Selling my leasehold flat; owner of building not playing ball, advice please!

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  • Lawcruncher
    replied
    In my last post:

    "However, precisely what the lender can do without consent may depend on the terms of the mortgage."

    should read

    "However, precisely what the borrower can do without consent may depend on the terms of the mortgage."

    I think that in this case the deed of variation is probably exactly that and not the grant of a new lease.

    The position as I set it out above is what it will be in most cases where the lender is a financial institution because of the terms of mortgage.

    The position in law is set out in section 99 of the LPA 1925. However, the section is rarely going to apply because financial institutions take advantage of section 99(7) and set their own terms for what a borrower can do. Section 99 is therefore very much a default provision.

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  • AndrewDod
    replied
    Interesting, I had never heard of that. A lease extension is simply a variation -- so does that mean that if a lessor defaults on his mortgage all of of the lessees simply lose their leases and get thrown onto the street?

    Where is this enshrined in law (and distinguished from other situations where the contractual relationship between the lessee and what was the lessor simply ceases to exist)? - such as loss of the freehold the the Crown?

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  • Lawcruncher
    replied
    A mortgagee has an interest in the property.which has priority over any later dealings so as to preserve the security. That is why when taking a tenancy or being granted an easement you need to establish whether the property has a mortgage. Anything done without the mortgagee's consent does not bind the mortgagee but is only relevant if the mortgage is exercising his power of sale or some other right. However, precisely what the lender can do without consent may depend on the terms of the mortgage.

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  • AndrewDod
    replied
    Originally posted by Lawcruncher View Post
    All that can happen is if the lender sells the freehold as mortgagee it can sell it free from the deed of variation.
    Is even that possible? There would certainly be a discrepancy between the contract that the lender owns and the contract held by the lessee, but why is that the lessee's problem (or why different to a sale by lessor to anyone else)? What gives the lender special rights as owner?

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  • Lawcruncher
    replied
    The deed of variation is binding between you and the landlord. You have no contractual relationship with the landlord's lender. The lender cannot therefore sue if you sublet. All that can happen is if the lender sells the freehold as mortgagee it can sell it free from the deed of variation. Unless and until that happens you are free to sublet. If you had a solicitor act on the deed of variation you need to have a word with him.

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  • AndrewDod
    replied
    Originally posted by pilman View Post
    Why is the freeholder getting involved unless the Lease shows that no assignment of the Lease is to be allowed without the Lessor's permission.

    When I last purchased a leasehold property all that was required was that a notice had to be served on the Lessor after the sale had been completed by the current leaseholder and the registered property had been transferred to me.

    The Landlord had no involvement with the transaction at all other than having the notice given that there was a new leaseholder in possession of the property.
    That's all very well -- but 99.99% of the time a buyer's solicitor will simply tell the buyer to withdraw if the freeholder does not respond to standard questions in good time and appropriately (asbestos certificates, service charges, pending works, breaches to lease buyer will be purchasing, arrears, confirmation of ground rents,......). It provides a wonderful mechanism for freeholders to abuse lessees trying to sell.

    And in any case why would anyone purchase not knowing that they will be instantly purchasing a £20K arrears debt or litigation over modifications.

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  • pilman
    replied
    The owner now refuses to get involved despite us offering to cover costs.
    Why is the freeholder getting involved unless the Lease shows that no assignment of the Lease is to be allowed without the Lessor's permission.

    When I last purchased a leasehold property all that was required was that a notice had to be served on the Lessor after the sale had been completed by the current leaseholder and the registered property had been transferred to me.

    The Landlord had no involvement with the transaction at all other than having the notice given that there was a new leaseholder in possession of the property.

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  • AndrewDod
    replied
    The relationship between the FH and his mortgage provider is absolutely nothing to do with you. The fact that FH might have erred in granting a lease variation is his problem not yours. The lease is the lease, and it has been varied.

    Feel free to let it out.

    The (implied?) problem of FH not responding in a factual and honest manner to potential purchasers is a massive and unaddressed problem in leasehold-land -- FH's regularly use this to bully lessees (and even to artificially drive down prices where they end up becoming the purchasers). It's a type of fraud - but nobody who legislates cares about it.

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  • Selling my leasehold flat; owner of building not playing ball, advice please!

    Hi everyone. I've reached a brick wall with the sale of my leasehold flat and not sure where to go next, any help much appreciated!

    We bought the flat back in 2001 and in 2004 had to get the lease altered to allow subletting so we could rent it out. That was carried out and we've been renting it ever since. We now have a buyer but it transpires that the owner of the building's mortgage lender never consented to the deed of variation - so it was granted but erroneously I guess. The owner now refuses to get involved despite us offering to cover costs. So we are unable to move forward and also unable to let it out again despite the fact that we've been doing that for years.

    Is he within his rights? I'm sure he must be obliged to request permission from his mortgage lender given that we hold a deed of variation...or if not then any suggestions -surely we can't just be stuck with an empty flat....or can we?!

    Many thanks

    Kate

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