Selling home new build management company, deed of variation
Discussion
Just been floored by this. And wondered if others have experience of it.
We are selling a 2013 built home. Freehold owned property built via Persimmon. As part of the purchase we were required to pay a nominal (less than 100 per year) amount to a management company who would maintain public areas before the council adopted the roads ect.
I was told at the time this was pretty normal and some councils even lower the council tax band in recognition that the owners are not paying the council for full services.
Its been no issue, and now we have come to move our buyers mortgage lender has expressed concern at a clause whereby if the management fees are not paid the company can envoke a rentcharge repossession clause .
Seems this is something Persimmon and others have flown under the radar, but obviously mortgage lenders are not keen on a freehold purchase someone other than them having reposession rights for non payment of a pretty small fee.
We've been told by the solicitor we need a deed of variation to nullify the repossession clause. Its an unexpected and unwelcome £1000, and we are liable. Otherwise the sale is dead because our buyers wont get funds.
Permission wash their hands of it and pass charges to the management company.
Anyone else have experience of this? It feels wrong that each owner is now individually responsible if they want to sell is responsible on a contract by contract basis to repeal this claise, and the cost for somethingthey are seeminglyhanding out ,left right and centre seems overly expensive. Especially since it was something applied pre sale and wasn't an issue to mortgage lenders 7 or 8 years ago.
Just another grand to pi55 away which is small in the scheme of things but gauls somewhat.
Grrrrrr.
We are selling a 2013 built home. Freehold owned property built via Persimmon. As part of the purchase we were required to pay a nominal (less than 100 per year) amount to a management company who would maintain public areas before the council adopted the roads ect.
I was told at the time this was pretty normal and some councils even lower the council tax band in recognition that the owners are not paying the council for full services.
Its been no issue, and now we have come to move our buyers mortgage lender has expressed concern at a clause whereby if the management fees are not paid the company can envoke a rentcharge repossession clause .
Seems this is something Persimmon and others have flown under the radar, but obviously mortgage lenders are not keen on a freehold purchase someone other than them having reposession rights for non payment of a pretty small fee.
We've been told by the solicitor we need a deed of variation to nullify the repossession clause. Its an unexpected and unwelcome £1000, and we are liable. Otherwise the sale is dead because our buyers wont get funds.
Permission wash their hands of it and pass charges to the management company.
Anyone else have experience of this? It feels wrong that each owner is now individually responsible if they want to sell is responsible on a contract by contract basis to repeal this claise, and the cost for somethingthey are seeminglyhanding out ,left right and centre seems overly expensive. Especially since it was something applied pre sale and wasn't an issue to mortgage lenders 7 or 8 years ago.
Just another grand to pi55 away which is small in the scheme of things but gauls somewhat.
Grrrrrr.
Edited by Flat6er on Thursday 30th July 11:51
Similar tale, albeit not identical, when selling my leasehold flat. Ground rent was £250pa, but when the law changed for all new builds to be free, I was trying to sell my flat. I sold it 6 times in 18 months, each time falling through as the purchaser solicitor kept wanting to change it from £250pa to £0.
In the end I had to pay for a Deed of Variation, and "buy out" the clause in my contract for £5k (on a £190k flat) to even get the final buyer to entertain going all the way to signing of contracts.
Took it back to the original developer who washed their hands with it, as they "sold" the site onto their management company. Even went back to my original purchasing solicitor and they wash their hands with it as it technically isn't illegal on a "used" property.
The entire process is crap, and subsequently will never buy a property with any form of independent management involved in any capacity, and certainly will be steering my daughter away from buying anything that isn't 100% truly freehold.
In the grand scheme of things, £1000 to seal the deal is a fractional % in the whole moving house category, and I wouldn't want to lose the sale over it!
In the end I had to pay for a Deed of Variation, and "buy out" the clause in my contract for £5k (on a £190k flat) to even get the final buyer to entertain going all the way to signing of contracts.
Took it back to the original developer who washed their hands with it, as they "sold" the site onto their management company. Even went back to my original purchasing solicitor and they wash their hands with it as it technically isn't illegal on a "used" property.
The entire process is crap, and subsequently will never buy a property with any form of independent management involved in any capacity, and certainly will be steering my daughter away from buying anything that isn't 100% truly freehold.
In the grand scheme of things, £1000 to seal the deal is a fractional % in the whole moving house category, and I wouldn't want to lose the sale over it!
Thanks for the context. You had a pretty horrendous time it sounds.
As you say, my own experience is almost insignificant in comparison but it has made me aware of how crooked this process is.
We are absolutely not going to jeopardise a sale for the sake of 1k. But if this helps anyone else be aware of the pitfalls then it was worth posting.
As you say, my own experience is almost insignificant in comparison but it has made me aware of how crooked this process is.
We are absolutely not going to jeopardise a sale for the sake of 1k. But if this helps anyone else be aware of the pitfalls then it was worth posting.
christhreadgill said:
Similar tale, albeit not identical, when selling my leasehold flat. Ground rent was £250pa, but when the law changed for all new builds to be free, I was trying to sell my flat. I sold it 6 times in 18 months, each time falling through as the purchaser solicitor kept wanting to change it from £250pa to £0.
In the end I had to pay for a Deed of Variation, and "buy out" the clause in my contract for £5k (on a £190k flat) to even get the final buyer to entertain going all the way to signing of contracts.
Took it back to the original developer who washed their hands with it, as they "sold" the site onto their management company. Even went back to my original purchasing solicitor and they wash their hands with it as it technically isn't illegal on a "used" property.
The entire process is crap, and subsequently will never buy a property with any form of independent management involved in any capacity, and certainly will be steering my daughter away from buying anything that isn't 100% truly freehold.
In the grand scheme of things, £1000 to seal the deal is a fractional % in the whole moving house category, and I wouldn't want to lose the sale over it!
So it cost you £5,000 to buy out a forever £250 annual charge? (i.e. 5%) Seems reasonable to me.In the end I had to pay for a Deed of Variation, and "buy out" the clause in my contract for £5k (on a £190k flat) to even get the final buyer to entertain going all the way to signing of contracts.
Took it back to the original developer who washed their hands with it, as they "sold" the site onto their management company. Even went back to my original purchasing solicitor and they wash their hands with it as it technically isn't illegal on a "used" property.
The entire process is crap, and subsequently will never buy a property with any form of independent management involved in any capacity, and certainly will be steering my daughter away from buying anything that isn't 100% truly freehold.
In the grand scheme of things, £1000 to seal the deal is a fractional % in the whole moving house category, and I wouldn't want to lose the sale over it!
I owned 2 Westbury houses which later became Persimmons.
RMG did the management. Its verging on criminal what they do.
I will never own a house with a management company again as its just way too much hassle.
As for the clause - yes we also had this.
On our estate we had about 20% of owners that had not paid the fees for over 10 years! At each AGM it was brought up and RMG said they were not taking action because the court process would be too expensive. Instead they would recover the money at the time of sale by not issuing the sellers packs.
Mean while everyone else had to cover the higher costs. Thats just tip of the iceberg.
We sold 2 years ago and it wasn't an issue back then - but our buyers were highly motivated and I think they were porting an existing mortgage.
RMG did the management. Its verging on criminal what they do.
I will never own a house with a management company again as its just way too much hassle.
As for the clause - yes we also had this.
On our estate we had about 20% of owners that had not paid the fees for over 10 years! At each AGM it was brought up and RMG said they were not taking action because the court process would be too expensive. Instead they would recover the money at the time of sale by not issuing the sellers packs.
Mean while everyone else had to cover the higher costs. Thats just tip of the iceberg.
We sold 2 years ago and it wasn't an issue back then - but our buyers were highly motivated and I think they were porting an existing mortgage.
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