It sounds like a cut & paste job e.g. same leases etc... so why £700. (there are about 11 blocks with 4-6 flats each).

[jeffrey]

I have a share of freehold on a leasehold flat, which has less than 80 years on the lease.

Last year, we received a letter from the director (residential) to say that if we wanted to extend the lease to 125 years, it would cost £700 (in legal fees), but no cost to extend the lease plus they would vary certain conditions in the lease.


My question: Is it worth extending the lease, if I have share of freehold? Is there any benefit?

I am relunctant due to the legal costs? It sounds like a cut & paste job e.g. same leases etc... so why £700. (there are about 11 blocks with 4-6 flats each).
You MUST extend. When you need to sell or remortgage, it's only the leasehold interest that you own -so extending it is ESSENTIAL.

There's no premium (purchase price) simply because you have already - in effect- purchased the extension value by jointly purchasing the f/r.

[hollypop]

Hi,

We live in a victorian conversion in London and we have share of freehold with the owners of the above flat.

The owners of the other flat sublet their property to a housing association (arranged before we bought our flat and before we purchased the freehold) we had many problems with the tenants, the last ones burning the flat down.

The repairs to both flats are nearly complete and it appears they will once again be leasing their flat through a housing association, after our last experience we are obviously concerned about this and were wondering if we have any say over their choice on tenants as we have share of freehold?

I think it says in the lease that they are not allowed to sublet without or permission but I am not sure if this actaully gives us any rights?

Thanks in advance for your help.

[Poppy]

Please quote the lease clause stating that lessees require permission to sub-let and any other salient clauses. Without this, we'll all be guessing.

[hollypop]

Thanks Poppy,

I can't seem to find the clause in the lease, probably due to my inability to understand the legal language however, in the lay-person report from our solicitors it does say under our obligations that we are "Not to sub-let the property without the landlords written consent". I am guessing as we have share of freehold we both count as the landlord?

Thanks again for getting back to me so quickly.

[jeffrey]

Thanks Poppy,

I can't seem to find the clause in the lease, probably due to my inability to understand the legal language however, in the lay-person report from our solicitors it does say under our obligations that we are "Not to sub-let the property without the landlords written consent". I am guessing as we have share of freehold we both count as the landlord?
Yes, AND another clause (covenant) will prohibit each lessee from doing anything which may be or become a nuisance to the other lessee. Acts of the other flat's occupants are imputed to its lessee who is thereby placed in breach -and you can take action to remdy such breach.

[Brevan]

Hi Everyone

I wondered if I could ask your advice on something.

I own two flats in a converted victorian terrace where there are four flats in the block. I would like to buy a share of the freehold to enable me to extend in to the loft on the top floor flat. (Obviously subject to the roof space being demised under the new lease). However, the other two leaseholders do not want to join me in a collective enfranchisement process. Am I able to collectively enfranchise without them? Also I believe that the freeholder may be willing to sell me a 50% share of the freehold. If we were to come to an arrangement would he have to inform the other two leaseholders and would they be able to block my purchase?

Regards.

[jeffrey]

Enfranchisement rights belong to all lessees collectively.

However, F can sell to anyone he likes PROVIDED that he complies with LTA 1987. Briefly, F has to serve a Notice (on all lessees):
a. stating the price which an outside purchaser is willing to pay- that outsider could be you, and F does not have to disclose your identity; and
b. inviting the collective lessees to exercise a collective RFR [Right of First Refusal] at the same price.

[Brevan]

The landlord is proposing to only sell me a 50% share of the freehold and maintain his right to income from lease extensions or sale of the remaining 50% to the other leaseholders in the future. Which is fine with me. Our joint concern is whether or not he has to disclose this to the other leaseholders and whether they can block him from selling me a 50% share. The other issue for me is do I have any exposure if the other leaseholders attempt to collectively enfranchise in the future and if it is possible to collecively enfranchise on my own seeing as I own 50% of the qualifying flats and buy 100% of the freehold for a smiliar price?

[jeffrey]

The landlord is proposing to only sell me a 50% share of the freehold and maintain his right to income from lease extensions or sale of the remaining 50% to the other leaseholders in the future. Which is fine with me. Our joint concern is whether or not he has to disclose this to the other leaseholders and whether they can block him from selling me a 50% share. The other issue for me is do I have any exposure if the other leaseholders attempt to collectively enfranchise in the future and if it is possible to collecively enfranchise on my own seeing as I own 50% of the qualifying flats and buy 100% of the freehold for a smiliar price?
1. If L wants to sell 50% to you, he is effectively selling 100% to himself + you jointly (beneficial tenants in common in equal shares).

2. That would trigger s.5 of LTA 1987 (RFR- a reactive procedure) unless it's exempted by s.4 [e.g. because it's a gift to a family member, or a transfer within a family, etc; no exemptions are likely in your case].

3. Even if he sold to himself + you and the collective lessees did not intercept, they would still have pro-active rights to collective enfranchisement by 1993 Act.

4. As you alone own half the flats, you can unilaterally use the 1993 Act procedure to buy 100%, the whole f/r. By s.5(5) of 1993 Act, that's so only if:
a. you own one flat of the total two; or
b. [as in your case] you own two flats of the total four.
If there had been more than four in total, the owner of three or more would NOT be a 'qualifying tenant' as defined.

[Brevan]

Thanks Jeffrey. I have had a look into this myself but I think I am getting more confused the more I learn, if that make sense.

Am I right in thinking that the other leaseholders would not be able to collectively enfranchise, if the freeholder sold me a share, due to the fact I am resident in the property?

Also, are you saying that I can collectively enfranchise on my own? Therefore paying the marriage value on just my flats but obtain the whole freehold? The solicitor I normally use has advised me that I couldn't as I would be classed as one tenant out of three.

[jeffrey]

If L sells 50% to you: see paras. 1-3 in post #4.
Re enfranchisement on your own: see para. 4 in post #4.

Really, and without wanting to sound unhelpful, I'm not sure what more I can add. You do have a solicitor advising you at your own expense; but the final sentence of your post #5 is surely misleading or wrong.

If you purchase the f/r in sole name, one way or another, the collective lessees can nevertheless use the 1993 Act. Nothing that L or you do (or don't do) can deprive them of this statutory right, exercisable no matter who owns the f/r.

[Brevan]

Say for example I bought 100% of the freehold. Could the other leaseholders collectively enfranchise to purchase a share of the leasehold from me? Would this effectively mean that I would have to join them in any future enfranchisement by purchasing 50% from myself?

[jeffrey]

Say for example I bought 100% of the freehold. Could the other leaseholders collectively enfranchise to purchase a share of the leasehold from me? Would this effectively mean that I would have to join them in any future enfranchisement by purchasing 50% from myself?
Yes, it seems so.

[rafik]

hi
i did buy the flat 1 year ago ,and is in 6 flat mansions ,i have to pay share of freeholders charges but i desagree with some of the charges.do i have to pay?do i have to be share of freholder like the others?]
thanks#
rafal

[jeffrey]

hi
i did buy the flat 1 year ago ,and is in 6 flat mansions ,i have to pay share of freeholders charges but i desagree with some of the charges.do i have to pay?do i have to be share of freholder like the others?]
thanks#
rafal
I'm not sure that I entirely understand your post. Are you asking whether you are able legally:
a. to challenge F's service charge; or
b. to buy a one-sixth share in F as owner of the freehold reversion? Do the other five flats' lessees each own one-fifth at present?

[Richard Webster]

If there is a company owning the freehold which is owned by some or all of the flat lessees then as freeholder it will set the service charge levels.

If OP does have a share in the company (as therefore in common parlance is a "shared freeholder":

a. As a "Shared freeholder" he will have a say at company meetings for the setting of the service cahrge so he should make sure he goes to those meetings and makes his views known and gets others to support him.
b. He is unlikely to find anyone to pay him much for his "share" so he would have difficulty divesting himself of it and
c. Even if he did get rid of the "share" he would still have to pay the service charges but would have less say in the decisions about how much they should be.

If he does not have a share in the company then he will have no say beyond his statutory rights as a lessee to challenge charges where insufficient information has been given etc - seehttp://www.lease-advice.org/scgrframe.htm

[doranolin]

I am thinking of buying a small apartment in London, and I am trying to get some explanations of the term "leasehold with a share of freehold".
As the property-selling agencies failed to give me a clear explanation of this ambiguous term, please, be so kind to solve my confusion.

1. When you buy a flat "leasehold with a share of freehold" that "share of freehold" should equal the share of your flat in the building? (For ex., if there are 5 equal flats in the building - you should owe 20 per cent of the freehold)?

2. Buying a flat "leasehold with a share of freehold" means that I actually am the owner of the flat? (I understood that flats cannot be sold "freehold" because thus a "flying freehold" would be created)

3. However - how can you have a leasehold over something that is actually yours?

4. If I bought a flat "leasehold with a share of freehold", and my leasehold is, for ex., 25 years - what happens with my share of freehold when the time of the lease expires?

5. If I decide to extend my lease (of the apartment of which I owe a share of freehold) for, say, 99 or 999 years - what would be the average price? I am not interested in precise numbers, but would the price be like the one I paid when buying that property (for ex. 250,000) or would it be more of a symbolical kind (a few thousand pounds)?

6. What are actually the rights of the "freeholder" who sold me the apartment "leasehold with a share of freehold"?

7. Am I obliged to pay the ground-rent if I owe a flat "leasehold with a share of freehold?

Thank you

[jeffrey]

1-3. It ought to mean that V is:
a. a leaseholder (so sells leasehold); and also
b. a joint freehold reversioner, either in personal name (= one of two/three/four joint owners) or as a member of the jointly-owned company).

4. Once you have purchased a leasehold in that case, the next thing to do would be to extend it.

5. If you've actually bought a 'share of freehold', no further price should be payable for lease extension- but you would be required to pay both sides' legal fees.

6. The freeholder's rights and duties are- or ought to be- set out clearly in each flat's lease.

7. Yes, at least until the new (extended) lease is granted; it usually deletes the money rent and reserves only a 'peppercorn' [= rent exists but it's of no money value].

[kikuyu]

One very important point being a part freehold owner of the premises is that you, along with the others, decide the running of the building. You decide when and how to spend the money on its upkeep. Therefore, you cut out the middle men.

If the leases are not of long duration then the freeholders should extend these to 99year or in perpurtuity.

[James 2009]

Jeffrey

Just to clarify something here for SoF people who wish to extend their leases.

What is to stop one of the freeholders (possibly one who somewhere along the line extended theirs already) saying "no you can't extend your lease" unless you go down the statutory route. Clearly this would depend on voting rights but potentially one obstructive freeholder in a block of two flats could prevent a lease extension?

And yes, I have seen this happen! (Well almost, the lessee had a 50% share of freehold with a housing association, both had 66 year leases, but HA was not interested in extending and insisted on l/h er paying 50% of a fair, statutory premium.)

[jeffrey]

What is to stop one of the freeholders (possibly one who somewhere along the line extended theirs already) saying "no you can't extend your lease" unless you go down the statutory route. Clearly this would depend on voting rights but potentially one obstructive freeholder in a block of two flats could prevent a lease extension?
Nothing stops that happening; each lessee has irremovable statutory rights.
BUT each lease involves the identical problem; so the objector himself would also need an Extension Deed.

[doranolin]

Thank you for your answers. However, I am totally confused with the answer:

1-3. It ought to mean that V is:
a. a leaseholder (so sells leasehold); and also
b. a joint freehold reversioner, either in personal name (= one of two/three/four joint owners) or as a member of the jointly-owned company).

I would be grateful if you could give me a more elaborated one (and I do not understand the meaning of "V").

Actually, I am trying to find out how risky it might be to buy a "leasehold with a share of freehold" flat in the UK.

So:

1. If you own that kind of flat and you cannot afford it any more - can you sell it whenever you like, and for any price?
2. When selling, are you obliged to pay anything to anyone?
3. Would it be better and more safe to buy something completely freehold?
4. Are there any special rules and laws for non-UK residents?

Thank you,

Dora

[jeffrey]

Thank you for your answers. However, I am totally confused with the answer:

1-3. It ought to mean that V is:
a. a leaseholder (so sells leasehold); and also
b. a joint freehold reversioner, either in personal name (= one of two/three/four joint owners) or as a member of the jointly-owned company).

I would be grateful if you could give me a more elaborated one (and I do not understand the meaning of "V").

Actually, I am trying to find out how risky it might be to buy a "leasehold with a share of freehold" flat in the UK.

So:

1. If you own that kind of flat and you cannot afford it any more - can you sell it whenever you like, and for any price?
2. When selling, are you obliged to pay anything to anyone?
3. Would it be better and more safe to buy something completely freehold?
4. Are there any special rules and laws for non-UK residents?
'V' means 'vendor'.
What did you not understand in my last post's wording (below)? Time precludes me from writing an 'elaborate' essay for you, unfortunately!

It ought to mean that V is:
a. a leaseholder (so sells leasehold); and also
b. a joint freehold reversioner, either in personal name (= one of two/three/four joint owners) or as a member of the jointly-owned company).

[doranolin]

'V' means 'vendor'.
What did you not understand in my last post's wording (below)? Time precludes me from writing an 'elaborate' essay for you, unfortunately!

It ought to mean that V is:
a. a leaseholder (so sells leasehold); and also
b. a joint freehold reversioner, either in personal name (= one of two/three/four joint owners) or as a member of the jointly-owned company).



I have a little problem with the mentioned legal terms (where I come from nothing similar to leasehold exists - a flat is bought freehold, like a house). That might be the reason for my confusion.

If I understood it right - although you buy "leasehold with a share of freehold" you are still not the owner, you just participate in the building-management.

I am sorry for asking such basic and probably stupid questions. I read the information on the link sent to me by RallySally. However, this UK property law is really confusing. I understand that you can sell such "leasehold with a share of freehold" flat. I suppose also that your relatives can inherit it?

[jeffrey]

1. If you own that kind of flat and you cannot afford it any more - can you sell it whenever you like, and for any price?
2. When selling, are you obliged to pay anything to anyone?
3. Would it be better and more safe to buy something completely freehold?
4. Are there any special rules and laws for non-UK residents?
1. Yes. V (vendor) owns:
a. a leasehold, capable of being sold in the usual way; and
b. a share of the freehold reversion; this needs to be transferred to P (purchaser), too, no matter whether V is:
i. a personal joint owner with two or three others; or simply
ii. a member of the leaseholder's nominee company.

2. Leasehold: yes, of course. Freehold reversion: no.

3. Yes, but- in E&W (England and Wales), flats ought always to be individual leaseholds (except 'commonhold' schemes).

4. No. Anyone, whether an individual [aged 18 or over] or a corporate entity, is competent to purchase- at least in E&W.

[Richard Webster]

1. If you own that kind of flat and you cannot afford it any more - can you sell it whenever you like, and for any price?
2. When selling, are you obliged to pay anything to anyone?
3. Would it be better and more safe to buy something completely freehold?
4. Are there any special rules and laws for non-UK residents?


1.You can sell it. Normally a share of freehold is reckoned a little more attractive than one where there is an outside freeholder. You would sell the lease for the price agreed and transfer your "share" in the freehold for a nominal amount.

If the freehold is literally owned by up to 4 flat lessees then you have to get the others to sign a transfer of the freehold title. Usually they will do this as they will recognise that they will want the same favour when they want to sell. If one of them wants to be difficult, or is stupid and doesn't understand, and doesn't sign, then you have a problem because your buyer won't want you still partly owning the freehold and him not having this part ownership.

If the freehold is held by a company then the freehold title doesn't change hands at all - the buyer simply gets a share in or membership of the company, so this is much less likely to be a problem on a sale.

2. There is no particular reason why you should have to pay anything unless one of the co-freeholders has had an argument with you about some probably unrelated issue, and wants to use refusal to sign over the freehold as a negotiating ploy.

3. Freehold houses are always easier to deal with than any kind of flat. A completely freehold flat (where there are flats in a building each with its own freehold title) is a disaster and unmortgageable. Avoid!

4. No. It may be more difficult to obtain a mortgage, but hardly ever to do with the title. (There will be a few ex-local authority properties in areas of natural beauty etc where there are restrictions on people buying other than those who have lived in the area for a number of years, but these will be few and very far between.)

[jeffrey]

2. When selling, are you obliged to pay anything to anyone?


2. Leasehold: yes, of course. Freehold reversion: no.
Just to clarify:
what I meant, of course, was that P pays V the usual price (purchase of leasehold) but nothing- usually- for 'share of freehold reversion'.

[doranolin]

Thank you very much for the advice. I have to say that buying a property in London looks like a very complicated and potentially risky adventure for a foreigner.

If I understood your advice correctly: freehold house - best buy; then leasehold with a share of freehold; then leasehold. Freehold flat (in a commonhold building) - never. (I am really grateful for this advice - because for me the last option sounded as the best one)

Please, tell me a few more things:

1. To buy an apartment in London, I will have to sell the flat in the home-country. That means - if I decide to do it, I intend to pay cash. Is there anything in particular one should keep in mind or beware of when doing such a transaction? (taking a solicitor is a "must", of course)

2. What happens with the property I bought if something happens to me? Can my family inherit and sell my "leasehold with a share of freehold"?

[Richard Webster]

If I understood your advice correctly: freehold house - best buy; then leasehold with a share of freehold; then leasehold. Freehold flat (in a commonhold building) - never. (I am really grateful for this advice - because for me the last option sounded as the best one)

That's essentially correct. However, the lawyers on this board didn't mention Commonhold. This is a new kind of tenure where you can have "freehold" flats in a building where the whole building is regulated as Commonhold. This was all introduced with a lot of fuss a few years ago, but is so rare that it hasn't been mentioned, but is acceptable to some mortgage lenders.

There are maybe something like 20 Commonhold Flats in the whole of England & Wales! So for practical purposes ignore the possibility of finding one. Pure freehold flats (to be avoided) are very rare, but there will be more of them than Commonhold!

As far as English law is concerned (in broad terms) you are free to leave a freehold or leasehold property to your family or whoever you like. However the relationship with the laws of your home country can complicate the issue and we get into murky waters of Private International Law, in which I am no expert.

Also, if you didn't realise, property law in Scotland is completely different from England, so all the comments are relaed to the law of England & Wales.

[doranolin]

Tnx.
Then - again some confusing terms:
1. what is freehold reversion
2. leasehold reversion
3. underleasehold and underleasehold reversion?

[jeffrey]

1. what is freehold reversion
2. leasehold reversion
3. [A] underleasehold and [B] underleasehold reversion?
1. Freehold subject to a lease.
2. Leasehold subject to an underlease.
3A. [Inferior] lease created by someone who is not a freeholder but only a leaseholder.
3B. Ditto subject to an [inferior] lease.

[doranolin]

I suppose that means that a leaseholder can underlease the property to someone else?
My goodness! How wonderfully complicated :)

Thanks

[jeffrey]

I suppose that means that a leaseholder can underlease the property to someone else?
1. Yes, subject to any restrictions in lease.
2. If underlease etc. is on sale, its term is normally (but not invariably) existing term less a bit at the end.
3. Example:
F grants lease for 999yrs. to X.
X grants underlease for 999yrs. (less final 10 days) to Y.
Y grants sub-underlease for 50yrs. to Z.
Z grants tenancy for 3yrs. to T.

[tfrisbee]

Hi,

I'm thinking of extending the lease on our flat, in a converted 3 storey house. I share the freehold with the other two flat owners.

Checking through the paper work I've noticed that the lease on our flat is some 50 years less than the lease on the other two flats.

I know I need to get permission from the other 2 freeholders but should extending the lease pose a problem? There's currently 75 years left to run on my lease.

Any help welcome!

[kikuyu]

Hi,

I'm thinking of extending the lease on our flat, in a converted 3 storey house. I share the freehold with the other two flat owners.

Checking through the paper work I've noticed that the lease on our flat is some 50 years less than the lease on the other two flats.

I know I need to get permission from the other 2 freeholders but should extending the lease pose a problem? There's currently 75 years left to run on my lease.

Any help welcome!

No, there should be no problem in you extending the lease. You can do this either with agreement with the other 2 F/H's or failing that, serve the appropriate notice under the 1993 Act, which would be daft as you are one of the three F/H.

Better still, why don't you all extend your leases for a much longer period and all to run concurrently and with the say expiry date?

As your lease is 50 years shorter than the others then be prepared to pay a consideration for this, not forgetting that 1/3rd will be returned to you.

It is late in the night and I hope it makes sense.

[ndna]

I have a lease on a flat and I pay management fees to a management company.

I am also a shareholder in a company ( named after my building) and I receive annual accounts for this company showing what has been paid and received in respect of the property.

Who is or who would know who the freeholder is ?

If I am a shareholder in this company , do I own part of the freehold?

Any help would be really really appreciated

Thanks
Nick

[thevaliant]

Sounds like you are via the company. Read your lease however, it will tell you. Failing that, check the land registry website.

Note - Only YOU can really answer this question.

[sgclacy]

It is a legal requirement for the freeholder to be shown on the demand for ground rent

If no ground rent is charged almost certainly (but not 100%) the company to which you have a shareholding is probaly the freeholder.

The best method is as Valient says check at the Land Regiostry on line only costs £3.00 and you will have the definitive answer in seconds

[Gordon999]

1. Did you buy your leasehold property with a share of the freehold company ?

2. Do you pay any annual ground rent ? The annual GR demand will show the name of the freeholder. Is the annual service charge accounts produced under the company accounts ?

3. Buy a copy of the freehold title with plan from Land Registry online. It will show the name of the freeholder and the leasehold units included.

4. If the freeholder is a company, then buy a copy of the freehold company info from Companies House ( recent accounts, list of appointments and members list )

[jeffrey]

It is a legal requirement for the freeholder to be shown on the demand for ground rent.
Read that as, "It is a legal requirement for the landlord (receiver of the rent) to be shown on the demand for ground rent." The requirement is in s.47 of LTA 1987. The rent receiver, for these purposes, is T's immediate L but:
a. not that L's agent; and
b. not necessarily the owner of f/r. T may hold only an underlease!

[ndna]

I wasn't told that I owned part of the freehold when I purchased the property and this is what made me assume I didnt own any part of the freehold.

I pay annual ground rent (£20 at the moment) and the company I co -own (named after the property) is listed as landlord on the invoice from the management company.

I've checked with the registry and the freeholder is listed as the co-owned company and I receive annual accounts.

I've today sent an email to the legal team I used as that is the only way I can think of to get 100% confirmation.

Thanks to everyone for the advice so far.

[thevaliant]

You own the freehold via the management company therefore.

Why are they demanding the £20 ground rent one has to wonder?

[jeffrey]

You own the freehold via the management company therefore.

Why are they demanding the £20 ground rent one has to wonder?
Because (I guess):
a. the leases say so; and
b. no-one has yet dealt with Deeds of Surrender and Re-grant.

[maxima]

Hi not sure if this is the correct subforum..

I live in a flat I own and I have share in freehold. Hence I am landlord and tenant at the same time.

Freehold is on the name of limited company and all have 1 share in it (5 shares in total).

We just had and AGM. I was told that I cannot refuse to pay my share of expenses done on the outside of the property (which belongs to the freehold) if it was agreed by majority on AGM.

I am out of job for 12 months. I dont care about pruning trees or beautifying shrubs for now. I dont want to pay unless it is vital or we obliged by law or by the lease to do so.

Will I have chance to win court if sued for not paying expenses made without my agreement (I am talking about expenses which arent regular - we normally pay for lot of things including gardening and I do not argue about it).

If for example majority will agree to spend money for building helipad in the garden and happy to spend 2 millions for that would I have to pay the share?

The question is - What are the limits and what are the legal scope management company must operate in?

Thank you.

[Gordon999]

I don't think membership alone, of the freehold company can force you to contribute towards maintenance costs. As a member you can have a say but any final decision on what is spent will determined by directors /majority vote or by a managing agent appointed by freehold company.

Maintenance of the building, communal areas and gardens is part of the service charge which is paid by leaseholders and the valid items of expense are normally written inside your lease ( e.g TV aerial system , cleaning , electricity, periodic painting-internal and external, gardens and footp[aths and insurance etc. ) So read your lease .

Well maintained property helps to keep up capital values for the owners. If the building appearance looks run down, then capital values may be reduced by 5K-15K when potential buyers make their offers.

[maxima]

Thank you Gordon...

You mentioned the Lease... So my question is actually - can I argue any payment demands which is outside the Lease? If the company will take the matter to the court do you think it is feasible to argure if their demands are not in the Lease?


And to explain my issues:

I do not have any problem with routine maintenance. The problem is that today's majority in the company wants improvements. They have stable financial postion and they want to install more lights, do some gardening beyond usual maintenance, do this do that, they have loads of ideas as they just moved in a year ago...

I am aware about well maintained property and its value, however there are different points of view on what is "well maintained".

Half of the majority moved to England from Dubai and they want to change the place from respectable Victorian property into Arabian palace.

Not only I do not consent to this idea (I bought the place because it represents real English heritage) but also I have to pay for that..

Do you think that is fair??

[Gordon999]

Under the service charge account, you are not obliged to pay for any improvements unless it is a legal requirement.e.g single glaze windows must be replaced by double glazed windows.

but if the others want to install a communal sauna or tennis court or stables for camels or anything outside the scope of the "lessee covenants" , the contributions to cost must be voluntary.

So read your lease ( the lessee covenants to pay..............) .

[surreygirl]

I have the same problem! The owner of one of our flats wants to build a new garden shed and also a new shed to house the dustbins in as well as some bicycle racks and the drains are falling apart, so I received a letter telling me that I will have to pay a lump sun for the drains when they have finished building above. I know Poppy has commented on this and I have sent a letter to them all telling them that the drains are the most important and are essential, but they were due to start the work on the new bin area at the end of the month so will be furious if they dont fix the drains first and what to do if they spend the current 4500 pounds on bin area and leave no money for the drains!

[maxima]

from what I learnt the drains is a repair item and most definitely in your lease and the sheds is exactly the same problem as I have and it is an improvement and is most likely to be not in the lease...

I wish you luck!

[animal]

Nobody seems to have mentioned this, but there may be a clause in your company articles stating you must pay to cover the obligations of the company. This may be in addition to any obligations in the lease.

[dominic]

Nobody seems to have mentioned this, but there may be a clause in your company articles stating you must pay to cover the obligations of the company. This may be in addition to any obligations in the lease.

Actually there's normally a clause in AoA stating the opposite - that the company indemnifies each director for their actions!

The company's revenue comes from the collection of service charge payments, ground rent, and any insurance payouts.

Accordingly, the lessees in their capacity as directors and shareholders of the company have no such liability HOWEVER, as lessees under the lease they do have an obligation to abide by the terms of their lease, which is usually the sole document governing their obligations to the freeholder, and therefore must make such contributions by way of service charge and rent as they are required to do thereunder.

Likewise, there are restrictions on the freeholder contained in the lease as to what he may charge back to the lessee by way of service charge.

In summary, any dispute as to whether sums are due from a lessee to freeholder in relation to any expenditure should be predicated on what the rights and obligations of both parties are under the lease.

[maxima]

Dominic, I am sorry but it is difficult for me to follow....

Does what you have said mean that directors and the company would normally not be able to force shareholders to pay for improvements not mentioned in the lease?

I am one of the directors but again I am in minority anyway.

[dominic]

Surreygirl:

Once and for all... you seem to be sharing a building with a few rotten fellow lessees who are making your life difficult. From reading your posts on here you seem to have exhausted all if not most of the non-litigious and practical routes to resolution of the problems you are experiencing.

If the above is true, it seems to me that you therefore now have two options:

a. put your hand in your pocket and litigate; or
b. shut up and sit tight (and put your hand in your pocket either to, rightly or wrongly, make the contributions requested, or defend litigation against you).

[jeffrey]

Dominic, I am sorry but it is difficult for me to follow....

Does what you have said mean that directors and the company would normally not be able to force shareholders to pay for improvements not mentioned in the lease?

I am one of the directors but again I am in minority anyway.
Property-related matters are governed by the lease.
Company-related matters are governed by the Articles of Association. These rarely include payment obligations.

[dominic]

Dominic, I am sorry but it is difficult for me to follow....

Does what you have said mean that directors and the company would normally not be able to force shareholders to pay for improvements not mentioned in the lease?

I am one of the directors but again I am in minority anyway.

Maxima:

As a lessee: Generally speaking, if you are required under the terms of your lease pay a proportion of the costs in relation to an expenditure incurred by the freeholder (such expenditure being permitted by the lease), then you are legally obliged to pay your contribution as lessee.

As a director and shareholder in the freeholder company: you have a say in how the freeholder company spends its money - you are entitled to make your opinion heard by exercising your right to vote as a director at board meetings, and as a shareholder at EGMs/AGMs.

[animal]

Actually there's normally a clause in AoA stating the opposite - that the company indemnifies each director for their actions!

The company's revenue comes from the collection of service charge payments, ground rent, and any insurance payouts.

Accordingly, the lessees in their capacity as directors and shareholders of the company have no such liability HOWEVER, as lessees under the lease they do have an obligation to abide by the terms of their lease, which is usually the sole document governing their obligations to the freeholder, and therefore must make such contributions by way of service charge and rent as they are required to do thereunder.

Likewise, there are restrictions on the freeholder contained in the lease as to what he may charge back to the lessee by way of service charge.

In summary, any dispute as to whether sums are due from a lessee to freeholder in relation to any expenditure should be predicated on what the rights and obligations of both parties are under the lease.


Property-related matters are governed by the lease.
Company-related matters are governed by the Articles of Association. These rarely include payment obligations.

In our case, and judging from a number of LVT decisions we are not alone, there is a clause in the articles requiring the shareholders to contribute to any expenditure decided by the directors or losses to the company. The Directors are using this clause to try and get around the L&T requirements as well as other legal obligations. Their invoices are issued under this clause and do not comply with the L&T. The OP should check the articles least there is such an obligation before relying solely on the L&T act.

[dominic]

In our case, and judging from a number of LVT decisions we are not alone, there is a clause in the articles requiring the shareholders to contribute to any expenditure decided by the directors or losses to the company. The Directors are using this clause to try and get around the L&T requirements as well as other legal obligations. Their invoices are issued under this clause and do not comply with the L&T. The OP should check the articles least there is such an obligation before relying solely on the L&T act.

If the freeholder company is one limited by guarantee, then you would expect to see a clause in the AoA requiring each shareholder to contribute up to a certain amount (which must be limited or capped).

[animal]

Ours is limited by shares and the obligation in the articles has no limit other than what the directors decide. The companies (there are two) were set up by the directors for the directors and the place has always been run as a director's fifedom. We didn't quite establish this until after we purchased the freehold.

[dominic]

Ours is limited by shares and the obligation in the articles has no limit other than what the directors decide. The companies (there are two) were set up by the directors for the directors and the place has always been run as a director's fifedom. We didn't quite establish this until after we purchased the freehold.

YOur articles present an interesting legal question vis-a-vis company law, as effectively you are an unlimited company (i.e. the liability shield affiorded by the shareholding has been lifted by virtue of that clause in the AoA). I wonder whether there is any case law on this type of clause being unenforceable as a matter of public policy, given the "ltd" suffix is misleading to both counterparties and incoming shareholders.

[animal]

I don't want to hijack this thread, but...

There was a case last year in the appeal court (Morshead Mansions Ltd v Di Marco [2008]) where the lessee/shareholder lost when he claimed that he was not liable for the variable amount decided by the directors due to section 16 of Companies Act. Basically that is the clause saying that a shareholder liability is limited. Judges decided he was liable under the Articles, but they did make the comment that he may have been successful if he had claimed under L&T Act.

OP and others need to check both Lease and Articles to figure exactly what their liabilities are. I know of no case law that resolves the conflict between Lease and Articles, but would be grateful if anyone finds a definitive decision :-)

[dominic]

I don't want to hijack this thread, but...

There was a case last year in the appeal court (Morshead Mansions Ltd v Di Marco [2008]) where the lessee/shareholder lost when he claimed that he was not liable for the variable amount decided by the directors due to section 16 of Companies Act. Basically that is the clause saying that a shareholder liability is limited. Judges decided he was liable under the Articles, but they did make the comment that he may have been successful if he had claimed under L&T Act.

OP and others need to check both Lease and Articles to figure exactly what their liabilities are. I know of no case law that resolves the conflict between Lease and Articles, but would be grateful if anyone finds a definitive decision :-)

Just read the case you referred to. Very intersting, and it has some authority being a court of appeal decision.

In summary, it seems that freeholders may be able to bypass the LTA1985 service charge consultation requirements etc through the AoA, the reason given is that the relationship of company/member is distinct from lessor/lessee.

"The two kinds of legal relationship could co-exist between the same parties but were different relationships incurred in different capacities and gave rise to different enforceable legal obligations. A defence to one of the claims was not necessarily available as a defence to the other legally separate claim. The instant appeal was concerned only with the question of law whether C was entitled under art.16 and pursuant to the resolutions to be paid the money which it claimed from T as a member of the company. The judge did not decide and was not asked to decide whether s.18 applied to T as a tenant. He was not deciding whether C could avoid altogether the statutory protection which T might enjoy as a tenant if he were sued under the provisions of the lease or if he invoked the terms of the lease and the statutory provisions in his capacity as tenant. "

In other words - conveyancers of share of freehold transactions: watch out for such articles permitting the company to call on members to cough up. Such article should definitely be brought to the attention of a prosepctive buyer.

[jeffrey]

In our case, and judging from a number of LVT decisions we are not alone, there is a clause in the articles requiring the shareholders to contribute to any expenditure decided by the directors or losses to the company.
Normally, a non-profit company limited by guarantee uses Memorandum of Incorporation showing a £1 nominal figure, akin to the £1 share value utilised in the M of I for a corresponding company limited by shares. It's possibly a bad idea for basic information like this to appear in Articles of Association- but, as from CA 2006, M of I operates only at the time of incorporation; thereafter, A of A will govern who does what.

[balamoray]

Hi
we are a freehold share of 6 flats
I am wondering if I have a lease for life being that I
am a shareholder

many Thanks

Balamoray

[jeffrey]

As far I can tell, from your post, it's like this:
1. You alone own a leasehold flat.
2. You- jointly with each other flat's lessee- own a company that owns the f/r.
3. So, no- you do not own a 'lease for life'. What you own now, in respect of your flat, is what you first bought: a leasehold interest UNLESS you (and each other flat's lessee) acquired an extension ("Deed of Surrender and Re-grant") which would replace the original leasehold term.

[thevaliant]

No you don't.

Distinguish between:

1. Your rights as lessee (lease of flat, expiring) vs
2. Your rights as shareholder in company holding freehold
3. Your obligations as director of freehold company?

If you have this setup, the fact that you have freehold doesn't prevent a problem. When lease term expires, and you want to sell, how will you sell without a lease (you might be able to sell share but not really satisfactory and if limited by guarantee - can't sell at all!).

[lichfield]

Sorry if this is in wrong section, first post.

I own the 1st floor of 3 Victorian converted flats. I bought the freehold with Upstairs, Downstairs could not contribute financially. Freeholder unusually agreed sale in record time, agreed our offer if we could complete in 2 weeks. I was going abroad for 4 weeks on business within 24 hrs of offer from Freeholder, Upstairs was moving abroad within 48 hours; renting out flat via letting agent.
Upstairs could not offer share of costs within time to complete, I payed for Freehold + legal fees on understanding of reimbursement as soon as possible. Remember, I had 24 hours to get all monies to solicitor before leaving on business to take advantage of quick sale at reduced price. Freehold sale goes through, now registered in My name and Upstairs.
New tenants move in upstairs, find letter from bank notifying of repossession due to mortgage non payment. I have had no contact from Upstairs since buying of freehold, looks like he has skipped country. He has contacted letting agent to cite "procedural error" on the banks part. I'm not convinced as he refuses to contact me.

Can I force his share of freehold to me so I own in entirety?
What are my options?
I don't care about the cash if I can have ALL the freehold.

And yes I know I should have had legal document between us, but time was critical. Why bother going through rigmarole of buying freehold (all in a few days!) if you're running out?

Advice much appreciated.

[jeffrey]

You really need detailed legal advice, much more than LZ can provide. Your over-rushed transaction may have exposed you to a host of avoidable problems inc. possible criminal liability for not complying with LTA 1987 procedures.

[diposh]

I own one of four flats and together with the other three owners we also own the freehold directly (ie all named on freehold - not through a company).

What are the rules for getting Freeholder consent from joint freeholders, for example when building a conservatory or extension etc.? Do all the Freeholders have to agree? More generally what are the rules around taking such decisions, is it a majority decision OK or is a unimous decision necasary?

[jeffrey]

I own one of four flats and together with the other three owners we also own the freehold directly (ie all named on freehold - not through a company).

What are the rules for getting Freeholder consent from joint freeholders, for example when building a conservatory or extension etc.? Do all the Freeholders have to agree? More generally what are the rules around taking such decisions, is it a majority decision OK or is a unimous decision necasary?
Where there are joint owners, as here, decisions are usually taken by a [binding] majority vote. However, there can be other pre-agreed rules. For instance, the Trust Deed etc. could stipulate that unanimity is required either:
a. always; or
b. in a category of clearly-defined cases.

[pandoralcy]

Hi there.

I'm looking to buy a flat which has been converted within a house, which has share of freehold, with a lease of 71 yrs. Am hoping to buy it but subject to the vendor extending the lease. I just have a few questions which I need some advice on.

1. Is there any difference in cost or any other issue when you come to extending the lease, if it was for 99 yrs or 999 yrs? and how long will the actual process take normally?

2. right now, there is no "single" building insurance.....each flat insures their own. Is that actually advisable or even legal? so what would happen say, if there is subsidence in the bottom flat and he doesn't have insurance?

Thanks in advance.

[leaseholdanswers]

Before buying take the advice on the lawyer and a valuer. If the vendor is extending then I would expect they would follow the enfranchisement pattern of adding 90 years onto the exisiting lease. If all are willing and terms are agreed, then it is a matter or a few days and would be done at the same time as the conveyancing. 999 years confers few real benefits in your lifetime.

As to insurance, read the lease, buy it from the land registry, and see who should and what they should insure. and who repairs what. It is not unusual for the ground floor flat to have to look after and insure foundations and drains. I would be worried who insures the common areas and structure and roof and how it deals with failure to insure, and the outbuildings paths fences etc.

If you like it enough then get the lease and a lawyer asap before going to IKEA, and make sure they understand you want advice, not just sausage machine conveyancing.

[jeffrey]

I'm looking to buy a flat which has been converted within a house, which has share of freehold, with a lease of 71 yrs. Am hoping to buy it but subject to the vendor extending the lease. I just have a few questions which I need some advice on.

1. Is there any difference in cost or any other issue when you come to extending the lease, if it was for 99 yrs or 999 yrs? and how long will the actual process take normally?
For how long has V owned: at least two years?


2. right now, there is no "single" building insurance.....each flat insures their own. Is that actually advisable or even legal? so what would happen say, if there is subsidence in the bottom flat and he doesn't have insurance?
Very bad idea. Unless there's a single block policy:
a. how will one lessee know whether all others are insuring;
b. there's immense scope for each flat's insurer to refuse a claim and to try and shunt the claim onto another flat's insurer; and
c. what about common parts?

[quarterday]

actually this was pretty common back in the 50s and 60s, but I agree it is far from desirable. You could get your solicitor to write to the vendors' solicitors to see if it might be possible for both flats in the building to enter into a deed of variation such that the freeholder insures and recovers the premium. Or, tackle the other owner to see how they'd view a possible application to acquire the freehold between the two flat owners. Either way, quite a lot of hassle.

I know of many blocks of maisonettes where lessees insure their own flats. Not ideal, by any means, but far from unknown.

[leaseholdanswers]

I think the consensus is that there are many older developments that do this and on enquiry you may have a landlord who aggresively ensures the owners insure, and the lease and management addresses our concerns. As said get advice from a solcitor not a sausage machine conveyancing firm.

If you have a loan from the "chemcial bank of somewhere no one has heard of" they are less likely to accept these arrangements especially if you are at the borrowing most of the value, than say high street lenders.

Again if you really like it, it might be worth the extra work but be prepared to be dissappointed, and imagine having bought the flat and you come to sell , your buyer might be concerned as you are.

[dominic]

Better simply for all cooperative lessees to chip in amongst themselves for insurance for the whole building (if this is feasible).

[jeffrey]

Better simply for all cooperative lessees to chip in amongst themselves for insurance for the whole building (if this is feasible).
Yes. Not only do they have to insure anyway but, this way, the total insurance policy premium payment (on a single block policy) will be much less than the total of individual insurance policy premium payments- economies of scale. What's not to like?

[leaseholdanswers]

I wouldnt buy it if I was no guarenteed that arrangement. The lease may not allow recovery of the premium in service charges so if I was a hard up flat owner I might refuse to pay and you would have a hard time. I have experience of this where a resident was a retired employee of a very large company and got discounted rates. You will never know until you are an owner.

Its a good idea but I would only do as a variation to the leases at the LVT to make it binding .

In short eyes wide open before you buy.

[exoz]

I live in a converted Victorian house that comprises three flats. We would like to purchase the freehold by making an informal approach to the current landlord. Due to an oversight in the original lease, the freehold comes with a liability for the cost of some repairs to the building, so we are confident they will sell it at a discount.

If we purchase the freehold, do we do so jointly or is it split into three parts which are 'attached' to each of the flats? If we purchase jointly, is it necessary to form a company (we have already formed an RTM company to maintain the building). And do we have to have the three leases redrawn to reflect our ownership of the freehold?

Any answers greatly appreciated.

[jeffrey]

I live in a converted Victorian house that comprises three flats. We would like to purchase the freehold by making an informal approach to the current landlord. Due to an oversight in the original lease, the freehold comes with a liability for the cost of some repairs to the building, so we are confident they will sell it at a discount.

If we purchase the freehold, do we do so jointly or is it split into three parts which are 'attached' to each of the flats? If we purchase jointly, is it necessary to form a company (we have already formed an RTM company to maintain the building). And do we have to have the three leases redrawn to reflect our ownership of the freehold?

Any answers greatly appreciated.
As I regularly post: never, ever sever. Keep the whole building's freehold reversion intact.
No company is needed, as the f/r can be held in three names (= one per flat). You could even then voluntarily wind-up the RTMC and avoid future Companies House filing and fee requirements. Finally, the triumvirate can then re-grant the leases extended to 999yrs.

[Monarch100]

Hi guys

First post, please be gentle!!

I have come to sell my flat (leasehold with share of freehold) after purchasing and completing in September 2009. I was never sent a Share Certificate (or any stock transfer forms) which my current buyers are now asking for.

I have gone back to the original solicitors I used to purchase the flat but they are not being very helpful and just say they'll revert to my original vendors solicitors.

Where do I stand and what problems will this cause me? I'm due to give birth in 12 weeks and so a little concerned!! :eek:

Any response would be greatly appreciated.

[jeffrey]

Is the f/r-owning company owned by the leaseholders collectively? If so, is it limited by shares or by guarantee?

[leaseholdanswers]

As you say share certificate it is unlikely to be limited by guarentee, but do check just in case.

Do you have a managing agent? If so their company secretarial service can prepare an indemnity form or exercise a lien under the articles (as long as the company was set up correctly and there are no complications such as loans or premuims- all very unlikely but do crop up now and again).

If not find out who your company secretary is; they and your solicitor should be able to resolve it. If your solicitor wont help - they need an ear bashing, this is easy stuff for them to help you on.

If you dont know the company secretary, your solicitor can access companies house website.

Its easy if they try!

[jeffrey]

In fact, anyone can access Companies House's website. See http://wck2.companieshouse.gov.uk/72b0b54bc60f9b4fb7f4bb2b6c3783be/wcframe?name=accessCompanyInfo.

[Jeremy1978]

Hi there,

I am in the process of buying a flat which is leasehold with share of freehold. There is 74 years remaining on the lease. I want to extend this.

1. As it is share of freehold, will there be a cost (in addition to legal fees) for this?

2. Should I ask the vendor to extend the lease before I buy?

I am naturally risk-averse and the thought of buying a flat with a short lease unnerves me!

Many thanks for any help.

Jeremy

[jeffrey]

Yes. If V is one of the freehold reversioners, make V extend before selling to you. There should be no extra cost- V ought to have done this already! You alone would have no right to extend until two years from purchase.