Selling leases without declaring disrepair - The bona fide purchaser

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    Selling leases without declaring disrepair - The bona fide purchaser

    In 2006 me and my flatmate decided to move on the property ladder and appointed a solicitor for conveyance service for the purchase of a flat. Midway through the purchase of the property we received the leasehold's documents and by looking through the documentation, we discovered that he was also the freeholder of the same building. Until then our solicitor had never mentioned any detail of such important issue.

    We both thought this was strange and could be a conflict of interest and immediately contacted him to ask clarifications. We asked him questions mentioning to him that quite a few things in the leasehold paperwork were not brought to our attention, for example a conflicting information on lease's length.

    He was quite blasé about the matter. At this point the solicitor laughed and tried to reassure us saying that of course there was nothing wrong with the lease as he himself had written it 15 years ago.

    A couple of years later we discovered that the property was in disrepair with defective roof since the year 2000. It was at that point we really discovered the conflict of interest. At this point, we felt that our solicitor acted for us in clear conflict with our interest as buyers.

    In the meantime, some other fellow leaseholders in the building started legal proceedings and were able uncover much evidence about the disrepair.Two of them managed to settle and got good compensation claims forcing the freeholder to repair the roof which costed almost £80,000.00

    However, after the roof was repaired in 2010 the freeholder sent us our share of the bill which turned up to be almost £10,000.00.

    We believe that his position as solicitor for conveyancing and freeholder at the same time created serious conflicts between the duty of confidentiality and duty of disclosure.

    Given that he was also our conveyancing solicitor and that his faults and financial liability were evident, how do we stand? Do we have to pay this hefty bill?

    Do we have a claim for the fact that he sold us a property in a building in disrepair of which he is the freeholder?

    #2
    You can make a complaint against your conveyancing solicitor to the Solicitors Regulation Authority.

    Comment


      #3
      First and foremost was a Section 20 consultation undertaken for the repair work to the roof. If not the Freeholder can only recover a maximum of £250 per lease and you can challenge through the LVT.

      Secondly I would speak to the Solicitor's professional body to ascertain whether he has acted in accordance with their guidance and regulations.

      Comment


        #4
        Originally posted by Gordon999 View Post
        You can make a complaint against your conveyancing solicitor to the Solicitors Regulation Authority.
        Thank you Gordon999,

        That was already done. Two letters, one to the Solicitors Regulation Authority and another to the Legal Complaint Services without any result! The letters were detailed but they responded that they can act only in case of criminal offense and not in civil litigation cases.

        However, we wonder didn't he breach the following rules in doing what he did?

        Rule 10: Relations with third parties
        10.01 Not taking unfair advantage

        You must not use your position to take unfair advantage of anyone either for your own benefit or for another person's benefit.


        Particular care should be taken when you are dealing with a person who does not have legal representation. You need to find a balance between fulfilling your obligations to your client and not taking unfair advantage of another person.

        They define the values which should shape your professional character and be displayed in your professional behaviour.

        1.06 Public confidence

        You must not behave in a way that is likely to diminish the trust the public places in you or the profession. …..high standards of integrity and professionalism…ethical dilemma which may arise in legal practice…..
        It will be a breach of rule 1 if you permit another person to do anything on your behalf which would compromise or impair your ability to comply with any of the core duties.
        Personal integrity is central to your role as the client's trusted adviser and must characterise all your professional dealings
        Public confidence – 1.06
        10.
        Members of the public must be able to place their trust in you. Any behaviour within or outside your professional practice which undermines this trust damages not only you but the ability of the profession as a whole to serve society.

        We are here left still wondering why the SRA and LCS have done nothing about it?

        We feel that the only option left is to seek legal advice!

        Comment


          #5
          Originally posted by MCPH View Post
          First and foremost was a Section 20 consultation undertaken for the repair work to the roof. If not the Freeholder can only recover a maximum of £250 per lease and you can challenge through the LVT.

          Secondly I would speak to the Solicitor's professional body to ascertain whether he has acted in accordance with their guidance and regulations.
          Between 2007 and 2010 the freeholder (alias our conveyancing solicitor) lost 4 legal disputes with us and with the other leaseholders and in 2009 the LVT forced him to repair the roof. He took over two years to repair the roof (hence causing even more damages) and respect the LVT verdict. Moreover we are aware that another leaseholder won a compensation claim for all the damages incurred due to the defective roof and the freeholder was forced to admit liability in 2009.

          How can he now ask for the money to cover the roof repairs after he was found guilty of negligence for having left the roof and the property in disrepair!?

          Comment


            #6
            Originally posted by jackrussell View Post

            How can he now ask for the money to cover the roof repairs after he was found guilty of negligence for having left the roof and the property in disrepair!?
            Did he carry out a Section 20 Consultation for the repairs works?

            Comment


              #7
              Originally posted by MCPH View Post
              Did he carry out a Section 20 Consultation for the repairs works?
              To MCPH,

              Thank you for asking. Yes, late in 2008 he presented a section 20 to skip the consultation process and start the repairs to recover the money spent from the leaseholders but his application was rejected by the LVT.

              The application was rejected on the ground of the evidence presented by us, the leaseholders. We argued that he left the defective roof in disrepair for so long that by the time he presented the Section 20 application the defective roof caused already too much damage to both the building and to several flats. So the LVT forced him to repair the defective roof as a matter of urgency. He then took two more years to repair the roof causing even more damages to the leaseholders' property.

              Some of the leaseholders, like me and my mate, purchased their leases after 2005 when the roof was already defective. We have then discovered that in the year 2000 the freeholder did not authorise repair work for a total of £20,000. Hence, he was fully aware that the roof was defective.

              Can he now recover the money spent to repair the roof that he left defective for so long? Shouldn't we claim a compensation for the fact the he was also our conveyancing solicitor selling a lease in his own building where he is the freeholder?

              Comment


                #8
                Jack

                From what I understand he applied to the LVT to dispense with S20 consultation which was rejected.

                Did he subsequently carry out a full S20 consultation after the rejection of the dispensation to consult?

                MCPH

                Comment


                  #9
                  To MCPH,

                  Dear friend, thank you for your reply. After his application was rejected the LVT ordered to him to provide the urgent repairs. He was legally bound by a formal document drafted in 2008 by the LVT which was signed by both the leaseholders and the freeholder.
                  The LVT ordered that an independent surveyor was to draft a report on the roof conditions and supervise the repairs including the tendering process and the selection of the contractors.

                  Unfortunately, the freeholder delayed the payment of the surveyor's fees and it placed quite few obstacles delaying the survey process and repairs. In fact, he took two years to respect the LVT order. In meantime, the building and some of the properties were left at the mercy of the weather with leaks in four properties every time it was raining.

                  Now the freeholder is pushing to recover the money of the repairs through the service charges. Can he do that or do we have a strong case to object and present our own claim for damages?

                  Comment


                    #10
                    Hello jackrussell,

                    you claimed that the freeholder signed a formal document drafted in 2008 by the LVT. My questions here are: did the LVT decide who is going to pay for the roof repairs? Also, why did you not report to the LVT that the freeholder was dragging the matter and taking too long to provide the repairs as ordered by the tribunal?

                    I think that you may have a valid point in stating that he should not be your conveyancing solicitor, I would report that again to the Ombudsman's office - did you consider this option?

                    Comment


                      #11
                      Jack

                      Thank you for your detailed response but I am struggling to understand the full story.

                      Check here to see if this procedure was followed by the freeholder:

                      http://www.lease-advice.org/publications/documents/document.asp?item=19

                      You could also apply to the LVT to determine whether you should pay for the demand.

                      Details here

                      http://www.lease-advice.org/publications/documents/document.asp?item=18#7

                      I hope this helps

                      MCPH

                      Comment


                        #12

                        Answer to MCPH,


                        thank you for the links but I was already aware of the information. Maybe it is easier to come back to my first question and leave the disrepair questions to another thread.

                        QUESTIONS:

                        Can a freeholder complete a conveyancing transaction as conveyancing solicitor selling a lease in his own building? Is that legal? Isn't there a major conflict of interests? Isn't such freeholder liable if the property is found in disrepair later on? And what can be done to this regard?

                        Answer to paulstephens,

                        Thank you for your advises. As said above I will leave the question regarding the disrepair to a later stage. Thank you for your opinion that we may have a valid point in stating that he should not be your conveyancing solicitor
                        QUESTION:
                        Is the option to report our freeholder and conveyancing solicitor (they are the same person!) to the Ombudsman's office the best and most effective option for us to do before commencing any litigation?

                        Comment


                          #13
                          What is being said is that if you prove a conflict of interest, then the SRA may act as you will have proven that there is one.

                          In the meantime if litigation is likely pending or current they will not investigate. They may have misunderstood the role as freeholder as being an Act outside of practice, or that your discussions amounted to him explaining the conflict and in his view assuring you of his position in representing you.

                          A considerable amount of time has passed as has the incident of the roof which focused it, and most telling it indicates, by omission that there is clear legal remedy.

                          Sadly this is a matter of wading through the facts of the roof issue and the questions asked and answers given, in terms of the purchase.

                          A central issues is if you can prove that the problems were a defect that he knew about at the time, and failed, as your solicitor, to ask the question about it.

                          I would be taking another run at the SRA for his failing to declare the conflict at the very least.

                          Bear in mind you ahvean itial 6 year clock on these disputes and after a 2006 purchsde get advice soon if you choose to pursue this.

                          A good start is the outcome of the other two flats cases as to who knew what and when.

                          Challenge the cost at the LVT as being a defective roof and therefore the costs not being fair and reasonable, on the basis of the admissions and settlement made with other leaseholders.

                          And then exercise right to manage and get the wotsit as far away as possible from you all.
                          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
                            Dear jack,

                            If I understood well your conveyancing solicitor sold you a lease in a building where he is the freeholder and the property was then found to be defective right?

                            If so not only you should not pay for the roof but also demand that he pays for the new roof and for any damage to your flat or to the building caused by the roof.

                            You should also report it to the SRA explaining in details what happened to you and to your co-owner adding copies of your conveyancing act with his name with other evidence that he is also the freeholder.

                            P. S.

                            Comment


                              #15
                              Selling leases without declaring disrepair - The bona fide purchaser

                              I am a leaseholder on a flat for which, under the terms of my lease, the freeholder should have arranged roof repairs and provide the annual buildings insurance.
                              I purchased my lease in 2004. Few weeks after I moved in the property my kitchen ceiling collapased due to water accumulated from the defective roof and the leaks continued for almost six years until the roof was repaired. The property is in a converted in such a way that the building has no access to or into the roof unless a specific survey is commissioned

                              Not only I am left with a consistent amount of damage but I have also received a gigantic bill of around £20,000 for the roof repairs.
                              However, recently it came up clear evidence that the freeholder who sold me the lease was aware of the disrepair and that £20,000 were needed to repair the roof in the year 2001 well before I purchased my lease.
                              Basically, my conveyance solicitor and surveyors were not informed of the disrepair and of the sum of money needed to repair the roof and so I bought a property which was defective well before my purchase of the lease.
                              Both the conveyance solicitor and surveyor confirmed that they were not informed by the other side of the major repair works needed before I bought the lease.
                              How does the freeholder stands legally for the fact that such a crucial information was not provided to me before I purchased the lease? Should the party selling the lease declare if there is money to pay towards major repairs when the conveyance survey is arranged and before selling the lease?
                              Does the freeholder have legal responsibilities for not having declared the real conditions of the property before I got the lease?
                              Thanks a lot for any opinion

                              Comment

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