Option to buy a Headlease: is the property right secure?

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    Option to buy a Headlease: is the property right secure?

    This is an unusual situation. I purchased an option to buy a 999 year Head Lease subject to a short under lease with 50 years to reversion. The option can be exercised at any time and upon exercising, the pre-drafted Headlease comes into existence, sitting inbetween the Freehold and the short Leasehold, with the benefit of the latter's reversion. Thus it effectively has the same economic value as the Headlease it refers to, but with the advantage of being easier to transfer (assign), similar to an SPV. It is mentioned in the Freehold title in the land registry. My solicitor is concerned however that without actually exercising the option and creating the Headlease, there's nothing preventing the freeholder from granting a lease extension to the leaseholder, thus reducing the entire value of the option/headlease to next to nothing. He doesn't say that this is definitely the case, but that he can't guarantee that it's not the case. So the solution to secure my property rights would be to exercise the option immediately upon completion of the option purchase and then own the Headlease. I would/will do that if needed, however if it can be avoided without putting property rights at risk I would prefer to keep the option unexercised, as a) I would save the cost of exercising/registering the headlease, b) it would make it easier to sell it in the future, c) avoids the hassle of collecting the service charge from the leaseholder and passing it to the freeholder. I would therefore be interested in hearing from others. I have obviously already hired a conveyancing solicitor for this, so any ideas/free advice will be passed on to him but if there is scope to work with someone else in a professional capacity, they will probably need to coordinate or have the case transferred, so that's something to keep in mind. Thanks in advance.

    #2
    The leaseholder has the legal right to seek a statutory 90 years lease extension from the freeholder, if there is no headlessee.

    The Land Registry will show for your post code address; the name of holder of freehold title and name of holder of leasehold title.

    Comment


      #3
      Originally posted by Gordon999 View Post
      The leaseholder has the legal right to seek a statutory 90 years lease extension from the freeholder, if there is no headlessee.
      The question is whether the option for the headlease counts as a headlease for this purpose

      Comment

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