under lease?

[tali122]

what are the disadvantages (if any) of a buying a property that has an "under lease" on it?
thx

[Eve]

Is it a residential property? Are you buying the freehold or the Leasehold (prob more likely here)

There will be a freehold title which is the "superior" title to the particular piece of land and may involve more land than just the bit you are buying.

The freeholders will have granted a Lease of all or part of the land to say Mr X for a certain amount of years. The freeholders still retain their freehold title and become Mr X's landlords.

Any leases granted out of the Lease to Mr X will be underleases. Again this can be for the whole or part of the land and wil be for a term of less than what was given to Mr X (otherwise it is what we call and assignment of Mr X's lease ie taking Mr X's lease over).

So you have.

Freehold ->Headlease (Mr X) ->Underlease

It depends what you are buying, in this case I will assume that it may be the Headlease (Mr X's lease) if it is subject to an underlease.

If this is the case then you would be what we call the superior Landlord (Underlessor) to the Underlessee (tenant/owner of the Underlease).

It very much depends on the contents of the leases involved and the circumstances. Your legal advisors should be able to advise you of your obligations under each of the relevant documents before and at completion and your future obligations.

These often relate to ground rent which can be nominal if residenitial leases, even a peppercorn.

[Eve]

There will often be rights granted and reserved which should be checked ie if you or the underlesses have any access rights over any part of your property generally or in certain circumstances such as repair and maintenance.

You should also check all the relevant consents have been obtained under the lease and that your solicitor serves any notices required under the lease (eg notice to the freeholders of your ownership) which may attract a fee.

There may be restrictions which you should be aware of as well for example if the use of the property is restricted or if consent is required from the freeholder for any alterations to the property (important if you are thinking about any alterations or building works).

Make sure you get and keep a copy of all the documents along with the report on title you should get from your legal advisor so you can refer to it whenever you need it.

Hope this helps, if you can give me some more info I may be able to help some more.

[tali122]

thanks for info- it is a residential terraced property , further info i had was this - it had a lease which expired and then became a under lease , the owner of the lease was/is the lord mayor and yes a nomoinal rent of �5 per annum was mentioned - i find it all rather complex and confusing , my solicitor is checking it out but i wanted a 2nd opinion here - any further info welcomed

[Eve]

I'd check with your solicitor about it as to the specifics as not sure if I can advise you generally on the info given.

x