Common defects in a lease can include:
- Type of Title (ownership)
Most title is called Absolute Leasehold Title which guarantees that the Lessor has ownership to grant the Lease. In some cases you can only acquire Good Leasehold Title which means that the Lessor’s right to grant the Lease is not guaranteed, usually in cases where some of the documentation has not been registered at the Land Registry.
If the Lease is held as Good Leasehold Title then an Indemnity Policy will probably have to be obtained.
- No right of access or right for services
A flat requires rights of way over two different areas:
- Within the building
- Outside the building to the nearest public highway
If either is missing then an indemnity policy will be required.
Very occasionally there are no rights for services to cross other parts of the building and if this is the case an indemnity is required.
Defects that can occur in a maisonette could include:
- Where the landlord does not promise to enforce any breaches against other Tenants should the other Tenants default in carrying out some requirement under the Lease.
- No adequate provisions for repair or maintenance.
- Defects in Buildings Insurance Arrangements
If the building insurance arrangements are not adequate then this insurance will be required. However, normally, the reason why the Insurance arrangements are not adequate is because the landlords do not enforce requirements against other Tenants.
Blocks of flats will have one of the following arrangements with regard to buildings insurance:
- The freehold owner or Management Company insures the whole block and each Tenant pays towards insurance. This is the arrangement with almost all modern Leases and is the best arrangement.
- Each flat owner has to ensure his or her own flat. There is a covenant or requirement by the Freehold owner to enforce compliance with the Lease. This is not as good as the first option but no indemnity is required.
- Each flat owner has to insure his or her own flat and there is no covenant or requirement by the freehold owner to enforce compliance with the Lease. In this situation an Indemnity Policy is required.
- Absentee Landlord
There is a special policy that can be taken out if the Landlord doesn’t exist. Some mortgage lenders regard this as being so serious that it has to be reported to them. Almost invariably, the reason why the landlords do not exist is because the companies have gone out of existence.