Our solicitor says don’t buy it – Step away?

Our solicitor says don’t buy it – Step away?

16:12 PM, 16th March 2022, About 2 months ago 12

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Hi, my partner and I are trying to buy a whole house that has a self-contained basement flat included. We have found out this basement flat has a mortgage on it in the name of the seller’s business. (No tenants)

The lease on the house above is owned by him and his wife, and the Freehold is also in the name of his business. So all within the ‘same’ family so to speak.

Our solicitor says don’t buy it, step away! But surely there’s a way to do this.

We would like to port the mortgage deal we have, but it is possible that we could be cash buyers if the mortgage lenders won’t port our current deal for any reason.

Can we buy it all and then merge the leases to make a single whole freehold?

Do we need to set up a Ltd company and use that to ‘own’ the freehold while we have both leases in our joint names?

Not sure why our solicitor is saying they can’t proceed. They are worried the land registry may not merge after we buy.

Any advice would be appreciated 🙂

Alison



Comments

by robert fisher

17:46 PM, 16th March 2022, About 2 months ago

why employ an expert then ignore the expert advice ? a fool and their money are soon parted is the old adage. It sounds very complicated and a recipe for disaster. Walk away .Something else better will come up. There are no easy quick profits in property.

by DSR

9:59 AM, 17th March 2022, About 2 months ago

avoid avoid avoid!

by Helen

12:43 PM, 17th March 2022, About 2 months ago

I agree. There are so many red flags here. How do you know he will agree to sell you the Freehold for a start, and what he will charge you for it?

by Robert

12:43 PM, 17th March 2022, About 2 months ago

Hi
I'm a conveyancing solicitor and i can't see any problem Sounds like you will get vacant possesion of the whole builing in your names That will consist of the freehold , the lease of the basement flat and the lease of the house above The sellers mortgage will be redeemed No obvious reason why you can't cancel the lease and be left with the freehold of the whole or you can keep the lease in place. If you were granting a new lease the yes the freehold and the lease can't be in the same names but as they are already in existance not sure if even that is a problem but if it was then freehold in your joint names and lease in one of your names or a company or some combination Am I missing something?
Robert

by Helen

12:48 PM, 17th March 2022, About 2 months ago

If the existing owner has the Freehold I don't understand why buying the property will automatically transfer the Freehold to the new owner, unless the existing Freeholder wants to sell it. But perhaps I am thinking of leaseholds on flats, not whole self contained houses. But if the basement is currently a leasehold then I think caution is required, but I am not an expert of course.

by Darren Peters

13:02 PM, 17th March 2022, About 2 months ago

Assuming no other undisclosed legal or physical problems with the property, surely the expert solicitor should be able, at the very least, to give a more comprehensive description of the issues. Ie something less pithy than, "don't buy step away!"

Eg. 'Here's why I think it is problematic, it will cost between £X and £Y to remedy and take an additional Z months to process'.

With this information you could go to the vendor and negotiate hard on the price to cover the extra legal work and hassle factor. I mean isn't this what us professional investors do, fix problems to unlock hidden value?

Alison you don't state what your end goal is. Do you want the property as one whole entity as a family home or two separate units?

by AnthonyG

13:39 PM, 17th March 2022, About 2 months ago

I am not a solicitor, but I would have thought the safest route was for you to acquire both leases and the freehold at the same time and in the same names. That will make it clear to the Land Registry why you want to merge/ cancel the leases so the full property will revert to the freeholders with the same name as the lessees. Maybe find a different solicitor.

by Jan

16:46 PM, 17th March 2022, About 2 months ago

Personally, and I'm no expert, I'd expect the seller to sort it all out and offer you a single freehold dwelling. Maybe the involvement of a company makes it difficult for the seller/s economically, but I'd think that's their problem not yours. Why didn't they sort it out before selling? Why isn't their solicitor making it very clear how the sale can be managed in a way that isn't worrying your solicitor?

by Freda Blogs

17:15 PM, 17th March 2022, About 2 months ago

I wonder whether the perceived problem is to do with the fact that the freehold is in the name of the seller's business. We don’t know whether that is held in a limited company or as sole proprietor. We also don’t know in whose name the basement lease is, and that might also be an issue.

Acquiring a freehold and two leases are not in themselves difficult or complicated, but it might be the business perspective that is muddying the waters. Presumably the seller will wish to retain the name of his company for continued business operations? Acquiring a company (if that is what it is) could be complicated in terms of due diligence, other assets held, warranties/debts etc). Alternatively, transferring the freehold and the basement lease to a new names or company/ies created by the purchaser will require some work, but is not necessarily insuperable.

I’m not sure we have enough information to make an assessment, and the OP would do well to clarify the issues further if he wants to proceed, and then an informed judgment can be made on the simplicity or otherwise of the transaction.

by Suresh Parikh

18:04 PM, 17th March 2022, About 2 months ago

Check the Land Registry.
The way you have worded it, you are buying:
Leasehold Flat (above);
Leasehold Basement Flat; and the
Freehold reversion.
There should be the freehold title showing the whole property; are there separate titles for each of the flats?
If you buy all three, there will be merger, and the two leases will merge with the freehold reversion.
The Seller will no doubt be selling with Title Guarantees and free of any encumbrance (which means he will pay off the mortgage secured on the basement flat, which would imply there is a separate Land Registry Title number for this flat).
You do not say why your solicitor has said: Avoid.
I would be interested to know his reasons.
I suspect you have not stated the full facts.

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