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Deed of variation requested to leasehold property

Posted: Thu Nov 21, 2013 12:31 pm
by annie08
Hi - I own business premises and the freehold of the flat above. Prospective purchasers of the flat want a deed of variation as the deeds say the flat can not be let. Their lender will not lend without the variation. I suspect they have applied for a buy to let mortgage. Also the flat and shop are insured separately and the lender says this is not acceptable,they want me to insure the flat and they will contribute to the cost. I'm not very happy on either count and wonder if I can refuse and that will be the end of it or can I be forced to agree in some way. I don't want to be in a position where the owners fail to pay part of the insurance and also I have no control over possibly troublesome tenants who may neglect the property and cause me to make a claim on the policy. It's potential hassle that I don't need. Any help would be appreciated.

Re: Deed of variation requested to leasehold property

Posted: Thu Nov 21, 2013 12:52 pm
by Brainsey
Of course you can refuse to agree to conditions that prospective buyers want to impose and there's no way they can force you to agree.

Obviously, once you tell them you won't agree to their conditions, they'll no longer be prospective buyers.

Re: Deed of variation requested to leasehold property

Posted: Thu Nov 21, 2013 3:31 pm
by annie08
Thanks.You probably thought it was a dumb question but I wanted to be sure. I understand a freeholder, after twenty one years, is entitled to buy the freehold whether the landlord agrees or not. The previous tenant who had been there for more than twenty one years died a while ago and his sons have inherited the flat. Am I right in thinking that the twenty one years does not carry over to the new owners. Just want to be sure of my ground before I respond to their solicitor.

Re: Deed of variation requested to leasehold property

Posted: Thu Nov 21, 2013 4:31 pm
by Brainsey
Ah, not quite as simple as it first appeared; it might be useful to include all the relevant facts in order that any answer does not appear to be one to a dumb question.

I gather now that you are the freehold owner of the flat.
The flat has been let on a long lease to a person who is now dead.
That person's sons are now the tenants having taken over the lease.

I don't know anywhere near enough about this issue to advise.

I'd suggest that you need your own solicitor and one who specialises in lease/tenancy areas.

How did the tenancy pass to the sons? Did they previously live in the flat with their father?
The right to buy the freehold applies to 21 year tenants in blocks of flats - does the same right exist for tenants in single flats?

Re: Deed of variation requested to leasehold property

Posted: Thu Nov 21, 2013 4:50 pm
by annie08
Ah I didn't realize the twenty one year rule applied to blocks of flats. This is a single flat above our retail premises. We used to own it but sold it to the deceased keeping the freehold. His sons did not live there and have inherited it jointly and want to sell it.

Re: Deed of variation requested to leasehold property

Posted: Sat Nov 23, 2013 10:29 pm
by ukmicky
annie08 wrote:Thanks.You probably thought it was a dumb question but I wanted to be sure. I understand a freeholder, after twenty one years, is entitled to buy the freehold whether the landlord agrees or not. The previous tenant who had been there for more than twenty one years died a while ago and his sons have inherited the flat. Am I right in thinking that the twenty one years does not carry over to the new owners. Just want to be sure of my ground before I respond to their solicitor.
In not an expert on leasehold matters so gain other advice


I think you will find 21 years has nothing to do with how long they have to have held the lease before a leaseholder qualifies for the right to buy. I believe the lease itself must be a long lease of 21 years or more for the right to buy to apply.

2 years is the qualifying period i believe.

New tenants must wait 2 years.

Those dealing with the diseased estate can purchase the freehold within 2 years of the death

Houses with a flat above a shop i believe are not that straight forward and think there is something which says the flat must be 51 percent or more of the total floor space before the right to buy exists

Lastly If you are talking about a restrictive covenant, the covenant will remain even if the freehold is purchased. You can refuse to remove the restrictive covenant and it is not as far as im aware a restriction which is classed as a restraint of trade. So dont fall for that line if it is mentioned.

Do not believe youu need to provide insurance unless it is a term of the lease.

If you introduce any service charges or are going to make any changes which will affect the lease gain advice from a solicitor.

Re: Deed of variation requested to leasehold property

Posted: Wed Nov 27, 2013 3:49 pm
by annie08
Many thanks. My husband has been to see his solicitor who says the laws have changed since the document was drawn up and the leaseholder could take us to court. He says the judge might agree with the them, and we would have to agree to the variation. We would then have to shoulder the court costs. Not sure what we are going to do now.

Re: Deed of variation requested to leasehold property

Posted: Wed Nov 27, 2013 11:13 pm
by ukmicky
annie08 wrote:Many thanks. My husband has been to see his solicitor who says the laws have changed since the document was drawn up and the leaseholder could take us to court. He says the judge might agree with the them, and we would have to agree to the variation. We would then have to shoulder the court costs. Not sure what we are going to do now.
I have been looking into this for you since i posted last. It seems this could be a form of restraint of trade which i believe is called an Alienation covenant as its prevening free disposal of the property.

You need to go back to your solicitor and ask him to provide more detail. His answer is very general and is not really good enough.

Re: Deed of variation requested to leasehold property

Posted: Fri Nov 29, 2013 10:36 am
by annie08
Many thanks - will do as you suggest and go back to my solicitor.

Re: Deed of variation requested to leasehold property

Posted: Mon Dec 09, 2013 1:56 am
by Conveyancer
The right to enfranchise does not apply as the premises do not contain at least two flats.

There is no obligation on the OP to agree the variations requested.

The insurance provisions do not sound ideal from either landlord or tenant's point of view. Despite the risk that the tenant may not pay his proportion of the premium it is better for the landlord to have control of insurance and for the building to be insured with one insurer.

Excluding sub-letting altogether is perfectly acceptable and the fact is that the restriction was accepted when the lease was granted.

A restraint on alienation is not a restraint on trade.

Subject to exceptions which come down to a question of degree, you cannot impose restrictions on the disposal of freehold property. Leases are different. An absolute restriction on assignment of a long lease granted for a premium would be unusual, but absolute prohibitions on sub-letting are seen.

Covenants in restraint of trade are a bit too complex to go into.

Re: Deed of variation requested to leasehold property

Posted: Mon Dec 09, 2013 10:46 am
by annie08
Will stand our ground in view of your reply. Many thanks.

Re: Deed of variation requested to leasehold property

Posted: Mon Dec 09, 2013 9:55 pm
by ukmicky
Conveyancer wrote:The right to enfranchise does not apply as the premises do not contain at least two flats.

There is no obligation on the OP to agree the variations requested.

The insurance provisions do not sound ideal from either landlord or tenant's point of view. Despite the risk that the tenant may not pay his proportion of the premium it is better for the landlord to have control of insurance and for the building to be insured with one insurer.

Excluding sub-letting altogether is perfectly acceptable and the fact is that the restriction was accepted when the lease was granted.

A restraint on alienation is not a restraint on trade.

Subject to exceptions which come down to a question of degree, you cannot impose restrictions on the disposal of freehold property. Leases are different. An absolute restriction on assignment of a long lease granted for a premium would be unusual, but absolute prohibitions on sub-letting are seen.

Covenants in restraint of trade are a bit too complex to go into.
I did say i didnt know much on this subject in my first post and to gain other advice. it seems my intial advice was actually good then .

What made me wonder was an old post by someone called Lawcruncher on another forum whos advice is akways good and trustworthy , i must likely misread it.

Re: Deed of variation requested to leasehold property

Posted: Tue Dec 10, 2013 12:10 am
by Conveyancer
Since I am Lawcruncher perhaps you can point to the thread in question.

Re: Deed of variation requested to leasehold property

Posted: Tue Dec 10, 2013 9:38 pm
by ukmicky
Conveyancer wrote:Since I am Lawcruncher perhaps you can point to the thread in question.

I know :)

I will see if i can find it again. I think it was nearly 8 years old.I will see if my google term brings it up again.

As i said it was most likely a mis read by me

Re: Deed of variation requested to leasehold property

Posted: Tue Dec 10, 2013 11:02 pm
by Conveyancer
ukmicky wrote:I know :)
I suspected you might. :P

So who are you over there?