Ways around the ti­tle con­fu­sion of prop­erty di­vided in to flats

Yorkshire Post - Property - - PROPERTY - John Rob­son

Q: I own a semi-de­tached house in London which is es­sen­tially con­verted into two flats.

I and my wife re­side in the ground-floor flat and the first-floor flat is held on a lease­hold ti­tle. The ti­tle to the house, grounds and our flat is free­hold.

We are mov­ing to Leeds with my em­ploy­ment and have agreed a sale of the prop­erty. How­ever, the buyer’s con­veyance states the free­hold ti­tle sta­tus of our flat will not be ac­cept­able to a lender for mort­gage pur­poses. I have spo­ken with the con­veyancer who acted when we bought some five years ago and they state the prop­erty is a free­hold sub­ject to the lease of the first­floor flat and this is ac­cept­able.

This is all very con­fus­ing to us – can you help to clar­ify the sit­u­a­tion? A: The de­scrip­tion of your free­hold prop­erty is that of a ground-floor flat with grounds, be­ing the drive and front and rear gar­dens. As the phys­i­cal sta­tus of your prop­erty is es­sen­tially a flat, then the Coun­cil of Mort­gage Len­ders Hand­book guide­lines ap­ply on this premise. Free­hold flats are not usu­ally ac­cepted as se­cu­rity for mort­gage pur­poses. Only cer­tain ex­emp­tions are made when the free­hold ti­tle con­tains rights and covenants sim­i­lar to those usu­ally set out in a lease.

Thus your buyer’s con­veyancer is cor­rect. The so­lu­tion is to firstly cre­ate a lease of your ground-floor flat and grounds and base the sale con­tract around the grant­ing of the new lease on com­ple­tion. Se­condly, a limited com­pany should be formed to ac­quire the free­hold im­me­di­ately af­ter the grant­ing of the new lease. Your buyer and the owner of the first-floor flat lease take a 50 per cent share in the limited com­pany. This will then put the flats on an equal le­gal foot­ing and cre­ate a sep­a­rate le­gal en­tity for the free­hold ti­tle. Of course, this will all be at a cost but as you are re­lo­cat­ing with your em­ploy­ment I take it you need to pro­ceed quickly with your sale. How­ever, you may be able to re­claim some, if not all, of the costs from your for­mer con­veyancers.

John Rob­son is res­i­den­tial con­veyanc­ing man­ager at Ford & War­ren So­lic­tors, Leeds.

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