We received a letter from our solicitor yesterday and just don't know what to do - I'm going to copy it below and would be really grateful for any advice as to what we should do next.
We can just about cover our current legal costs re this purchase as it is and are unlikely to have sold our property by the time this purchase is likely to complete (not too much of a prob, we can afford both mortgages and we are thinking of letting our current prop out if it doesn't sell).
The issues raised in the letter I'm going to copy make us want to run for the hills and forget the whole purchase, I need some perspective on whether these are issues which are easily dealt with or whether we should just walk away.
Here's part of the letter;
As you are aware this property is a shared ownership property and has a shared ownership lease. Your
lender has provided us with specific guidelines as to the wording of the Lease and as to what they will find
acceptable. I have to report to them about any issues that do not meet their requirements.
I have had to report to them because the Lease does not enclose a detailed mortgagee protection clause.
The Lease does have a clause of this nature but it is not as detailed as the lender requires.
This clause is in the Lease to protect the lender in the event that they have to repossess in the future, it gives
them the ability to staircase and buy the remaining shares in the property from the Housing Association. The
lender asks for this Lease clause to state how they are to go about obtaining these shares and give time
limits and detail as to the calculation of the cost of the additional shares etc, however the Lease for this
property does not go in to this much detail.
We have reported the issue to your lender and await confirmation as to whether they are happy to proceed
on this basis. However you have to be aware that this is likely to be an issue when you sell the property in the
future, as not all lenders would be happy to proceed on this basis.
If the lender is not happy to proceed on this basis, or if you are not happy to proceed on this basis we can
ask the sellers if they would be willing to apply for a deed of variation to vary the terms of the Lease so that it
includes a valid mortgagee protection clause. However the housing association would charge for agreeing to
the deed of variation and would expect their legal fees to be paid in this regard. It would have to be agreed
as to who would cover the cost of this.
The other issue is that the Lease currently only has 72 years remaining. Most lenders now insist on the
Lease having at least 70 years remaining on the term to be able to lend. So you will have to consider
extending the Lease in the future or you may not be able to sell or remortgage.
I have asked the housing association for a guide as to the cost of extending the Lease, but they have not
confirmed this to us yet.
However if you wanted to vary the terms of the Lease to amend the mortgagee protection clause you could
also ask for the Lease to be extended at the same time as this may reduce the legal fees.