Joint Freehold Responsibilites turn into nightmare – help!

by Readers Question

10:28 AM, 15th January 2015
About 4 years ago

Joint Freehold Responsibilites turn into nightmare – help!

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Joint Freehold Responsibilites turn into nightmare – help!

Bought and sold a flat with a joint freehold. I decided to keep the joint freehold for a rainy day hopefully sell it in the future when the other freeholder may want to buy it off me.

The property is a terraced house converted into two flats upstairs and downstairs. The other joint freeholder is also one of the live in owner leaseholders along with the other leaseholder whom I sold the flat too on a 99 year lease.

What was supposed to be a hands off hassle free asset has proved to be a pain as the current joint freeholder is a very rude and awkward individual. Firstly he has refused to jointly insure the building breaking the terms of the lease. I have had to threaten him to insure that the building is insured jointly or at least send me a copy of the insurance he took out to insure the whole building is covered.

Reluctantly he has finally sent me a copy of the policy but my name has not been noted on the policy. Is that a problem? can or should I insist on my name being noted on the policy?

2, The downstairs leaseholder has been flooded from upstairs freeholders bathroom above and the buildings chimney stack. The downstairs leaseholders solicitor has written to me and other freeholder demanding that we sort out the problems. I have tried speaking to the other freeholder and asked him to sort out some estimates as he lives there, but he has ignored me.

Therefore I will now have to get involved and get some building quotes

A) can I charge both the leaseholders a management fee for getting estimates? The lease seems to infer that I can change a reasonable fee. What would be a reasonable fee? how does it work, do I invoice first and not do anything until I am paid?

B) When I have building quotes for the works to be carried out, for sure the upstairs leaseholder/freeholder is going to ignore my request for authorization for the works to be paid for and carried out. So what do I do now? what is the procedure of the freeholder? get estimates, invoice the leaseholders, get paid by the leaseholders and then authorize the work?

What should I do if the other freeholder simply ignores or blocks everything we need to do jointly to maintain the building?

Any experience on this would be greatly appreciated

Johnnight



Comments

Ian Narbeth

14:07 PM, 15th January 2015
About 4 years ago

Hi
You may need to take legal advice. From what you have said you are potentially exposed. You say:

"...my name has not been noted on the policy. Is that a problem? can or should I insist on my name being noted on the policy?"

Almost certainly the insurance should be in the names of all the freeholders. It is not sufficient for your interest to be noted. There may be a problem if a claim has to be made as you will not be the insured and will have no control over the policy or the claim. There may be problems recovering from insurers.

The leases will usually include covenants binding the landlords, jointly and severally, to insure the property and to repair damage caused by insured risks so if this has not been done correctly you can be made liable for any shortfall in recovery on account of this.

Roughly what is your interest in the freehold worth? Unless it is sizeable the costs and hassle of hanging on to it may be more than it is worth so I would consider selling to the other joint freeholder.

As to your points A and B, I recommend you take legal advice so that someone can review documents properly. The rights of the landlord accrue to the persons constituting the landlord collectively so if you cannot agree on action, you risk not being able to recover anything if you incur costs on your own.

john kelly

15:39 PM, 15th January 2015
About 4 years ago

Ian thank you VERY much for your good advice
i had no idea when i decided to keep the freehold that i would be liable in any way for anything

this is a learning curve and warning to any B2L investors out there thinking owning a freehold is a ticket to a free lunch

Tony Lilleystone

17:22 PM, 15th January 2015
About 4 years ago

I am not sure that you can expect ownership of a share of the freehold to be entirely 'hands off hassle free' for this type of property.
Presumably you and the other freeholder are registered jointly as the owners of the freehold of the whole of the property. The other freeholder also owns the leasehold title of the upstairs flat which he also occupies, and there is a 99-year lease of the other flat which is owned by someone else.
Much here will depend upon the provisions of the two leases, which should set out the arrangements for the repair, maintenance and insurance of the building. But it is common in leases of flats for the freeholder (landlord) to be made legally responsible for repairing and insuring the whole building, subject to the leaseholders (tenants) reimbursing the costs.
I would certainly recommend getting legal advice and perhaps a suitably worded solicitor's letter to your co-freeholder will make him see sense. Assuming that the leases are in usual form the leaseholder of the other flat will be liable for half of any repair costs, so this awkward chap is not going to have to pay them all himself.
But if the work isn't done he is likely to find himself being sued by the leaseholder (jointly with yourself) so it's in his own interest to agree to the work being done.
Buildings insurance should really be in the joint names of both freeholders, and should be a proper Landlords Block of Flats policy, not a standard homeowners policy. Again the other leaseholder should pay half the premiums (unless their lease says otherwise.)
As regards selling your interest in the freehold you might ask the owner of the other flat if they are interested. Estate agents always seem to think that selling a flat with a 'share of the freehold' increases the value so it would be worth their while to buy you out now.

john kelly

19:29 PM, 15th January 2015
About 4 years ago

Tony like Ian thank you so much for your valued and clear advice

Chris Amis

21:22 PM, 15th January 2015
About 4 years ago

There is a hands off answer for you, appoint a manager, the costs are born by the LHs. It means you make no money except ground rent and the occasional extension.

The problem is finding a reputable agent who can profitably work with a small block, there are agents who can work with small blocks but I would rather not promote the use of these £$^^££s.

That should make the other FH see sense, and if not I don't think there is anything to stop you going to the tribunal and getting them to appoint a manager.

john kelly

13:25 PM, 16th January 2015
About 4 years ago

Reply to the comment left by "Chris Amis" at "15/01/2015 - 21:22":

thats food for thought Chris thanks

Nick Pope

14:24 PM, 18th January 2015
About 4 years ago

Difficult situation but what must be remembered is that the other joint freeholder is also a leaseholder and has obligations to the owner of the freehold - he is, in effect 2 completely separate legal entities and the fact that he is only one person has no bearing and whatever he thinks the obligations in the lease must be complied with.
I think that you have 2 courses of action open to you:-
1) Take legal advice as to the best way of enforcing the covenants in the lease. You will probably need to get the other leaseholder involved.
2) Dispose of the freehold interest. Your best potential buyer is the other leaseholder and you may have to take a hit on value to get rid of the responsibility. Perhaps a transfer to him at £0 would leave you without the asset but without the hassle either.


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