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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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We purchased a freehold wing of a stately home 3 months ago

Customer Question

We purchased a freehold wing of a stately home 3 months ago which has a covenant attached dating back to 1988 containing both restrictive and positive elements dealing with the maintenance and management of the estate. We were happy with the reasonable Estate Service Charges shown of 500GBP per quarter and managed by a reputable firm, and purchased the house.

However, unknown to us a year prior to our purchasing, a portion of the estate known as "The Grove", which is a 13 acre area of woodland adjacent to our freehold property for which we have access for "Peaceful Perambulation", and are to be maintained in their "current condition" were sold by the Estate to our very wealthy neighbor. These maintenance costs are to be split between 3 freehold houses comprising the main building. The same neighbor has also, prior to our purchase and unknown to us, purchased the other house affected by the maintenance fees, so he now owns 2 of the 3 houses in addition to the Grove. Prior to the change of Grove ownership, costs for maintenance have typically been (in addition to the charges above) around 2 - 3,000 pounds per year. The previous owner of our house did not declare any disputes, or change of ownership or a second service charge for the Grove but despite the huge additional costs, we could have lived with them but we are taking legal action against the previous owner for non declaration.

However, our very wealthy neighbour, who purchased the Grove has embarked on an expensive and extravagant plan of improvement and restoration and on September 29th of this year, presented us with the budget for the next couple of years. He plans to restore two derelict grade II listed structures which we didn't know existed - an old unused water tower and well, rebuild the corner of the ha ha, complete the fencing, replace the gravel, and metal edge the lawns in addition to the basic lawn maintenance.
In summary, he expects us to contribute over £33,000 over the next two years to these projects.
Our guess is that this is why the previous owner chose not to declare.
1. Our neighbor has told us that since there is no provision for apportionment in the Covenant, then we are obligated to pay for the outstanding balance owed by the previous owner of 3,000 Is this so?
2. Our neighbour says that he can spend what he wants when he wants on whatever project with complete autonomy and no accountability. We need to challenge a number of these costs, particularly the restoration of his buildings. Do the service charge laws fall under the Landlord Tenants Act and do we need to challenge the validity and reasonableness within 30 days as stipulated? Or would it fall under Estate Rent Charge?
I understand that there was no separate Covenant or Estate Rent Charge documents with our neighbour as the new owner of the Grove listed with the house title deeds at the Land Registry when we purchased. This may have alerted us to the presence of a further set of service charges. Our neighbour says that it was a Land registry mistake, but that we now have to sign one with him.

Obviously we have no choice but to sell the house and lose the 25,000 pounds we paid in stamp duty, but our fear is that our neighbor won't ring fence the service charges or initiate a sinking fund for major works, and therefore we won't actually be able to sell the house, and will become bankrupt as we don't have enough money to pay the service charges or legal fees. We are a bit desperate, and now getting quite physically ill, and fear that our neighbor may have an agenda to buy our property for a fraction of its worth.
Any advice would be very gratefully appreciated.
Submitted: 3 years ago.
Category: Law
Expert:  Joshua replied 3 years ago.

Joshua :

Thanks for your question. Please kindly RATE my answer when you are satisfied

Joshua :

Do you have access to the transfer deed containing the rent charge provisions please? If so could I trouble you to kindly reproduce the same for me here?

JACUSTOMER-atqpain8- :

I have the Official copy of the register of title from the land registry. which essentially alludes to the Covenant dating back to 1988, and gives a summary of the schedule of restrictive covenants (not the positive ones). We also have a copy of the original conveyance dating back to 1988 which is approx 30 pages long and includes the provision of service charges for the entire estate before it was split last year. We have a supplement to the Deed of Covenant between ourselves and the original owner which have not yet signed, but we do not have any service charge documents or supplements to the original Conveyance from the new owner of the Grove (our neighbour), which apparently should have been listed with the Land Registry when we purchased but were not. This is all we have, what do you need, I can see if we can get it.

Joshua :

Thanks. In order to assist specifically I would need to have sight of either the extracts of the (presumably) conveyance containing the rent charge obligations) or know the wording from them. If this is not possible I can still assist in a general manner but of course this may inevitably be of less use. to you. Would you let me know how you would like to proceed?

JACUSTOMER-atqpain8- :

I will retype the relevant extracts from the Covenant for you later. This may take a while, but I will try to do this by the end of the day. However, my very rudimentary understanding is that "positve Covenants" do not run with the land, and can only be enforced if there is an "Estate Rent Charge" attached to the title deeds and signed between the Owner of the Land and the Owner of the freeholder who has the benefit of the positive covenant. there was no such agreement attached to the title documents nor any Estate rent charge. We are not arguing that we should pay for maintenance such as mowing and landscaping services, but we do have to argue restoration of derelict listed buildings from which we derive no benefit. we also really have to be able to ring fence the costs so that both us and subsequent owners can budget and account for the additional major works. for the past 26 years with the previous owner of the land, the only things charged for were lawn and landscaping. I will type the details of the service charge portion of the covenant for you later. Thanks very much for your help.

Joshua :

Thanks. You are correct that positive covenants do not automatically run with the land with the exception of a rent charge which can be enforceable despite the above.

Joshua :

I look forward to sight of the wording from the same in order to assist you more specifically with this.

JACUSTOMER-atqpain8- :

Hi Joshua, I have been doing some research. It would seem that the original conveyance was a Compulsorily Renewed Covenant, so that registration of the title deed should not occur before the Covenantee is satisfied that the new covenant certificate is in place. However, our conveyancing solicitor successfully registered the title without doing this. Since the estate has now been split into two separate ownerships, in theory, there should have been two new covenants to be signed before the title deed should have been registered. We knew about the first one, and had seen the service charges relating to it, which were fine, but we were not aware of the second one (the new land owner of the Grove) which would have alerted us to the other set of service charges which are the ones we can't afford.

Joshua :

Thanks for the above. Unfrotunately there is a limit to what assistance I can provide beyond general information about rent charges and so on without at the very least the wording of the rent charge covenant(s) and ideally copies of the deeds themselves. I am not sure whether you have managed to locate them?

JACUSTOMER-atqpain8- :

Hi Joshua, I'm not sure the wording within the Covenant is relevant, it basically says that the original vendor (previous owner of the land in question) will maintain the Grove in it's current condition and the purchaser (original purchaser back in 1988) will pay a proportion of the maintenance. However, I do have a copy here of our sellers register of title.

JACUSTOMER-atqpain8- :

My understanding is that in order to enforce a positive covenant, there has to be a device within the conveyance which enables the burden to pass to successors in title. These are either: 1. Chain of indemnity, 2. Compulsory renewed covenants supported by a restriction, 3. Estate Rent Charge, or simply 4. reliance on the burden of benefit vs. burden.

JACUSTOMER-atqpain8- :

In looking at the title deeds, it shows the following under the section: Proprietorship Register: The Transfer to the proprietor (the last owner) contains a covenant to observe and perform the covenants referred to in the Charges Register and of indemnity in respect thereof.

JACUSTOMER-atqpain8- :

Am I right in thinking that this suggests that there is a Chain of Indemnity device? The only restriction on the Right of Disposal is as follows: RESTRICTION: Except under an order or the registrar, no disposition by the proprietor of the land is to be registered without the consent of the proprietor of the charge dated XXX in favour of Barclays Bank PLC ...

JACUSTOMER-atqpain8- :

I'm guessing this is simply an order to pay the mortgage first when selling the property.

JACUSTOMER-atqpain8- :

So it would appear that there is a chain of indemnity, and my understanding of this is that it is only valid if the original seller of the land is still the owner and is notoriously difficult to enforce. This leaves device number 4, the principle of benefit v. burden. We are actually OK with paying towards the benefits such as the shared driveway and even rights to "peaceful perambulation" in the Grove. However, my understanding of this principle is that it must "touch the land" and not include the buildings on the land.

JACUSTOMER-atqpain8- :

Our problem is that the new landowner wants to charge us for the restoration of two grade II listed follys within the Grove, and then because the Covenant states that the following years quarterly payment will be the sum of the previous years actual costs plus 10%, he is including major works in the calculation, with the result that over the next two years we would have to find 58,000 pounds.

JACUSTOMER-atqpain8- :

I suppose we also have the question of "maintenance in it's current condition" (this has only ever been simply lawn & garden care for the past 26 years) which suggests that even if we were liable for paying for them, the follys have not been maintained and therefore the covenant has been breeched?

JACUSTOMER-atqpain8- :

To sum up. We only bought the place in August, and were given no notice by the previous owner of any service charges , which while deceitful, it is very obvious now why she didn't declare as we would have never bought the place nor would anyone else. Clearly we can't stay here and we have to sell up and suck up our stamp duty losses of 25,000 pounds. However, we will never be able to sell the property with this level of service charge or with a Landowner who is under the impression that he can spend whatever he likes whenever he likes with no consultation.

JACUSTOMER-atqpain8- :

We would very much like to go to our neighbor(landowner) and basically say that if he is prepared to ring-fence the service charges so we can sell, we will pay our portion of everything he wants out of the proceeds, plus deposit say a thousand pounds to start a sinking fund for future major works so that this never happens to future owners of our property. Not a great deal for us, but we desperately need an exit strategy And if he is not prepared to do this then we will only pay for basic lawn and driveway maintenance going forward. What are your thoughts?

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