Legal Requirements of a Lease
Legal requirements in
respect of a Lease are set out under the Council for Lenders' Guidelines. These guidelines are sometimes interpreted
differently by Solicitors although not as much as they used to be. This section deals with these guidelines and what
is required of a Lease.
What standards of Leases are there?
In
our experience there are three standards of Leases:
- Leases
which are of an extremely high standard and conform to every requirement of the guidelines. Most modern Leases in big
city centre developments are of this standard.
- Leases
which in some respect do not conform to the Guidelines but will be acceptable if an Indemnity Policy is obtained (a special
type of Insurance Policy)
- Leases which are drawn so badly that
there would be difficulties in obtaining a mortgage and the property is therefore unsellable. This is extremely rare.
How long should a Lease last for?
The lease should be at least the mortgage term and 30 years. However, we
would normally hope for a longer lease than that. In addition, bear in mind that
a Lease is more expensive to extend if there is less than 80 years outstanding.
Should all Leases in a block be the same?
They should be the same or similar.
What does "Absolute Title" mean and should I be worried if I don't
have
it?
This type of ownership guarantees
that the Landlord has the ownership to
grant the Lease
and is the owner of the Freehold Title.If the freehold title was
missing or was inadequate at the time the Lease was first registered,
this is
called Good Leasehold Title. This type
of Lease ownership is common in
leasehold houses in Northern
cities like Sheffield.
Just because the Lease does not have Absolute Leasehold Title, it does not
mean it is entirely defective although you should only purchase this type of
lease if:
a. Your Solicitor confirms that the Title is acceptable;
b. You have obtained an Indemnity Policy (a type of Insurance), to protect
against any future problems that may arise.
