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Buying a flat and a lease extension simultaneously

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  • Buying a flat and a lease extension simultaneously

    Hi, my flat purchase is in jeopardy because of a disagreement between my solicitors and the vendor's solicitors concerning a new lease for the property in question, and I would welcome any kind of advice. I find it difficult to believe this is not a reasonably common problem.

    The vendor is renewing his lease (now down to around 50 years) as part of the purchase. The vendor's solicitor is proposing that the new lease becomes mine when we complete. The vendor does not have the money to pay for the lease extension and needs the sale to obtain the money. At completion, the freeholder will receive his money and I will become the owner of the property.

    My solicitor, however, is very concerned that I will have bought an "unregistered" lease, and that there may be problems in registering the lease with the Land Registry, which by this point the vendor or the vendor's solicitors would have no interest in helping to resolve. The vendor's solicitors say it is my solicitor's job to register the lease, just to finish off the transaction.

    My solicitor says its the vendor's solicitor who should organise the registration of the lease, or at least give an undertaking to assist should there be any problems. The vendor's solicitor says this is not their role and that it would be a conflict of interests for them to get involved, after the sale, with registering it since I already have a solicitor to do that.

    My solicitor wants the registration of the lease to be a condition of completion but the other side doesn't understand why we can't just proceed and I register the lease later.

    Which side is right??

    Grateful for any advice or solutions offered!

    Catherine

  • #2
    I would suggest that, in any event, the lease should be executed a moment before completion with a term in the contract of sale that it becomes registrable only at completion - that is, when the vendor receives his share of the proceeds at the same time as the landlord. The lease can be between the vendor and the landlord and then merely assigned to you at completion, which is what normally happens in other transactions. Yours is different only in that it is a new lease. So, the contract should clearly state which lease you are having assigned to you. There will be a scintilla of time between the execution of the lease and the assignment. Done!!

    Come back if your solicitor or the other disagrees.

    Comment


    • #3
      hi i am buying a flat at the moment with the same problem. 59 years remaining. the seller solicitors have handing the notice to the freeholder for a lease extension and then transferring it over to me to complete so i don’t have to wait the 2 years. the property has been reduced in price due to this. my flat has a garage which has a separate lease as well. some flats the flat and garage are covered under the same lease. also it can take time. we had to write to the freeholder to confirm there price and a deadline (as they could put the price up). once my solicitor receives confirmation that the lease notices have been accepted by the freeholder the purchase of the flat will then complete and i will continue the lease extension.

      also my solicitor said it is really stupid to buy the flat with the low lease. she said legislation could change and can be a lot more expensive later. also you will find it very hard to sell the flat on with a short lease. you also need to live in a property for 2 years before you can renew the lease yourself.
      Last edited by cjonesguitar; 27-12-2008, 08:10 PM.

      Comment


      • #4
        Can't see what buyer's solicitor's beef is in original post. OK he has to be happy that there is no problem with the lease extension deed but why should there be? It is very common for a buyer's solicitor to deal with such a registration. He canmake sure that he will get all the right paperwork before contracts are exchanged.

        As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying client
        RICHARD WEBSTERwww.rwco.co.uk
        As a conveyancing solicitor I want to be helpful (England/Wales only) but can't accept liability for this.

        Comment


        • #5
          Thanks all for your posts.
          The vendor's solicitor will not give her undertaking to assist with any requisitions from the Land Registry when the registration of the new lease takes place. This is causing my solicitor concern, even if, in practice, there is unlikely to be a problem. Its not clear whether the transaction can proceed without the vendor's solicitor giving this undertaking.

          Comment


          • #6
            Re: Buying a flat and a lease extension simultaneously

            I am currently in the process of buying a flat. It only has 65 years left on the lease. The vendor has agreed to pay for the lease and has had a value for the extension agreed. He now wants me to exchange and for the completion to go through asap without the lease having been completed. My solicitor suggested exchanging then completing once the lease has been extended but the vendor is getting impatient and just wants to get it sold so does not want to wait for the lease to be completed. Any suggestions as to how we can proceed so that everybody is happy?

            Comment


            • #7
              Re: Buying a flat and a lease extension simultaneously

              As in the cases above, the safest way to proceed is -
              - your contract with the seller should include an obligation for the seller to get the lease extended, so that the extended lease is sold to you
              - the actual extension would be immediately (seconds) before your purchase is completed
              - the seller should be obliged to deal with stanp duty requirements (including any stamp duty payable on the extension)
              - the seller should agree to assist in any requisitions raised by the Land Registry
              - your solicitor would register (a) any discharge of an existing mortgage by the seller (b) the lease extension (c) the transfer of the extended lease and (d) any new mortgage by you

              If you are being asked to pay for an extended lease without being sure you can insist on the lease being extended then this is not right

              I hope this helps
              This is based on my experience as a conveyancing solicitor in England, but I do not accept liability for information I give in this forum

              Comment


              • #8
                Re: selling a flat and a lease extension simultaneously

                We are having a problem with the sale of a flat where we also have to extend the lease
                We have negotiated with the freeholder for the cost of the lease extension to paid on completion however today we heard from the buyers solicitor that the mortgage company wont allow the sale to go ahead unless the lease is paid for before completion as they are concerned about requisitions issues after completion
                We don't have the money to pay in advance and our solicitor is saying we have to find the money or borrow but if we borrow and sale doesn't complete what can we do if a friend lends us the money.Its risky for us
                Please can we have suggestions

                Comment

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