When common sense advice is as important as legal advice when buying a leasehold flat with an absentee landlord

Before she had started looking for a property Mrs Klein had never heard of an Absentee Freeholder. In October 2006 Mrs Klein was excited about her offer being accepted on a leasehold flat on Wandsworth Bridge Road.   Having previously conducted the conveyancing on the sale of her son’s property in Hackney, Mrs Klein said that we had come highly recommended.  

During our first conversation outlining our fees Mrs Klein said that the property had over 900 years remaining on the Lease but that oddly the ground rent and service charge was not collected.   She said that she had enquired as to the level ground rent and service charge fees with the agent( her son had advised he to do this )  but they told her that there was no landlord for the property.   Identifying this issue of an Absentee Freeholder we advised her that we would look into this matter further.  

Mrs Klein was buying a ground floor flat and it was apparent from the agents’ particulars and plan that the agents had sent through that there was a large conservatory.   When the legal paperwork came through from the Seller’s lawyers it became clear that Mrs Klein was in fact correct and that this property did have an absentee freeholder.   The Seller had purchased the property four years ago, and during the sellers time of ownership there had been no communication whatsoever with the Landlord.   No rent or service charge had been collected and the Seller had arranged insurance on his flat alone.  

The Seller also indicated that the Landlord had missing for some time because when he purchased the property the Seller’s conveyancing solicitor had picked up on the problem and had taken out absentee freeholder indemnity insurance.   The person that the Seller had bought from had in turn owned the property for four years, again with no communication from the Landlord.

One immediate concern we had was the fact that the insurance was not taken out by the Landlord under the provisions of the Lease.   Just as worrying was the fact that the Seller had arranged the insurance himself as opposed to arranging the insurance with the other two flat owners in the building.   This aroused some suspicion.   The concern we had was that as it made more sense for one policy to be taken out and split between the three of them, why had the tenants collectively not insured together.   Could this be because the three tenants in the building did not get on, in which case if there was going to be any major works required to the building then there could be difficulties in agreeing the works and collecting the monies ? If our pessimistic fear proved correct there was a danger that the building as a whole could fall into disrepair.  

One other issue was highlighted fairly quickly by the Fridaysmove conveyancer.   The plan in the Lease outlining the extent of the property did not match the plan in the agents’ particulars.   The conservatory was not shown on the original lease plan.   Further investigations revealed that the Seller had added the conservatory two years ago.   Although there were no issues in terms of planning permission and Building Regulation Approvals, the Lease did contain an obligation to obtain the Landlord’s consent for any external alterations to the property.   Clearly consent could not be obtained because the Landlord was absent.  

Whilst the Seller maintained that there were no concerns with the insurance arrangements and that there were no disputes with the neighbours, Fridaysmove took a common sense approach and suggested that Mrs Klein attend the building and try and speak to both the owners of the other flats in the building to seek to find out their attitude towards taking out one insurance policy.   It was also suggested that she speak to them about the possibility of acquiring the freehold via a Vesting Order through the County Courts.   Finally, that she should speak to them about the possibility of painting the exterior of the building which her surveyor had indicated would need to be done within the next couple of years.  

Mrs Klein agreed that this was a good idea but much to her surprise she found out that both the other flats in the building were let to students.   As and when she did manage to track down the owners of the two properties they said that as the properties were let they had no interest whatsoever in acquiring the freehold or indeed contributing towards painting the outside of the property.   Quite rightly this caused Mrs Klein major concern.  

When we discussed the fact that indemnity insurance could be obtained to satisfy her lender over the absentee freeholder issue, we also pointed out that notwithstanding the absentee indemnity insurance this insurance would not help her in the event that the absentee freeholder reappeared and the property had to be put back into its original position due to the lack of consent for the conservatory.   Mrs Klein only wanted the property due to the conservatory and even now she was having second thoughts because the two other properties in the building were tenanted.   After discussing the matter with her son, Mrs Klein decided to withdraw from the property and was successful in exchanging on another flat in the area six weeks later.