Solicitor complaint re house purchase

[Lilylolamillie]

I’ve posted this in legal but adding here in the hope it’s seen and someone can offer advice.

I purchased a house in 2022. It was built in 2018 and I’m the second owner. As it’s a new build there are estate charges of around £300 year. The house is freehold and I own all of it (with a mortgage).

I’m coming up to remortgage and speaking to mortgage broker who has advised me there is a covenant on the deeds which means the management company need to produce a certificate of compliance in order for me to remortgage (or sell the house). I’ve contacted the management company about this and am sure there will be a charge for this.

My issue is that my solicitor failed to tell me about this restriction. I’ve checked my report on title. She had listed some restrictions with the management company - the need to pay their fees and need for approval for building work which I accepted.

However she didn’t mention this and in her conclusion at the end of the report says
‘the title to the Property is currently good and marketable; and
there are neither onerous restrictions or provisions affecting the Property nor other
matters of a legal nature that should deter you from proceeding in your proposed
purchase of the Property.’

Had I known that I need to obtain a certificate to remortgage or sell the property I’m not sure I’d have gone ahead with the purchase and would at the very least have negotiated further on price.

I feel I have a valid complaint with the solicitor to reimburse me any fees for obtaining a certificate and compensation for me purchasing a house without full information from her. I’m sure now it will be harder to sell in the future and / or worth less. I’d certainly have been very cautious had I been given this information and would probably have pulled out of the purchase. I’d already sold my previous house and was renting so I wasn’t in a chain and was in a strong position to buy.

Has anyone had experience of this? I think I have a valid complaint but before I contact the solicitors want to check. It just seems quite a large bit of information to not tell me.

Any advice appreciated.

It’s not a reason to complain or an onerous request. Your solicitor is right. Perfectly common with new builds. It’s just new to you.
Email the management company and they’ll send you the certificate.
If you do sell you’ll need a sellers pack which is usually chargeable. Around £200 if I recall. Hardly enough to need to renegotiate the price.

Not a leg to stand on.
will waste your money trying to fight it

Ah okay, my previous house was a new build and didn’t have this clause for remortgage so I’d never heard of it. I’d remortgaged twice when living there as lived there quite a while. I knew about the management pack when selling and know I’ll need that at the time I sell (no plans). Will call the management company tomorrow to ask for a certificate - hopefully won’t take too long to send through and not be too expensive.

You should join homeowners rights network on Facebook groups - I hate to break it to you but you’re in a fleecehold with restrictions and covenants on your deeds.
Many mortgage providers won’t lend on these properties anymore and it makes it harder to sell. Ask questions on that group

That’s a perfectly normal certificate and is required to ensure your payments are made before selling/ remortgaging.

the management company will issue it when applied for as long as your payments are up to date although obviously I don’t know what they will charge.

i would be pretty sure if you were sent management company paperwork prior to purchase it will be in there somewhere.

unless the cost is prohibitive your title is still ‘good and marketable’ and this does not warrant a complaint.

Not true. The restriction isn’t onerous and you shouldn’t have an issue remortgaging.

Everyone is so desperate to blame professionals without getting an understanding of the facts.

This is standard on new build estates, whilst you arguably should have been advised in more detail of the procedure when undertaking future transactions on purchase of the property it's not something that devalues the property or is an "onerous" restriction assuming the management company is functioning so you're fighting an uphill battle with a complaint I would think. If it's impossible to comply with the restriction (i.e. management company insolvent etc) then ask your solicitor whether requirements are met to make an application to land registry to set aside the restriction to allow registration of the particular transaction to proceed.

Sorry but that’s absolute nonsense - you’ve confused freehold houses subject to management fees (rarely a problem for a lender) to leasehold properties subject to extreme rent and/or service charge (which can in extreme circumstances be a problem)

Gently, you are YABU and overreacting.

It’s nothing to do with ‘fleecehold’

(You also can’t expect sound legal advice from people who haven’t even seen the restriction!)

It sounds like a standard restriction and won’t impact ability to sell or market value if so. The restriction is usually to ensure that all service charges/management fees are paid at the point of any ‘disposition’. This will include a remortgage.

The terms of the restriction would have been included in the Transfer deed you signed when you purchased. A good solicitor would have make it crystal clear what the intention of the restriction was; but buyers do also need to read what they sign.

There may or may not be a fee payable to the management company to get the certificate. Check with them first before complaining.

Best of luck.

Thanks all for the replies.
Ive spoken to the management company today and they’ve sent me details to complete to send me the certificate for which they’ll charge £192 so not too bad. Sounds like it will be emailed across very quickly so I can pass it on to the mortgage broker.

Respectfully I have not - look it up

You will have no luck against your solicitor, firstly you should have read the documents yourself … and secondly it’s not onerous

No I’m talking about freeholds - the TP1 will have these covenants in.
We struggled to sell our freehold with estate management fees last time as two mortgage lenders refused due to the ground rent charges (not leasehold). Luckily we got a third buyer where it went through and our solicitor said it was becoming more common that lenders won’t lend without a deed of variation which our management company refused.
That’s how I know about the HoRNET group as people on there helped and they are now raising awareness about this freehold fleecing that’s going on still.

£192 for sending you a bloody certificate? That's taking the piss. Dread to think what they'll charge you for the seller's pack.

I know it’s a lot but read it can be a lot more so better than expected. I haven’t got any choice so trying to find the positives! As for the sellers pack I know from selling my last house it’s pretty awful, I didn’t intend to buy on a new build estate again but loved this house and couldn’t find anything that compared. It’s got a great energy rating so we save on heating over winter at least. But when we move, in a few years time, will definitely be looking for a normal freehold.

Unfortunately its not nonsense. It's quite common to have an estate rentcharge against a freehold property stated on the TP1. Mortgage lenders are becoming increasingly aware and want you to apply for a deed of variation.

I've just paid £275 for the sellers pack to our management company. According to our estate agent, that was pretty reasonable compared to others they've seen.
I know it's not the question you asked but part of the reason we're selling is all of the covenants on our new build and the management fees (which have gone up every year). I hate the fact we own the house but can't do this, can't do that without permission from the developer, can't change things without voiding the NHBC warranty.

This is correct if they ropery has a rentcharge against it. 👍🏻

Haven’t read all the comments but we have just remortgaged our house and we didn’t need to get a certificate from the management company. We are subject to a restrictive covenant on our deeds! I suggest you try a different mortgage broker!

Didnt you look up estate charges before buying? I wouldn’t touch them with a barge pole.

Youll always have to covenant with a management company for a disposition, I’m surprised you need to for a charge (remortgage) though - I would double check the wording of the restriction.

It’s a blank cheque.

Yep, what @Champere said.

Just to add to this, we nearly had to pull out of our purchase as our mortgage company wanted a deed of variation and management company at first refused, but they then backed down at the last minute and did it. Owner was very confused and said no one else on the estate had experienced such issues but solicitor explained it’s now becoming very common with mortgage providers to want this.

Usually only if s121 of the law of property act isn't excluded in the transfer, that's the culprit of most lenders having issues regarding the charges. Unless the charges are completely unreasonable of course