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Ask Joshua Your Own Question
Joshua, Lawyer
Category: Property Law
Satisfied Customers: 30009
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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My question is as follows: I'm looking to buy a freehold

Customer Question

Good Evening,
JA: Hi. How can I help?
Customer: My question is as follows: I'm looking to buy a freehold property in London with a commercial tenant. I've looked at the lease and before I bring this to a commercial conveyancing solicitor I'd like to clarify certain things. The building tenant is a bank. I've looked at the lease and under parties of this lease, the tenant is the bank occupying the property however the landlord is another bank. I'd appreciate some clarification on this subject matter.
JA: Because laws vary from place to place, can you tell me where the property is located?
Customer: London
JA: Has anything been filed or reported?
Customer: What do you mean by that?
JA: What confuses you?
Customer: Has anything been filed or reported? Ask in what? as *
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: No, thank you.
Submitted: 14 days ago.
Category: Property Law
Expert:  Joshua replied 14 days ago.

Hello and thank you for your question. My name is ***** ***** I will be very pleased to assist you. I'm a practising lawyer in England with over 15 years’ experience. Please be aware that although I will endeavour to reply to you promptly, I am also in full time private practice and so I may not be available to respond immediately and it may also take me a few minutes to prepare a reply. The site will notify you as soon as I respond. I look forward to working with you to answer your question fully.

how may I assist you in relation to the above. I am grateful for the brief narrative you have provided. You have some questions in relation to the same please?

Customer: replied 14 days ago.
I might elaborate depending on the answer I get.
Expert:  Joshua replied 14 days ago.

thank you. it is a little difficult to answer the above because I'm not quite sure what your question is. the closest thing I can see to a question above is a request for "some clarification on the subject matter". Are you able to kindly be a little clearer on what it is you would like to know please?

Customer: replied 14 days ago.
Whilst conducting due diligence on a commercial property, something in the lease has caught my attention. The tenant is a well-known bank, however, the landlord stated in the lease isn't the freeholder of the building, instead, it's another bank. Is there an explanation to this?
Expert:  Joshua replied 14 days ago.

thank you for the clarification. There are two potential obvious explanations that occur to me. The first is that there may be what is known as a head lease. It is not at all uncommon for the freeholder of the building to grant a lease to another party with a right to sublet either the whole of the building or parts of the building as applicable. That third party may then subsequently sublet part or all of the building to someone else ( a sub tenant) resulting in an arrangement where you have a freeholder -> Head landlord -> tenant.

The other possibility is that the freeholder's title has been repossessed by a lender (a bank) and they have chosen to retain the property rather than sell it.

my suspicion is the first explanation is the more likely of the two but enquiries would need to be made and if there is a head lease, you would also need to obtain a copy of it to see if there are any provisions in it which might affect your lease

Customer: replied 14 days ago.
If the freeholder (a company with only one director and one member) is selling the property as a freehold would the second option apply?
Expert:  Joshua replied 14 days ago.

It possibly could it for example the bank has repossessed an underlease so you have for example freeholder -> Head landlord (repossessed now owned by bank that acted as lender to original head landlord) -> tenant.

However the first scenario is the much more likely of the two

Customer: replied 14 days ago.
Right, I see. Is there any way to find out if the property has been repossessed?
Expert:  Joshua replied 13 days ago.

You can look at the title for the head lease and see if there is evidence of a prior mortgage. from your perspective, if you are buying the freehold it is of little consequence if the property has been repossessed as rent will still be owed to you as freeholder either via the head landlord or by the sub tenant directly depending upon the circumstances. You should be able to ask the marketing agent for details and an explanation as regards ***** ***** have found

Customer: replied 13 days ago.
Perfect, you've answered my question. You also touched on the rent which was a concern for me. Let's say the rent is £50,000 per annum do I as a landlord get the full amount?
Expert:  Joshua replied 13 days ago.

You would receive whatever rent is specified in the headlease if you are buying the freehold. Whatever goes on in terms of any subleases under that in terms of rent is a matter between the sub- landlord and subtenant(s)

Customer: replied 13 days ago.
Right. The lease I have between the two banks (1st bank - landlord & 2nd bank - tenant) doesn't say sublease. It just says lease.
Expert:  Joshua replied 13 days ago.

It doesn't require to say sub lease to be a sub lease. determination as regards ***** ***** is a sublease or not is made by a review of the title. If you are experienced in looking at property titles, there is no reason you cannot do this yourself by obtaining copies of the relevant title documents from the land registry and following them through. It is not a straightforward task if you are not experienced in doing so and if you are not confident in reviewing title documentation, then you may need to consider retaining a solicitor to review the title and explain it to you or of course more simply, you can civilly asked the marketing agent to explain the structure as they should have looked into this prior to marketing the property

Customer: replied 13 days ago.
Right, thank you for your time.
Expert:  Joshua replied 13 days ago.

I'm glad the above answers all your questions for now. If you have any follow up questions please revert to me.

Customer: replied 13 days ago.
A small side note I forgot to mention. If you're looking at the title, what should an indication of a sublease be?
Customer: replied 13 days ago.
I'm looking at it right now and there isn't any mention of a sublease or even the bank stated as the landlord in the lease
Expert:  Joshua replied 13 days ago.

essentially, you start with the freehold title and then look to see what leases if any are noted in the charges register. You can obtain a copy of the leasehold entries for that leasehold title again repeat the process. Any leases that appear in the charges register of the leasehold title will constitute subleases. Of course, it isn't or is quite straightforward is that as some leases are not registered as leases under seven years do not need to be registered and accordingly additional enquiries can sometimes be required

Expert:  Joshua replied 12 days ago.

I trust the above was of assistance and that you do not have any follow up questions for now. If there is anything else I can help with please reply back to me though.

Expert:  Joshua replied 11 days ago.

Thank you again for visiting JustAnswer and see you again in the future I hope.