Difficulty to sell leasehold flat due to court order with freeholder

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  • Difficulty to sell leasehold flat due to court order with freeholder

    Hello everyone,

    I issued proceedings against my freeholder a couple of years ago to restrain him from committing a trespass into the demised airspace above the patio of my leasehold property and breaching the quiet enjoyment covenant by building an extension to his upstairs flat. Upon submitting my claim to the Court for judgement, the freeholder backed down and agreed to enter into a Consent Order with me (signed by the Court) whereby he undertook that for so long as he and I retained our respective freehold and leasehold interests, he would not proceed with building his extension.

    I am now trying to sell my leasehold flat. A buyer has just pulled out on the grounds that the existing Consent Order protects me against the freeholder building his extension but not my successor in title.

    It was not my original intention to enter into a Consent Order with the freeholder and the purpose of my claim was precisely to obtain an injunction from the Court to restrain anyone from trespassing into my property. But the freeholder backed down and I accepted to enter into a Consent Order with him as explained above.

    What can I do now to ensure that I don't lose another buyer? Is there a way I can resubmit my claim to the Court to obtain an injunction that would protect any leaseholder from the freeholder on the grounds that the existing Consent Order is preventing me from selling my flat?

    Many thanks in advance for any help you can offer!

  • #2
    Yes grant along lease of your term less one day., and as soon as the planning permission expires sell it to the owner for £1.
    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


    • #3
      Originally posted by leaseholdanswers View Post
      Yes grant along lease of your term less one day., and as soon as the planning permission expires sell it to the owner for £1.
      Sorry, I don't understand your comment. Please do you mind explaining?

      Also, I should have said that the planning permission will never expire because works had commenced before the proceedings although the freeholder had to hide them away due to his obligation not to proceed under the terms of the consent order.

      Yes renting the flat out is an option but I really want to sell and don't know how to resolve the problem I am having with the planning permission. Any ideas please?

      Comment


      • #4
        I think this is when an idemnity policy becomes useful! I don't know too much about them but when we bought our flat plus the freehold, our solicitor made the seller take one out before we bought. This policy did have a limited life of ten years.the problem was the the top flat put patio doors in and tried to make a roof terrace on a flat roof! i hope this is of some help to you

        Comment


        • #5
          Thanks all for your replies.

          Could the solution to the problem be to sell the flat with an underlease as described in my other thread http://www.landlordzone.co.uk/forums...987#post365987

          If I remain the leaseholder directly under the freeholder but sell the property with an underlease, then surely the Consent Order I have in place with the freeholder would still protect me and, by default, the underlessee. Am I correct? If I stand in between the freeholder and the underlessee, then the freeholder will never be able to build his extension under the terms of the Consent Order I have with him... And then I can provide full protection to my buyer. Is my understanding correct?

          This could be the golden solution as long as I don't need freeholder's consent to have an underlease which, per my other thread, seems to be the case. Am I right?

          Comment


          • #6
            Yes my lease allows me to underlet as long as I do so for the whole of the Demised Premises, which is the case here.
            The key thing is that I do not need freeholder's consent to underlet, therefore whether he likes it or not, it doesn't matter. The underlessee will have full protection against the freeholder implementing the planning permission via me.

            Now my last 3 questions please before I take this strategy forward:

            1. If the freeholder eventually sells his freehold interest to someone else (assuming not me or the underlessee), is there a way I can get rid of my lease at that point as the Consent Order I have with the freeholder will become void hence there will be no more point of me standing in between the freeholder and the underlessee?

            2. How long does it take to write an underlease?

            3. Will my existing lease (with the freeholder) need to be modified or will it stay as is? If it needs to be modified, will I require a Deed of Variation to be approved by the freeholder or can the modification be done without involving the freeholder?

            Thanks!

            Comment


            • #7
              If you simply grant an underlease you will continue to be liable for any ground rent and service charge due to the landlord. Your sublease may oblige your purchaser / tenant to reimburse you, but do you want that hassle? And that's not even getting started on the headache that could be caused if a sublessee breaches a covenant and it's you they come after.

              Comment


              • #8
                Agreed. I wouldn't buy such a lease. Presumably after you 'sell' you want nothing further to do with the development? I don't know about you, but I wouldn't want to buy this sub-lease knowing my landlord was just going to walk away from the whole development after he's gone.

                Comment


                • #9
                  Originally posted by Tulula View Post
                  If you simply grant an underlease you will continue to be liable for any ground rent and service charge due to the landlord. Your sublease may oblige your purchaser / tenant to reimburse you, but do you want that hassle? And that's not even getting started on the headache that could be caused if a sublessee breaches a covenant and it's you they come after.
                  The ground rent is peppercorn (i.e. zero) and there are no service charges. Only 1/4 of repairs and maintenance is payable on receipt of an invoice from the freeholder, which happens as and when. In 10 years, this happened twice. The building is a converted house into 2 flats with each having their own front door. There are no communal parts.

                  I prefer an arrangement where I can sell with an underlease rather than see buyers pulling out one after the other because they are concerned that they have no protection against the planning permission. I have such protection but only I have it, it is not transferrable under the existing arrangements.

                  Comment


                  • #10
                    But what happens if in 5 years time the freeholder decides to replace the roof and your sublessee decides he doesn't have the money to pay for his 1/4?

                    It's up to you but you must understand that you will have continuing obligations and liabilities which you may have difficulty in enforcing against the sublessee. I also don't think this arrangement will be as attractive to buyers and their lenders as you think it will be. Sorry to say it but your problem is the terms of the consent order, and I can see no way to go back on that now.

                    Comment


                    • #11
                      I agree with Tulula that it is less than perfect.

                      The risks of enforcement and time may be offset by the difference in the sale price and getting a buyer where there are none. If it is say £10k then that money you would put to one side in other investments so at least the property is sold ( rather than hard to sell or unsaleable at present) against the day there is a problem with the underlessee.

                      Of course the issue may only run as long as the planning consent is valid, and whether they might get permission in future.

                      You can offer to the freeholder to surrender the consent order, for a sum of money, to allow them to complete the works, if your flat, after completion of the extension, is saleable at a realistic re sale value.
                      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


                      • #12
                        Originally posted by leaseholdanswers View Post
                        I agree with Tulula that it is less than perfect.


                        You can offer to the freeholder to surrender the consent order, for a sum of money, to allow them to complete the works, if your flat, after completion of the extension, is saleable at a realistic re sale value.
                        However the freeholder will most likely guess that you are wanting to sell if you offer to surrender the consent order. He therefore can afford to wait until someone buys, so therefore would not be willing to pay you anything. His solution of a consent order was well thought out and unfortunately you did not take or receive good advice on the implications of signing it.

                        Comment


                        • #13
                          But perhaps not. The court is unlikely to grant an order preventing the extension for a extended period and most likely did so on the basis of relief to the applicant, making it personal to them.

                          Given the ability as awkward as it might be to sell a long underlease of the flat ( with proper service charge contributions) the freeholder could find themselves timed out of ever doing the extension.
                          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


                          • #14
                            I have managed to get the buyer back and exchange contracts by offering a price reduction. So I didn't go down the underletting route. Contracts are now exchanged and completion is in 10 days time! As usual, problems can be resolved if you are flexible on the price.

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