Negligent conveyancer

[lydia771]

I am currently selling my 3 year old new build home. You would think it be a very straight forward sale but we've hit a massive stalling point because of wording in my house deeds, my buyers lender will not lend until a deed of variation is submitted.

We have a communal area management company on our estate that charges an annual fee as the roads are not adopted. In my deeds this is stated as an ' estate charge' which apparantly means it is a ' rent charge' and the lender won't lend until it is reworded to be a ' management company charge'

I've now had to pay the developer £300 to draft a deed of variation and they've signed it incorrectly meaning my sale is now further delayed and stands to fall through as we are on week 15.

My current conveyancer tells me that my conveyancer when purchasing the property should have picked this up at the time, I used the conveyancer that was recommended by developer at the time (incentive) as did most of my neighbours, i imagine they are all going to have the same issue when it comes to sell?

Is this potentially some sort of con by the developer as I've now had to pay them hundreds to fix their original mistake? (And everyone else in my estate will when they come to sell so it's a god money maker)

Do I have a leg to stand on with a negligent solicitor claim? This is causing such a horrendous amount of stress for me I'm becoming unwell!

You could raise it with your old conveyancer I suppose.

Lenders requirements do change over the years and it’s difficult to know without seeing the whole document.

@MinnieMountain I did raise it with them when the issue first came up and they told me everyone else involved is mistaken and it isn't an estate charge (even though the deeds explicitly say estate charge) and that the developer would confirm this. Developer didn't confirm and said if I paid them they'd change the wording so that's what I have done as no other choice. Google tells me it's always been a thing that lenders will not lend or have issue with estate rent charges so it isn't a recent change to the lending criteria:

In some developments the service charge is payable by way of a legal mechanism known as an “estate rentcharge”. The way this works is that the rentcharge creates a charge on the property which can then be enforced by the rentcharge owner in the event of any default with payment. The implications of this are therefore more severe and some mortgage lenders have concerns about lending against the security of a freehold property that is subject to an estate rent charge. This is because any default with payment can potentially give the rent charge owner the right to create a lease of the property to recover the arrears, which would put the lender’s security at risk.

Surely my conveyancer at the time should have known this

I’m not making excuses but developers solicitors normally put a time limit to exchange and, if buyers solicitors pick up abnormalities in the title, 9/10 the developers solicitors refuse to amend documents. They have a take it or leave it attitude and the buyer just wants it to go through ASAP. It’s a headache and that’s why many solicitors refuse to act on new builds. It’s very easy to get sucked in with using solicitors recommended by the developer especially if there are incentives involved. Both parties just want the transaction to go through ASAP so they get their money. Not helpful for you now when you come to sell. Do you want to incur additional fees pursuing this?

Check out the competition and markets authority report on just this kind of miss-selling.

@BigGreen I can see the reports re new build leaseholds but nothing about estate rent charges on new build freeholds

@pilates surely the solicitors role is to protect me as the buyer. I wasn't even given the option to take it or leave it and we exchanged within 4 weeks of reserving so there was plenty of time needed to amend things it wasn't a time stress issue.

“we exchanged within 4 weeks of reserving”
that would be an immediate red flag for me that the conveyancer didnt do a very thorough job that is remarkably quick 🤨
There is a lot of paperwork to check with new builds.
You could write a letter of complaint to the office manager/senior partner to your previous solicitors but in the meantime I would want to get shot of your property ASAP.

I’m glad you understand it OP.

4 weeks is a common deadline. Developers will enforce it or not depending on the local market.

It’s really not that long to get everything done.

You're not near Newcastle are you? A friend has just had this issue with a 3 year old house!

If you bought it 3 years ago, it was probably fine at that time.

Unfortunately, lenders have radically changed why they will and will not accept with regard to Estate Rent Charges over the last couple of years.

Lenders change their policies on things all the time, so what was Ok when you bought, may well not be acceptable now.

Therefore, no-one is at fault, I'm afraid.

Did you get a mortgage? I believe it was easier to get mortgages with estate charges a few years ago, although some lenders have never liked them.

[quote lydia771]@MinnieMountain I did raise it with them when the issue first came up and they told me everyone else involved is mistaken and it isn't an estate charge (even though the deeds explicitly say estate charge) and that the developer would confirm this. Developer didn't confirm and said if I paid them they'd change the wording so that's what I have done as no other choice. Google tells me it's always been a thing that lenders will not lend or have issue with estate rent charges so it isn't a recent change to the lending criteria:

In some developments the service charge is payable by way of a legal mechanism known as an “estate rentcharge”. The way this works is that the rentcharge creates a charge on the property which can then be enforced by the rentcharge owner in the event of any default with payment. The implications of this are therefore more severe and some mortgage lenders have concerns about lending against the security of a freehold property that is subject to an estate rent charge. This is because any default with payment can potentially give the rent charge owner the right to create a lease of the property to recover the arrears, which would put the lender’s security at risk.

Surely my conveyancer at the time should have known this [/quote]
I assume you were able to get a mortgage, so why would the conveyancer have picked up on this? It’s the lender that decided, not the conveyancer. My DD had to change mortgage providers at the last minute because the property was on a private road and they won’t lend in that situation. She got another lender almost the same day. It was the conveyancer that told her about this, but it wasn’t their fault.

If I were you I'd complain in writing, following your previous solicitors complaints procedure. Ask for a refund of £300 plus vat to cover the cost of sorting this out. Tell them you'll complain to the ombudsman if they don't cover the cost.

@pilates first time buyer at the time so wouldn't have presented as a red flag to me. They had already acted for a number of buyers in the estate (including my semi detached neighbour in an identical property) so had most answers to common queries already to hand.

I definitely will never be buying a new build again that's for sure!

I’m with @ChampagneCommunist on this one

@lydia771 Property lawyers never buy new builds. They are generally shoddily built and the rules/restrictions/charges are always awful.

@ChampagneCommunist my neighbour is a conveyancer but ok 😂

Unless you live in Peterborough, there’s more than 1 OP. The rest of the office did think she was being silly though.