Questions and Answers: Smithfield leasehold conveyancing
Due to sign contracts shortly on a leasehold property in Smithfield. Conveyancing lawyers assured me that they will have a report out to me next week. What should I be looking out for?
The report on title for your leasehold conveyancing in Smithfield should include some of the following:
- You should receive a copy of the lease
I have just appointed agents to market my basement flat in Smithfield.Conveyancing is yet to be initiated but I have just received a quarterly service charge demand – what should I do?
It best that you discharge the service charge as normal because all ground rent and service charges will be apportioned on completion, so you will be reimbursed by the buyer for the period running from after the completion date to the next payment date. Most managing agents will not acknowledge the buyer unless the service charges have been paid and are up to date so it is important for both buyer and seller for the seller to show that they are up to date. Having a clear account will assist your cause and will leave you no worse off financially.
I am tempted by the attractive purchase price for a couple of maisonettes in Smithfield which have approximately forty five years unexpired on the lease term. should I be concerned?
There are no two ways about it. A leasehold flat in Smithfield is a wasting asset as a result of the shortening lease. The closer the lease gets to its expiry date, the more it adversely affects the value of the premises. For most purchasers and banks, leases with under eighty years become less and less attractive. On a more upbeat note, leaseholders can extend their leases by serving a Section 42 Notice. One stipulation is that they must have owned the property for two years (unlike a Section 13 notice for purchasing the freehold, when leaseholders can participate from day one of ownership). When successful, they will have the right to an extension of 90 years to the current term and ground rent is effectively reduced to zero. Before moving forward with a purchase of property with a short lease term remaining you should talk to a solicitor specialising in lease extensions and leasehold enfranchisement. We are are happy to put you in touch with Smithfield conveyancing experts who will explain the options available to you during an initial telephone conversation free of charge. A more straightforward and quicker method of extending would be to contact your landlord directly and sound him out on the prospect of extending the lease They may agree to a smaller lump sum and an increase in the ground rent, but to shorter extension terms in return. You need to ensure that any new terms represent good long-term value compared with the standard benefits of the Section 42 Notice and that onerous clauses are not inserted into any redrafting of the lease.
I work for a reputable estate agent office in Smithfield where we have witnessed a number of flat sales derailed due to short leases. I have received conflicting advice from local Smithfield conveyancing firms. Could you confirm whether the seller of a flat can start the lease extension formalities for the purchaser on completion of the sale?
As long as the seller has owned the lease for at least 2 years it is possible, to serve a Section 42 notice to start the lease extension process and assign the benefit of the notice to the purchaser. The benefit of this is that the buyer can avoid having to sit tight for 2 years for a lease extension. Both sets of lawyers will agree to form of assignment. The assignment needs to be completed before, or simultaneously with completion of the disposal of the property.
An alternative approach is to extend the lease informally by agreement with the landlord either before or after the sale. If you are informally negotiating there are no rules and so you cannot insist on the landlord agreeing to grant an extension or transferring the benefit of an agreement to the buyer.
What makes a Smithfield lease defective?
Leasehold conveyancing in Smithfield is not unique. Most leases is drafted differently and drafting errors can result in certain clauses are wrong. For example, if your lease is missing any of the following, it could be defective:
- A provision to repair to or maintain parts of the building
- A duty to insure the building
- A provision for the recovery of money spent for the benefit of another party.
- Service charge per centages that don't add up correctly leaving a shortfall
A defective lease will likely cause issues when trying to sell a property primarily because it impacts on the ability to obtain a mortgage on the property. Birmingham Midshires, The Mortgage Works, and Godiva Mortgages Ltd all have very detailed conveyancing instructions when it comes to what is expected in a lease. If a mortgage lender believes that the lease is problematic they may refuse to provide security, obliging the buyer to withdraw.
Smithfield Leasehold Conveyancing - A selection of Queries Prior to buying
Does the lease have more than 82 years left?
Are any of leasehold owners in arrears of their service charge liability?
If a Smithfield lease has less than eighty years it will have adverse implications on the marketability of the apartment. Check with your lender that they are content with remaining years on the lease. A short lease means that you will probably require a lease extension sooner rather than later and you need to have some idea of how much this will be. Remember, in most cases you will need to own the property for 24 months in order to be legally able to exercise a lease extension.