Want to stick with purchase but need advice

[Evecob]

Hi, I have come asking advice before though npbody could help, so some might remember our issue, but after 20 calls and 45 minutes on hold to my solocitor today we found out slightly more so i'm back again ...

We were hoping to exchange and complete on our sale and purchase this friday, however our last remaining enquiry on our purchase has caused issues last minute. Our purchase has rent charges attached to its title, however the builder never set up a management company/never charged any money to the small cul de sac of houses there for the past 3 years. Our solicitor had never heard of this before but has since asked his team leader who says the sellers solicitor needs to ask the builder/developer to remove the rent charges off the title. If he agrees he can put in an application and solicitors may be able to remove it themselves to exchange and complete. But he isnt sure, and if they can't, he says it is a long process for land registry to remove them. He cannot give us a completion date anymore. So now the chain is being held up by an unknown timescale...

Does anyone know of this scenario of removing rent charges and the timescale we could be looking at?

If this was to happen to your purchase, would you pull out or stick with it?

Oh dear. This sounds like a nightmare with no end date. I would seriously consider pulling out.

If the builder agrees could a contract be drawn up to say he can't charge, then complete the sale and then you carry on the removal from land registry?

Oh dear, I work in a conveyancing and the wait from LR at the moment can be really long. What are the rent charges? Would you consider going ahead anyway if it's nominal?

If he isn't charging them could you complete with them in place and then go through the process of getting them removed afterwards?

@nellly

Oh dear, I work in a conveyancing and the wait from LR at the moment can be really long. What are the rent charges? Would you consider going ahead anyway if it's nominal?

What do you mean by nominal?

We would be happy to move forward with all this attached to the title and remove it after, i think the issue is to do with the bank lending as we are getting a mortgage, im not 100% sure though.

Its such a pain. And im worried what our buyers will say. They are ready to exchange on our house. We only just found this out today and we dont want to lose them

@alahsbeje

If he isn't charging them could you complete with them in place and then go through the process of getting them removed afterwards?

I think the issue may be with the lender. I might email my solicitor to ask the question, as initially he was going to ask our lender, and changed to this scenario after talking to his team leader....but he is excruciatingly difficult to get hold of...

@trevthecat

If the builder agrees could a contract be drawn up to say he can't charge, then complete the sale and then you carry on the removal from land registry?

This sounds ideal. I have no idea and i dont think my solicitor has a clue either as he had to ask his superiors for advice on what to do.

Perhaps I can put this forward as a suggestion. Thank you

Is your solicitor's concern that the builder could suddenly demand the 3 years worth of missing payments and/or increase the rent charge by a massive amount with little to no notice? I'd want to make sure I fully understood the implications before I would agree to complete with it still in place. I'd also want to know what I was actually buying, as in, is it a freehold or a leasehold?I've heard horror stories where ground rent has been increased massively every few years and becomes completely unaffordable, that would be my fear.

@Faranth

Is your solicitor's concern that the builder could suddenly demand the 3 years worth of missing payments and/or increase the rent charge by a massive amount with little to no notice? I'd want to make sure I fully understood the implications before I would agree to complete with it still in place. I'd also want to know what I was actually buying, as in, is it a freehold or a leasehold?I've heard horror stories where ground rent has been increased massively every few years and becomes completely unaffordable, that would be my fear.

Its freehold but its a new build so the council dont adopt the roads, they have management companies that maintain them. We are currently in one and havr normal management company fees, but want to move to a bigger plot. This house is not in a big estate its only got a shared road to maintain. So we are not bothered about maintaining it. Or it not having a proper management company. We just want this over with honestly. The solicitor is the one unhappy with moving forward not us. His initial reason was due to the saleability of the house in future if this was on there.

Surely if the builder did charge the money, it would be to the current owners, not us? It shouldnt be more than 600 for the year more likely less as its such a small area. Our current area has a big green and park to maintain and its less than 200 per year.

Either way no idea. The builder didnt seem to understand it either. We phoned him and he was no help.

I think it would need to be sorted before you go ahead. I wouldn't buy a property with this on the title, so I'm sure it would put off a lot of purchasers should you want to sell in the future.

I think you need to find out if this a problem for the lender or not. They will have standard instructions on this type of rent charge I expect. Depending on how much the charges are I wouldn't be worried myself if I was comfortable that I could pay them (along with everyone else who is liable). The rent charges will run with the land, so you would be liable for back charges although you could sue your seller to reimburse you.
Rent charges can make people nervous as some will , in theory, allow the person with the benefit of the rent charge to retake ownership of the freehold. But when I looked at this in detail ( many,many years ago) it seemed very unlikely that would happen now.
There may be someone with more up to date knowledge than mine. But I would think you can find a way through this - depending on what lender says

@Catmummyof2 - agree with everything you've said but I am wondering if the issue is the rent charge has a right of forfeiture attached. (If it's still legal to create them?). That is likely to be a mortgagee issue

Rent charges are really common in Manchester. We have one on ours and no one has been charged for years.

You can get an indemnity policy on it on the off chance someone comes knocking for 50 years back rent.
Ask solicitor about an indemnity policy against the rent change. You might need to give notice to holder of the charge if they can be found.

[quote Catmummyof2]**@Grumpycatsmum* possibly, or possibly includes the need for subsequent purchasers to covenant directly with the management company, which would be rather difficult if they don’t exist yet. You’re right, depending on which mortgage company this could well be something they wouldn't be pragmatic about. @Evecob* I’d suggest getting some detailed, preferably written, legal advice on the title issue. I’d also call the house builder directly myself and ask them if they could shed any light.[/quote]
We did call the builder yesterday. He was less than helpful, saying he didn't understand the situation and he would ask his solicitor.

@Panda368

Rent charges are really common in Manchester. We have one on ours and no one has been charged for years. You can get an indemnity policy on it on the off chance someone comes knocking for 50 years back rent. Ask solicitor about an indemnity policy against the rent change. You might need to give notice to holder of the charge if they can be found.

Was a management company set up on yours? Or was the gouse built and no company ever set up?

If its the latter than it is like ours, and if its a simple case of just getting indemnity insurance should we suggest it to our solicitor? You would think he would know this already!!

@Evecob in our case I think it had previously been paid at some point but no one knew who the owner of the rent charge was anymore or if they were alive or how much was owed as it had been so long. (house built 1920s or 30s.

This is the exact thing an indemnity policy is designed for - to protect future owners from potentially being charged an unknown amount at some point.

I think it cost our original vendors a few 100 quid to set up and we have had to pay an extra 20 to cover our buyer as the value of the house has gone up higher than predicted.

Our current buyers are having to do something similar on their house but as I think the possible owner of the rent charge is known they have had to serve notice on it and the owner has a certain amount of time to reply and then I think they can get an indemnity - I think

[quote Panda368]@Evecob in our case I think it had previously been paid at some point but no one knew who the owner of the rent charge was anymore or if they were alive or how much was owed as it had been so long. (house built 1920s or 30s.

This is the exact thing an indemnity policy is designed for - to protect future owners from potentially being charged an unknown amount at some point.

I think it cost our original vendors a few 100 quid to set up and we have had to pay an extra 20 to cover our buyer as the value of the house has gone up higher than predicted.

Our current buyers are having to do something similar on their house but as I think the possible owner of the rent charge is known they have had to serve notice on it and the owner has a certain amount of time to reply and then I think they can get an indemnity - I think[/quote]
Interesting. So it wasnt a case of taking the rent charge off the title... I might try and contact my solicitor today to ask about this as a way forward.

If you dont pay rent charges, do you and other residents maintain the area around you?

@Evecob we live in and end terrace so there isn't much around us to be maintained. There is a grubby back ally which people keep bins and we have a little ally down the side of our house which we occasionally weed our side of but I wouldn't say there was specific maintenance going on other than people looking after their homes but there are no communal zones that would require it.

I would think maintaining the area/ground should be covered by some kind of service or community charge rather than the rent charge which I've always thought is literally paying a bit for the ground your house sits on.

Why isn’t the road being adopted by the council? I would want to know why it’s not being built to adoptable standards. These maintenance issues can be a huge expense. The builder is avoiding responsibilities in my view. Ditto with the man co. It’s shoddy.

There's a huge difference between a historic rent charge on a house built 100 years ago and one on a house built 3 years ago. I doubt an indemnity would be available for the latter situation.

this is the cul de sac of detached homes. we are buying one of the houses in this area. As it is only 3 years old the council have not adopted it. there is only a road and parking area that you can see here that needs maintaining.

we are happy to maintain it ourselves as a resident committee if need be, and we dont care about it being on the title. if we speak to solicitor today about an indemnity policy, will it solve our problem do you think?