Not sure about meaning of 'absent Freeholder' and consequences thereof

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Not sure about meaning of 'absent Freeholder' and consequences thereof

    Hello All,

    Not sure if this is the correct place to post such a question...

    I am looking at a property (flat) with the following status.

    Repossession, below the general market value with quite good rental potential and capital growth, also very close to my own home.

    I've been advised that the property has a share of the Freehold with the flat upstairs (only two flats) and has a 999 year lease which started in 1998. The flat above does not pay third party for Maintenance / Insurance / Ground rent.

    The previous owner cannot be traced, however the BS and agent are trying to locate him.

    I really need clarification of the following please...

    How can you be a Freeholder and a Lessee?

    If they cannot find the 'Freeholder' what happens

    How can the BS repossess a property and offer it for sale if the Freeholder hasn't signed it over?

    Can the BS just title back if T&Cs were not followed (ie repossession) and if so why do they now need to find the Freeholder?

    Any feedback gratefully received..

  • #2
    Originally posted by boyyo View Post
    How can you be a Freeholder and a Lessee?
    The owners of the freehold title will be different to the leasehold. i.e in this instance owners of flat A and B will jointly hold the freehold (with any other parties) and will hold the leasehold of each flat as sole owners.

    Originally posted by boyyo View Post
    How can the BS repossess a property and offer it for sale if the Freeholder hasn't signed it over?
    This is always what happens in a mortgagee sale, it is sold by court order not by consent of paper owner.

    Originally posted by boyyo View Post
    Can the BS just title back if T&Cs were not followed (ie repossession) and if so why do they now need to find the Freeholder?
    Yes, but through a process that ends in an order for possession and sale. NO idea why they need to find the freeholder without further information about who owns the freehold title, leasehold title and what land charges are against them.

    Originally posted by boyyo View Post
    If they cannot find the 'Freeholder' what happens.
    Has anyone said they need to find the freeholder? Isn't the freeholder the same as the leaseholder for this flat? There is an outside possibility that the BS took a charge against the leasehold but not freehold, but even in this case the leasehold could be sold anyway (and I really can't imagine that would happen).

    Ask some further questions of the vendor, or better, get your conveyancing solicitor to go over both titles at land registry (they do this anyway!).

    Buying a repo is cheap because usually the previous owner can't be contacted and all the 'seller questionnaire' type questions your solicitor ask cannot be done. It shouldn't be a big deal - just make sure no 3rd party interests exist and you inspect the property to make sure no-one is living there!

    Good Luck!
    caveat emptor
    If it sounds like I know what I am talking about........I don't.

    Comment


    • #3
      Many thanks White Knight.

      I'm contacting a Solicitor who apparently has already completed searches on behalf of someone else. They decided that they did not want the hassle and pulled out.

      The Agents do not seem to know too much other than...

      The previous owner has just disappeared since the repo' and when I asked if the Freehold was 100% split and assigned to the two Flats, they could not advise. I also asked if the above flat had any details and they said apparently no, other than the Lady has never needed to par Rent / Insurance and Maint' was split on a case by case basis.

      The Agents have said that they and the BS are trying to contact the previous owner, so my assumption is that 'they need to' otherwise why would they be trying?......I had thought that someone had screwed up in the BS and didn't realise that the Freehold was not 'attached'...or 'charged' which I guess is the legal term.

      So, it may not be a big deal if they can't get the Freeholder to retrospectively charge the Property with the LH to the Building Society....if that makes sense!?.....as the Courts can force it through at some point?

      Comment


      • #4
        If the property is on the market they have a court order for sale already, you don't need to worry about that.

        Land Charges - these are the means by which the BS/Bank registers its interest over the title. When you take out a mortgage the title goes into your name alone but the bank registers a 'charge' on the title. It can't be retrospectively done. The only way you'll get to the bottom of this is to check land registry, usually through your solicitor but you can actually do this yourself, look on the land registry website - or just pay your solicitor to do the search only.

        The BS will want to find the owner because usually even after sale the owner owes a lot of money! Also they invariably leave a lot of stuff behind.

        Repo's are generally messy, but the sale process 'cleans' up the title.
        caveat emptor
        If it sounds like I know what I am talking about........I don't.

        Comment


        • #5
          Hello,

          More information!!

          Spoken with the Solicitor who in possession of all searches / deeds etc and it appears a little messy so would like any opinions.

          The flat (A) that I am looking at has a 999 lease from 1981 and a Share of the FH. The other Flat (B) only has 99 year lease commencing the same date and has the other share of FH.

          Apparently, the Solicitor of the BS made a mistake by not realising that there was no charge on the FH but only the LH......hope that makes sense?!

          So to summarise, it appears that the FH of Flat A still has an interest in the property even though it can be leased by me on the remainder of the 999 year lease. It would cause me problems when I come to sell, and he may be able to affect the Maintenance costs etc.

          Solicitor advised that it could take quite some time to get the FH transfered via the Legal route ie..news paper adds, searches ....and because we know he was in the Military we would need to do checks there too. Once all done she said it could be up to £10K of costs....is that about right?!!

          Unfortunately the owner of flat B, an elderly Lady, is in a real bad situation as she only has 74 years left on her Lease and cannot extend it without the the FH agreeing....and his AWOL!!

          I am still interested as the Solicitor is saying that the BS will be keen to move this whole thing on, and I could reflect the cost of clearing up this mess within any offer.
          How much hassle would I be getting into ....and cost?

          Comment


          • #6
            Originally posted by boyyo View Post

            Apparently, the Solicitor of the BS made a mistake by not realising that there was no charge on the FH but only the LH......hope that makes sense?!
            It does make sense, I think I identified this earlier as a possible explanation, I just didn't think it would actually happen!

            Originally posted by boyyo View Post
            So to summarise, it appears that the FH of Flat A still has an interest in the property even though it can be leased by me on the remainder of the 999 year lease. It would cause me problems when I come to sell, and he may be able to affect the Maintenance costs etc.
            I doubt it would cause too many problems as most leaseholders are in this situation anyway and there are various protections to stop excessive service charges. You need to check the terms of the lease though - any charges and ground rent must be in there. It could be that there are none, given that the flat was probably sold with the FH share.

            Solicitor advised that it could take quite some time to get the FH transfered via the Legal route ie..news paper adds, searches ....and because we know he was in the Military we would need to do checks there too. Once all done she said it could be up to £10K of costs....is that about right?!![/QUOTE]

            Originally posted by boyyo View Post
            Unfortunately the owner of flat B, an elderly Lady, is in a real bad situation as she only has 74 years left on her Lease and cannot extend it without the the FH agreeing....and his AWOL!!
            There are ways around this, but lets not complicate things!

            Originally posted by boyyo View Post
            I am still interested as the Solicitor is saying that the BS will be keen to move this whole thing on, and I could reflect the cost of clearing up this mess within any offer.
            How much hassle would I be getting into ....and cost?
            I'm assuming the 10k estimate includes the cost of buying the FH title. With a 999 yr lease, do you really need it? I would be inclined to use it as a bargaining chip for the price but then not bother taking it forward until the FH turns up (if he ever does) - or not bother at all. Sounds like the other flat owner is going to have to do the hard work for you anyway!
            caveat emptor
            If it sounds like I know what I am talking about........I don't.

            Comment


            • #7
              Thanks again Knight!

              I will get the Solicitor to check out the Lease for Maint'/Rent / Insurance details, and I understand the reasoning on not paying for the FH with 999 Lease in place.

              However, would it not be a good idea to have everything in my control as part of the exercise to tidy all of it up including the Flat above, as she will need to Find the FHolder to extend the Lease. Or am I being too nice?

              Comment


              • #8
                I know what you mean, but in pure business terms you could argue you will get a better return by not buying the freehold - if there is no or minimal ground rent etc, then all you are buying is obligations if you have 999 yrs anyway. So you would only be doing it for peace of mind or just to 'tidy up'. Even if I did want the FH, I would be inclined to wait until he turns up rather than pay money to find him and/or purchase with him absent - he may be very motivated to sell when eventually he does emerge. In the meantime the other flat has all the FH obligations on them.

                A better way of being nice would be to point the fellow leaseholder to these forums or better just get a solicitor - she has a statutory right to renewal - member leaseholdanswers is the guy - the thread below has similarities:

                http://www.landlordzone.co.uk/forums...low-us-to-sell

                Here's the bit of most help:

                Originally posted by leaseholdanswers View Post
                As joint owners the answer is simple litigation resolved in the County Court to resolve an impasse between owners of property.
                Wearing your "leaseholder's hat" you can also do things

                1: if the lease allows, disputes can be resolved by arbitration.

                2: Moreover if you have lived there for more than 2 years you can make a statutory application for the existing term to have 90 years added on.

                Your solicitor should be saying you have 7 days to respond failing which my client as leaseholder will serve a section 42 notice and you can kiss goodbye to your amendments and variations oh and the ground rent.
                caveat emptor
                If it sounds like I know what I am talking about........I don't.

                Comment


                • #9
                  Thanks again White Knight.

                  Understood....and I will contact Leaseholdanswers to get his view too

                  Comment


                  • #10
                    A leasehold title with a term of 999 years is being offered for sale by the mortgagee in possession, so why is there any need to have a charge on the freehold reversion which will be effective in 900 years time.

                    This makes no sense.

                    Thousands of leasehold titles were registered with 999 years terms throughout England, but often no one knows who the owner of the freehold is except when rental payments, which can be as low as £4 a year, have to be sent to someone authorised to collect such rental payments.

                    The fact that the freehold of both flats is owned jointly by the owner of one flat and the previous owner of the repossessed flat merely means that the freeholder is not in a position to interfere with the sale of the lease.
                    When a lease is transferred a formal notification will often need to be made to the freeholder but if one of the joint owners is missing there is no one to stop the leasehold title being conveyed by the building society.

                    Comment


                    • #11
                      Thanks Pilman,

                      I was advised that when coming to sell the Property buyers needing a Mortgage may find it difficult to secure one with the FH being absent.

                      I am actually OK with the 990 years on the Lease as I will be renting it out for quite some time , and there does not appear to be any major issues with increasing rates of Maint / Rent etc...

                      Comment


                      • #12
                        There is a not a great deal more that I can add other than it depends on the lease.

                        The concern of a buyer and a mortgagee is if the responsibility for maintenance of the building as opposed to the flats, which are most often the flat area and everything inside up to an including the plaster, then your freeholder is two people one of whom is awol, and the other less than motivated. What happened in the past is irrelevant it is what the lease says. Now if the lease includes in your demise the walls and structure and services and the other one similar then the landlords obligations are relatively few. However if one or other is in breach and there is no one in place to enforce the covenants then that is another concern...

                        As to the freehold ownership currently you are buying a lease and that's all the BS are interested in. An absent freeholder can be dealt with exercising the right to manage, .The shorter lease issue can be resolved by application to the Court and LVT, once as explained you have both or she, for a lease extension, have advertised and investigated to the best of your ability and can convince a court. A payment will have to be made representing a lease extension vlaue.

                        However unless the deeds to the freehold (or the lease or if the FH is owned by a company , in its Articles) require the transfer of the freehold on a sale of a lease, I cannot see a right to force their interest into your hands, it remains the property of lady and Awol. She has to convince the Court to empower to make decisions in his absence as the freeholder.She might be able to convince them to transfer from AWOL + Her to Her + you, but on balance I am not sure a Court will be happy to do so so soon.
                        Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                        Comment


                        • #13
                          I think some of the confusion is caused by people thinking that somehow a mortgage lender could take a charge on the freehold title.

                          Think about it. The freehold will be jointly owned by A & B who reach have separate flat leases. If B wants a mortgage on his flat why on earth should A co-operate and be lumbered with a joint mortgage liability so that the freehold can be charged as well as the leasehold for the benefit of B. So they can only take a charge on the leasehold.

                          Ideally lenders should refuse to lend on these "shared freeholds" unless there are mechanics in place, e.g. a deed of trust, which enables the "share" in the freehold to be transferred if the co-freeholder has disappeared (typically after repossession) or refuses to co-operate in the the transfer.
                          RICHARD WEBSTER

                          As a conveyancing solicitor I believe the information given in the post to be useful (provided it relates to property in England & Wales) but I accept no liability except to fee-paying clients.

                          Comment


                          • #14
                            But then they are only really lending on the flat, which can be transferred by A who can retain his interest in the FH. There may be lease extensions or development rights or a loan to be repaid, though in many case the FH is relatively unencumbered, and in various forms there are requirements to transfer one with the other.

                            I do agree that lenders and their solicitors not to mention the poor buyer should look closely at the affairs and set up of any freeholder whether joint owners or trust or company so that terms of leases are enforced, and especially where consent to assign is required.

                            Where there are only two is is vital that there is some form of dispute resolution or a means of automatic transfer.
                            Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                            Comment


                            • #15
                              Originally posted by Richard Webster View Post
                              I think some of the confusion is caused by people thinking that somehow a mortgage lender could take a charge on the freehold title.

                              Think about it. The freehold will be jointly owned by A & B who reach have separate flat leases. If B wants a mortgage on his flat why on earth should A co-operate and be lumbered with a joint mortgage liability so that the freehold can be charged as well as the leasehold for the benefit of B. So they can only take a charge on the leasehold.

                              Ideally lenders should refuse to lend on these "shared freeholds" unless there are mechanics in place, e.g. a deed of trust, which enables the "share" in the freehold to be transferred if the co-freeholder has disappeared (typically after repossession) or refuses to co-operate in the the transfer.
                              This is one of those things that is obvious once pointed out!

                              Just for my curiosity though, is it that the joint owner of a shared FH would have to consent to a mortgage charge, or is it just that because the mortgagee would not be able to gain possession (because of the joint owner) it's pointless?

                              I did think prior to your post that a charge could be placed on a tenant-in-common share but that because a mortgagee could not ever exercise exclusive possession there was no point. Surely though with a FH share as here, possession isn't an issue as it can be exercised through the LH charge. So why not take the FH charge anyway?
                              caveat emptor
                              If it sounds like I know what I am talking about........I don't.

                              Comment

                              Latest Activity

                              Collapse

                              • how to convert freehold to leasehold for groundfloor flat
                                magmac
                                I own a freehold ground floor flat and there is one more freehold flat above me with another owner. Just the 2 flats in one building . Purpose built with separate entrances. No common area.
                                My prospective buyer has pulled out because it is a freehold flat.
                                How can I make my flat into a leasehold...
                                16-08-2017, 10:19 AM
                              • Reply to how to convert freehold to leasehold for groundfloor flat
                                magmac
                                Thank you Ram.
                                Can I sell my flat to the upstairs owner in exchange for a 125 year lease on my flat.
                                Would it be a good idea to do that ?

                                There has been no problem with maintaining the 2 free holds.
                                16-08-2017, 11:54 AM
                              • Reply to how to convert freehold to leasehold for groundfloor flat
                                ram


                                You can't ( basicly )

                                You would have to sell your flat to the one above.
                                The one above then owns all the property and can then let it, on a long lease.

                                You have to own ALL the property ( BOTH flats ) to lease it out, but you are selling, so you will own
                                ...
                                16-08-2017, 10:53 AM
                              • Moving front door position within a communal hallway
                                Tinker-79
                                Hi there,

                                We are looking to move the front door of our flat further into our communal hallway (there is unused dead space there). We hare the freehold equally with one other owner.
                                Would we need to update all the leases if we were to do this? Would we need agreement from the other...
                                04-08-2017, 20:52 PM
                              • Reply to Moving front door position within a communal hallway
                                wfd_property
                                To clarify, are you proposing to brick up one door and cut another hole, or are you proposing what is in effect an internal porch (best word i can think of really)
                                15-08-2017, 22:31 PM
                              • Reply to Moving front door position within a communal hallway
                                Tinker-79
                                Thanks very much for your responses. Difficult to judge I,m sure but how much roughly would it cost to update the leases? There are 4 flats in the block.
                                Also just to clarify, if we move the front door along our existing leasehold boundary then we wouldn't need to update all the leases? as the...
                                15-08-2017, 21:05 PM
                              • Selling empty property
                                londiner
                                Hi, I am selling an empty house without a tenant who moved out recently. The Estate agent told me the prospective buyer would live in the house. My solicitor I found online for this transaction based on a very competitive conveyasing fee sent me a contract to sign where the buyer is a limited company...
                                09-08-2017, 19:31 PM
                              • Reply to Selling empty property
                                wfd_property
                                This is weird.

                                If the buyer will live in it, it seems strange that the 'owner' will be a Ltd he doesn't control.

                                Has someone done a money laundering check?...
                                12-08-2017, 23:10 PM
                              • Reply to Selling empty property
                                londiner
                                Many thanks everyone for your replies.

                                I first telephoned the Estate agent this morning to ask the name of the seller. They said it is a Mr A. So I said my solictor sent me the name of a company(whis has a real Estate name and ltd.CO) which I checked out and it exists from April this year...
                                10-08-2017, 17:46 PM
                              • Parking problem with neighbour
                                mulberry49
                                I own and rent out a leasehold flat and we have recently taken over the Intermediate Lease within a Management Company of which 6 out of 8 owners are shareholders. The building is Grade 2 Listed and has its own small car park. The neighbours have lived next door since 2008 and have a car parking space...
                                09-08-2017, 16:43 PM
                              Working...
                              X