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leasehold and freehold

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  • leasehold and freehold

    I am buying a 3 bed house and I was told that it is freehold; this was confirmed verbally by the state agent and my solicitor. I also understood from my mortgage bank that it is recorded in their files as freehold. On receiving the final document for signature, I found that it is leasehold property, with 70 years remaining in the lease.
    My questions are:
    1/ How far this will affect the value of the property
    2/ Can I walk out of this sale without losses?
    Note: I have not yet signed any documents?
    Thank you

  • #2
    The effect on value will be a question for a valuer to answer, and will depend in part on the terms of the lease, but certainly a leasehold house is less valuable than a freehold one

    As you have not yet signed the contract, you can withdraw without any liability except for the expenses you have yourself incurred. Those expenses may well be recoverable from the selling agent (if any) due to the misdescription of the property, or from the preparer of the Home Information Pack (if there is one and it mis-described the property as freehold)

    However, you may be in the position a client of mine is in - thinking he was buying a freehold house, but the title owned by the seller turned out to be leasehold, it transpired that the property is a "shared equity" property, wiuth the seller having the right to buy the "missing" part of the equity. I have amended the contract for this to be done on completion, so that my client will, in fact, acquire the freehold title and the leasehold title simultaneously, with the two merging to become an unencumbered freehold title. If this is the case in your situation, you do not need to walk away from the deal

    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


    • #3
      the title owned by the seller turned out to be leasehold, it transpired that the property is a "shared equity" property, wiuth the seller having the right to buy the "missing" part of the equity.
      You have to look very carefully at the lease in this sort of case because sometimes the Housing Association or whoever had the lease drawn up will have put in provsions that penalise a buyer if the seller has not owned the freehold for 3 months, to stop these "back to back" transactions.

      If the lease s not a shared equity one where you can buy the freehold as well then it should be significantly down valued as in a few yaers it will become unmortgageable and you will have to buy the freehold in order to sell it at all.
      RICHARD WEBSTERwww.rwco.co.uk
      As a conveyancing solicitor I want to be helpful (England/Wales only) but can't accept liability for this.

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      • #4
        Thank you for the advice. I now have cancelled the sale and would like to recover the losses incurred during this process. The losses, which are around £1000, are non-refundable, and mainly related to the mortgage arrangement. As I said, the HIP, agent and solicitor all confirmed to me the property is freehold, which only turned out to be not true when I reviewing the sale agreement.
        My questions are:
        1/ If I want to take legal action to recover the loss, who is responsible in this case?
        2/ What legal channels can I take?
        Many thanks

        Comment


        • #5
          The agent may be liable under the Property Misdecription Act

          However, if your own solicitor wrongly told you that the title was freehold and as a result you incurred wasted expenses, I would have thought your first step should be to ask the solicitor to reimburse the expenses. I suggest you speak to the solicitor first; if that gets you nowhere, invoke the solicitors's complaints procedure
          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

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