Posts Tagged buyer
What You Need to Know About Lease Extension and Mortgages
Posted on November 10, 2011 | Real Estate Law.
If you live in a property that is a leasehold, rather than freehold, and are seriously contemplating selling up, there is a very important issue that you need to bear in mind. This is the length of time remaining on your lease. At first glance, especially if there are a number of decades left to run on the lease, this may not appear to be a problem. However, it is most likely that your buyer will be looking to take out a mortgage on your property; therefore, a leasehold or lease extension may be necessary if, as with most people, they need to take out a mortgage to buy your property.
Having carried out research on all the main banks and building societies in England and Wales with regard to mortgages and leasehold extension, it is quite shocking to see what the majority of these lending institutions require if and when they are able to offer buyers a mortgage on a leasehold property. As the majority of mortgages run for a period of 25 years, you would think that this would be the minimum term required to run on the lease, but this is definitely not what happens in reality.
Research reveals that the vast majority of lending institutions require a period of at the very least 55 to 60 years to run from when the mortgage commences. However, there are some lending companies that go way beyond this: in fact, one mortgagor required a minimum of 70 years left to run on the lease before even considering granting a mortgage. Furthermore some lenders have even dropped out of the market in lending on leasehold property entirely. This is where you may well need to seriously consider if you need to extend a lease.
You also need to be aware that lease extension is always more expensive once the remaining period to run falls below 80 years. This is because when any lease drops below 80 years, an additional premium [which is known as the "marriage value"] has to be paid to the landlord, on top of usual fees, in order to extend a lease.
If there is a period of less than 60 years to run on your lease, you may well encounter problems when it comes to selling your property. From the outset, the estate agent entrusted to sell your property is highly unlikely to point out the issues connected with leasehold properties. They tend to solely focus on the sale and steer clear of getting involved in such pertinent matters. In fact it’s quite remarkable how few estate agents know anything about leasehold extension.
It is not until a sale is subject to contract that this issue may rear its ugly head. The last thing you want is for a sale to fall through at this stage – but this is entirely possible if you fail to look into lease extension.
The Benefits of Consulting With a Real Estate Attorney
Posted on October 30, 2011 | Real Estate Law.
A real estate attorney can help you in a variety of related matters. Real estate may consist of agricultural, forest, brick, water, residential and commercial property. Well-informed lawyers know everything about any kind of property. They can advise you on matters concerning litigation, fraud, purchase agreements, leases, grants and concessions, and anything involving land legislation. A real estate attorney does not neglect any matter about land legislation, however small. They can help you with legal matters, as well as financial and business matters. Therefore, it pays to hire a professional to have him or her as a specialist legal consultant in a business. The Truth in Lending Act obligates creditors to disclose all the credit terms and borrowing costs of the creditor. The Board of Governors of the Federal Reserve System implements the Truth in Lending Act.
Congress created the Truth in Lending Act to accurately inform creditors of their credit costs and the exact provisions of credit loans. Many mortgagors are unaware of the exact provisions of the Truth in Lending Act and therefore this law is often violated because mortgagors are ignorant of it and their rights concerning the law. If there is a violation of the Truth in Lending Act, this can be a basis for rescinding the loan contract. Therefore, all mortgagors should carefully consult with an attorney to see if their creditors have faithfully complied with the law. The Truth in Lending Act came about because of many fraudulent acts by mortgagees on unsuspecting mortgagors that caused creditors to gain unduly at the expense of their debtors. Many mortgagors lost their properties because they were unaware of onerous terms in their mortgage contracts.
Therefore, to plug these loopholes, congress passed the Truth in Lending Act to curb abuses of mortgagees against their mortgagors. Since the passage of the Truth in Lending Act, mortgagors had a legitimate defense against being taken advantage of by their mortgages. Another important legislation that prevents further abuses in transactions is the Real Estate Settlement Procedure Act of 1974. Oftentimes contracts have many hidden fees that are not disclosed to the buyer at the time of sale. The Real Estate Settlement Procedure Act makes it mandatory for sellers to disclose any additional cost to buyers who may be unaware of these costs before the contract between them takes effect. Therefore, buyers will know of any additional costs they have to incur before buying a property. These additional costs encouraged the practice of kickbacks in real estate transactions at the expense of the buyer. The law reduced the amount of escrow to cover large deposits required in contracts.
Before the Truth in Lending Act and the Real Estate Settlement Procedures Act were passed, knowledgeable companies found many loopholes in the law that enabled its circumvention. Lawyers can spot a circumvention of those laws and advise the client of all the appropriate counter-measures that can be taken to avert any losses. Lawyers can inform you of your existing rights and the ways to counter the effective circumvention of the law. Real estate lawyers can review all your loan contracts and discuss all the options with you if a violation or circumvention of the law occurs so that you can rest assured that your rights are being protected.