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Major changes post-exchange(18 Posts)
Need help/advice as haven't come across this situation before and been going mad waiting for call from my solicitor! Have exchanged on a property but not yet completed (new build/conversion). Paid the typical 10% on exchange (back in Nov), house was due to complete in March. We are cash buyers so no mortgage lender to satisfy (may be relevant). House is small terraced house which comes with an allocated parking space and a garage (not attached to the house - elsewhere on the development). Just found out that someone (on vendor's side) appears to have made an error and they have emailed my solicitor to say that garage should be leasehold not freehold and will therefore be on a separate title deed and come with rent/service charge. CAN THEY DO THIS POST-EXCHANGE? We have signed contracts for one 'property' inc garage and it all says 'freehold' on paperwork. They haven't yet built the garage but there's going to be 3 in a row with a coach house on top which is why they've decided it needs to be leasehold. I wouldn't have bought leasehold (never have before) and am not happy to pay any rent/fees, particularly as this will lower the overall value of my property as far as I'm concerned. I don't know my options post-exchange though. Anyone any ideas??
Too late for them to change their minds about the garage. What has your solicitor advised? I would want to keep the garage freehold.
They can’t change this post-exchange without your agreement.
Tell them you don’t agree.
When my mum was buying her house after exchange the developer realised that they had made a mistake and it didn’t come with an allocated garage space, these were available to purchase separately
Her solicitor told them that as they had exchanged it was tough and she didn’t have to pay extra.
So far my solicitor hasn't advised anything, just sent me a 'have they spoken to you about this?' sort of email (they haven't - the first I'd heard of it was his email). I don't want to accept leasehold. But didn't know if just point blank refusing was an option? I guess the developers could then pull out of my sale by returning my deposit? Would I then lose the extra money I've paid for upgrades on the property? It's all such a mess! I've never had any problems after exchange before, but this is my first new build...
If they've actually exchanged contracts, they are bound to go through with it (or face the consequences).
They have a problem.
What are they planning to do about this problem they've got?
I own a 'FOG' (Flat Over Garages) - there are 4 garages underneath, one of which is mine. The other 3 belong to neighbours. The entire place (my flat and 4 garages) are freehold, and I have the freehold for the lot, with a clause somewhere to say that I can't do anything with the other 3 garages. I have to insure the whole lot (buildings only, contents just for the flat and my garage) and the 3 neighbours have to pay me 12.5 % of my buildings insurance to cover their garages. I've had mine a while though (12 years) and at the time it was built it wasn't very common, and I did struggle to insure it because it was a bit of a weird set-up. I think now they are all leasehold to avoid these types of issues. Anyway, just a suggestion you could make to keep the garage as freehold.
Thanks everyone, you've made me feel a little less panicked. Just spoke to my solicitor who has never had anyone try and change something like this post-exchange. But we all essentially agree that it's the vendor's problem to fix, not mine, and that I don't have to accept any service charges/rent etc. If it has to be leasehold then I'm going to state that I want a reduction in cost of property to reflect that. Need to discuss with DH but thinking that c. £5k seems reasonable?
I wouldn’t go there. I’d insist on a freehold.
Insist on freehold - that is the basis on which you exchanged contracts.
I’d have thought if you insist on freehold there will be an issue with your responsibility for the coachhouse above, as in the building or roof (or part of it?? Which would be weird and probably unenforceable as you can’t be responsible for part of a roof I wouldn’t have thought).
Your developer has a problem and they need to find a better solution.
You need to know what the service and rent is, on what basis does the ground rent increase and what about some sort of guarantee to buy you out if selling on your house turns out to be difficult given the issue with mixed leases? You would need your solicitor to advise on all this. I’d go for way more than £5k reduction if you go down the simple money-off route.
I guess I would want a fixed leasehold fee of something like £10 per year for 100 years. Basically I can see it needs to be leasehold but you don't want to have to pay for it... so that plus a £5k reduction as it's devalued the property.
You can't insist on it being freehold as that won't work with the development by the sounds of it. Broadly, your options are:
1. Say that you only wanted to buy the house with a f/h garage so if they can't deliver that, the contract needs to be rescinded with all your money and costs back - probably no-one's ideal option.
2. Negotiate the best deal you can both in terms of the overall price and any rent/service charge payable for the garage. At the very least you need to know what the service charge estimate is and see if they will cap it ditto the rent and then give you some other sort of recompense for what is their mistake - they'll be reluctant to reduce the headline price but you could possibly push or ask for something else - perhaps no cost for more extras? They should also pay for any extra costs if your solicitor need to run it past the mortgage company or if it needs to be revalued.
as GU says, you can't insist on it being freehold as that's not the developers set up. CAn pull out and they will have to pay you back ( your costs).
You may also find that the developers are not the same company as the people who own the head leases on the freehold or who collect the rent or who service the estate. Therefore you have to be very wary of any promises made as the developers might not actually be able to follow through on those in actuality.
as GU says, you can't insist on it being freehold as that's not the developers set up.
That's the developer's problem, not OP's. Are you really saying that OP should allow them to build somebody else's flat on her freehold?
Stand firm. Let them come to you.
Agree that you should stand firm and let them come to you with an offer / solution. Discuss what you'd accept with your DH but do not let anything slip to the developer (don't even suggest you'd accept a reduction).
You don't know what the developer is actually able to do. Chances are they'd rather throw money at you than look into the conveyancing. But hold your nerve and insist that any solutions comes through your solicitor. That way it's harder to guilt / push you into accepting an offer and you can think about it.
And I think £5k is a fraction of what they should be offering. Your house will be devalued by more than that i'd imagine. I think I'd probably settle for some money back (would need to know the market to estimate how much) but also a fixed peppercorn rent for a significant period of time that will be passed on when you sell
OP also needs to know the legal position/responsibilities between her (her garage) and the bit of the coach house that is above it.