Developer's permission to remortgage/sell house needed - Is this normal??

[Piscis2017]

We have recently learnt through neighbours that the property we bought a few years ago has a restriction where we need permission from the developer to remortgage or sell the house.

We were never told this by our solicitors and the paragraph where apparently says that is so difficult to understand that it is not actually clear what it says (obviouly done purposely by the developer) None of us the neighbours knew at the time of buying the house but some learnt this when trying to remortgage.

We are baffled that this can be even legal but it is so socking that we are trying to understand if this is a thing (this is our first property in the UK)? The main issue here is the developer, who is completely an unethical person and we have all been having problems with him for one thing or another, we are considering very seriously taking legal action against him. Where does a clause like that in a contract leaves us? That they can basically do whatever they want and you have to take it for fear or them not givin us permission to sell the house?? If we need permission from them, the house is not basically not 100% ours.

is this in the house deeds?

speak to your conveyancer.

You need to go back to your original solicitor-explanations of these kind of caveats on deeds is precisely what you pay them for

I have to say I’ve never heard of that one. My house has a restrictive covenant that the original owner of 200+ year old farmhouse has right of first refusal at resale.

Our solocitors firm went burst, they are not around anymore. Another firm has taken over but obviouly they won't be responsible for not explaining this to us.

The thing is that none of us (several families) knew, and all of us had different solicitors, so no solicitors thought that this was something that needed explaining. Weird.

Is the developer still building houses at the site?
They like to control house values on the development so I assume it will be something to do with this that they have put the clause in. Solicitors should definitely have picked it up. Might be worth asking if the solicitors that have taken over the firm you used have any responsibility for previous work.

They built some new flats next to our houses after ours were built, yes, only recently. They cannot build any more, no more space left.

Anyone else? Very courious if anyone has experience this? I am baffled that this can be even legal. Can they actually stop you from selling if they want? I cannot beleve this could happen but nothing surprises me anymore.

Can you post the clause here. If it's genuinely not clear (ie there are two readings of the same clause) it will be interpreted in your favour.

No, this is not usual in the U.K.

You need to speak to a solicitor who can advise on the meaning and validity of the clause. If your conveyancing solicitors missed it or did not advise you about the clause you might have a claim against them (even if the firm is no longer around there should be insurance).

Also I'd suggest you post this in the legal channel as there will be property lawyers on there.

Check if it is a freehold or a "virtual freehold" as well.

Never heard of it and I used to be a Legal Secretary in my younger years. I did come across a buyer who couldn't sell within three years without paying a certain percentage of the profit back to housing association who they purchased from - they obviously knew as they dragged the sale out as they couldn't sell for four months after the offer had been made.

I'd say it leaves your solicitor/conveyancer in a negligent position. Anything unusual or that might cause concern should have been reported to you. I'd contact the solicitor who took over, they might be able to point you in the right direction and they might still have your file to glean some information from that. Also, might be worth getting a copy of your Land Registry Certificate from Land Registry, any covenants/restrictions should be listed in that.

You might be covered by something called 'run off cover' - detailed on Law Society website.

OP : have you got a copy of your title (ie the Land Registry official copy register showing you as the owner in the "B" section. Is there anything in there about a restriction other than one which has the name of your mortgage lender? If so, if you cross out the personal info and paste the wording, a few of us can have a look. If there's nothing there and nothing in the "C" register about a charge in favour of your lender than that will rule out quite a few things. Is it freehold or leasehold?

Basically it sounds very unusual (especially if it blocks remortgaging) but without seeing the title, it's hard to give you a 100% answer. Happy to have a quick look over the official copy register for you as a first step if helpful - won't be remotely offended if not.

The clause you describe might be an unfair term or condition.
https://assets.publishing.service.gov.uk/media/5a807f4c40f0b62302693daf/Unfair_Terms_Explained.pdf
I suggest you take legal advice.

Tbf my first thought would be that your neighbours have got the wrong end of the stick- that makes more sense than half a dozen solicitors and purchases somehow not noticing such a clause.

you need legal advice, firstly to check if your neigbours interpretation is correct, secondly if it is what to do about it.

like you say it would be very restrictive and highly unusual. If the paragraph isn’t clear it’s unlikely they can enforce it if they can’t prove it says what they mean.

sounds to me more of a case of rumours at the minute. Get it checked out for peace of mind.

Not rumours, two of my neighbours needed permission from the developer to remortgage. We downloaded the documents from the Land Registry yesterday and the restriction shows there. I wish there were rumours but they are not

@GU24Mum I will check and see if I can post something more

Second the point about posting the clauses here.
If you and all your neighbours are bothered by this then you can go to the land tribunal and they will rule on restricted covenants. One of our neighbours did this for a restricted covenant on all our houses. It was not prohibitively expensive AFAIK.
Alternatively you can just ignore it and go ahead and sell anyway. The developer would then need to enforce the covenant against you. If it's a poorly drafted clause it is likely to be unenforceable and/or difficult to enforce. Especially as many different solicitor firms did not mention this so v wierd really that none of them did

It actually is quite common for new builds - the reasoning is the developer does not want competition if they are still selling other properties in the same development.

Dependant on the wording of the covenant, it is "normally" extinguished on the first sale, so the covenant only applies to the first owner.

@Piscis2017 As others have said, you should have the title documents, ask your solicitor the type of covenant it is - there are numerous kinds. I am presuming you purchased the property new from the developer? Did you use their recommended solicitor? If not, that is good. If you did, then ask an independant solicitor to view the title documents.

Yes, we bought the property new from the developer. I am not sure if the solicitor was their recommended one but anyway, they are not around anymore. We will make some enquiries tomorrow with the firm that took over them.

I am baffled that unfair clauses that cannot be even understood are allowed just because a developer wants to get more money for the properties they are building, how can this be legal?

I am sorry I haven't posted the clause or anything yet but I want be sure that it safe to post.

Why wouldn't it be safe to post? If it's on the land registry records then it's public info anyway !

If it's affecting all neighbours and they had different solicitors then you can ask them to check with theirs. You can raise a complaint either way regarding your solicitor
https://www.legalombudsman.org.uk/for-consumers/factsheets/complaining-about-closed-service-providers/#:~:text=You%20may%20be%20directed%20to,to%20continue%20with%20your%20case.

OP, please don't post anything you aren't happy to post but if you blank out the title number and identifying info, that will let people have an initial look at the clause without giving away your name or the development etc.

Those solicitors are obliged to have insurance cover even when they go bust plus there is always the SRA. This seems like a monumental fuck up.

I'm not sure you'd get away with arguing the covenant is unfair since you had a legal professional do the conveyancing. Had they raised it, would you have stopped the purchase?

@kirinm Yes, and this was not explained to us, which was their job.
We would have definitely not bought, ridiculous clause!