Dispute with a freeholder? What to do before selling your home.
If you are in a dispute with your freeholder, it could create problems when you decide to sell your home. Our checklist sets out the proactive measures you can take to help prevent the dispute from delaying or even jeopardising your sale
Complexities of Leasehold
Selling a leasehold property is usually more involved and time-consuming than selling a freehold house.
Buyers and their mortgage lenders will require a great deal more information about the property and the management of the building.
A common cause of delays in the conveyancing process is when there is an ongoing dispute between the leaseholder and the freeholder, landlord or managing agent.
So what steps should you take if you are involved in a dispute and you want to put your property on the market?
Typical disputes
Perhaps you have queried the service charges or even refused to pay them? Maybe the freeholder is planning expensive works to the building and you are expected to pay a share of the cost? Perhaps the freeholder might be refusing to carry out essential maintenance work on the building?
You might not have a dispute with the freeholder directly but you may have had cause to complain to the freeholder about one of the other flat-owners (or their tenants). Excessive noise, for example, is a frequent cause of complaint.
Perhaps there is water leaking into your flat from the upstairs flat and the occupiers of that flat won't fix the leak. Perhaps a complaint has been made about something you are doing and you are contesting the complaint.
Disputes mean delays
If you are in the middle of an unresolved dispute, your sale may be delayed when the buyer finds out about it. The buyer might even decide to pull out if the desire is of particular concern to them.
What should I do before putting my home on the market?
Speak to a solicitor
The first step should be to contact a conveyancing solicitor who is familiar with leasehold property transactions. The solicitor should be able to offer invaluable advice on how to resolve or frame a dispute, so it has the least impact on the sale process.
Instructing a solicitor at the same time you put your property on the market is a good idea generally. This approach can save time and delays when a buyer has been found.
Starting the legal process early is even more important if you are trying to sell a leasehold property. Your solicitor will be able to obtain the leasehold management information from the managing agent before you find a buyer. Not only will this help prevent delays, but it will also give your solicitor the freeholder's perspective of the dispute, helping you to decide on the best strategy to address the problem.
Most solicitors work on a no sale no fee, basis so it won't cost you any more money to get a solicitor on board before you accept an offer.
Don't bury your head
When selling a leasehold property, the seller must complete various property information forms, including:
TA6 Property Information Form
This form contains a specific section about disputes and claims that asks the following:
- 2.1 Have there been any disputes or complaints regarding this property or a property nearby?
- 2.2 Is the seller aware of anything which might lead to a dispute about the property or a property nearby?
You can download a specimen Law Society TA6 form from here:
TA7 Leasehold information form
This form asks the following questions:
- 8.1 Has the seller received any complaint from the landlord, the management company or any neighbour about anything the seller has or has not done?
- 8.2 Has the seller complained or had cause to complain to or about the landlord, the management company, or any neighbour our?
You can download a specimen Law Society TA7 form from here:
Once completed, these forms will be sent to the buyer's solicitor and they will form part of the legal contract of sale.
You will need to be honest about any disputes. Should you to choose not to disclose a dispute, the freeholder or managing agent will still give details in the management information pack sent to the buyer's solicitor. Providing incorrect or misleading information could lead to a subsequent misrepresentation claim.
Will the dispute affect the new owner?
Buyers will be concerned about any disputes that might affect them as new owners. If possible, you should take steps to resolve disputes before trying to sell the property.
For example, consider clearing any services charge and/or ground rent arrears (and any interest charged) if you have previously refused to pay because you consider the charges unreasonable.
Don't withhold service charge payments.
As a leaseholder, you the right to challenge unreasonable service charges but you are not entitled to withhold payment when properly demanded. If the freeholder claims that there are outstanding arrears at the date of sale they will expect them to be paid when they are notified of the sale.
The buyer's conveyancing solicitor will ask the freeholder for three-years of service charge accounts, plus an estimate of current expenses, so a buyer is fully aware. If there are any arrears, the buyer will expect these to be either settled before completion or deducted from the purchase price.
Resolve any disputes over alterations
Disputes sometimes arise when a freeholder claims that a flat-owner has made alterations to the property which are not permitted by the lease or have not been otherwise agreed.
If a buyer discovers there are unauthorised alterations, they will expect the situation to be remedied before completion.
If you are in this situation, it may be possible to remove the alteration or revert the property to its previous state. Alternatively, you could ask the freeholder for formal retrospective consent. Your solicitor will be able to advise you accordingly but you should raise the issue as soon as possible.
Ongoing litigation
This freeholder may, for example, have started legal action to recover any service charge arrears or in respect of an alleged breach of covenant in the lease. If the dispute has become litigious, it will have more serious consequences for a sale.
It would be preferable to try and resolve the issue out of court and as quickly as possible.
Perhaps you, together with other leaseholders, have started legal action for unreasonable service charges or if the freeholder has failed to carry out necessary repairs. If litigation is ongoing, you should speak to your solicitor about any proposed sale before putting the property on the market.
If the litigation has concluded, be prepared to provide your conveyancing solicitor with full details as the details will need to be forwarded to the buyer's solicitor.
Conclusion
No matter what the nature of the dispute, the conveyancing process is designed to 'smoke out' the details. The best course of action is to resolve the issue before you sell.
Instructing a solicitor before going on the market means you get access to critical advice on how to resolve the issues at the earliest stage. In effect, the solicitor's advice is free as 'no sale no fee' means you only pay a fixed fee if you sell your property.
