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Selling freehold flat - underletting issue

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  • Selling freehold flat - underletting issue

    Tearing my hair out and hoping someone has some advice or even just some calming words.

    I own a share of freehold purpose built flat and am currently in the process (hopefully) of moving to another property.

    Our buyer and their solicitors have turned out to be much more difficult than we first imagined.

    The gentleman who will live in our property is looking to retire in the flat. He is selling his own property and our flat is being purchased on his behalf by a company. Basically they are buying the property and he will keep the proceeds of the sale of his own home, then paying a rent to the company to live in our property.

    We have incurred significant expense thus far in the sale due to the level of questions that have been raised by the company purchasing and their solicitors. In turn this has led to a lot of costs with the management company for the preparation and re-preparation of said documentation.

    The most recent issue relates to the underletting of the property. There are 8 flats in the block and a number of these are currently rented by their owners.

    The buyers solicitors have requested the permission be expressly granted for the underletting of our property by them to the planned tenant.

    Our management company have offered wording around this matter stating that as long as agreement is reached that someone will cover the service charge (purchasing company or the tenant) they see no reason why consent cannot be granted.

    However the purchasers solicitors have expressed that they are not comfortable with the wording and have offered revised wording.

    The management company have now made 2 points.

    1, there is nothing in the lease stating that any consent is required, i.e why is this a problem

    2, If the buyers solicitors are adamant this must be in place then the Directors of the freeholders must confirm that they are happy in amending the lease to provide future coverage. We have been informed (by director of freeholders) that this permission will only be granted upon them taking legal advice. In short they are concerned that this might set a legal precedent that lifetime tenancies can be granted and that in turn in theory housing associations might get hold of other properties in future and place undesirable tenants in to the flats.

    As above, we've incurred significant costs and delays in the process thus far and one of the others in our chain is very close to pulling out due to the delays.

    Given that if the other side are adamant about having the surety in place, there will be further costs to us and further delays we are worried we will end up in one of 2 scenarios.

    1, The legal advice suggests that they will not grant consent and we then lose our buyer.

    2, we proceed, incur further expense in getting the consent, only to find that the others in the chain get fed up of waiting and pull out. Hence we spend the money but it's to late anyway.

    This is a long post, so I won't go into full detail but the process has dragged (IMHO) due to delays from the other side and they've not been the easiest to deal with.

    Do you guys think we should pull out, given the general issues and the risk of yet more spend for no successful outcome, or should we continue?

    Any thoughts or other ideas gratefully received,


  • #2
    Re: Selling freehold flat - underletting issue

    If no consent is required to underletting then why on earth don't the buyers just get on and buy the place and let it?

    Like you on the face of it I can't understand what the buyer's solicitors are on about. However there may be some other wording in the lease that does concern them e.g. about the lessee being an individual over 55 and a company would not comply. So possibly there is more to it.
    RICHARD WEBSTERwww.rwco.co.uk
    As a conveyancing solicitor I want to be helpful (England/Wales only) but can't accept liability for this.


    • #3
      Re: Selling freehold flat - underletting issue

      Thanks Richard.

      Seemingly it is still rumbling on and the purchasers are adamant it must be there so our management company are now going to pursue legal advice.

      On another point but related, I get the underlying impression that my management company are not keen on the idea of a company buying the flat and therefore I'm concerned they may suggest that it would set a precent after the advice and therefore our efforts will have been in vain.

      From what I can see you seemed pretty well versed in these types of situations and was wondering if you've had experience in this type of scenario before. Additionally, if my sale should fall through due to my suspicions above, do you think I have any options to pursue in terms of redress of grievance with my management company?

      Many thanks,



      • #4
        Re: Selling freehold flat - underletting issue

        You say it is share of freehold - an unfortunate term - which is all explained on my website - Shared Freehold Conveyancing | Conveyancing of Flats, Apartments, Maisonettes with Share in Freehold | Richard Webster & Co Solicitors.

        Can we be clear about who is who here?

        The freehold will be owned by a company. If it is "share of freehold" presumably you are a member of that company and have a vote at its meetings so you should have a say in its running and appointing directors etc.

        You talk about "our management company" - is this the same company or a company of professional managing agents who do most of the leg work for the freeholder company?

        I think you have to be clear about exactly which provision of your lease is causing the issue. The buyer's solicitors must have some provision in mind.

        Please ask your solicitors to spell out exactly what the buyer's solicitor's beef is. There must be some wording where your solicitors have said they believe it means no consent is needed and the buyer's solicitors say it means a consent is needed. What is that wording? Really difficult to comment unless we know what the argument is actually about.
        RICHARD WEBSTERwww.rwco.co.uk
        As a conveyancing solicitor I want to be helpful (England/Wales only) but can't accept liability for this.