Acting on instructions from a client who had spotted a new-build long leasehold commercial investment opportunity in West London, we began investigating the title to an office unit in a mixed commercial and residential development.
Our client was assured by the vendor that it would be a simple purchase as it was the penultimate unit to be sold in a large scheme, the bulk of which had been completed and sold over the preceding three years. We were given the usual twenty-eight days in which to exchange contracts by the vendor’s agent. Our investigations quickly revealed that the title to the development contained significant defects and there were a number of fundamental questions, which the vendors appeared unable to answer.
Coupled with this, parts of the proposed 125 year lease of the unit in question would also not have been satisfactory to a commercial lender. Whilst the vendor continued to insist that other units had been sold in the past without difficulty, we had to warn our client of our concerns, not least because he was proposing the place the property in his SIPP. Whilst our client did not require a mortgage for the purchase, we were bound to advise that any future purchaser might well do so and that this would make the unit difficult to sell. Our client was nevertheless keen to continue with the purchase as he was very happy with the location, design and finish of the unit in question. We therefore set about rectifying the existing title defects and redrafting the lease in an acceptable form. It took us considerably longer than the 28 days originally anticipated to persuade the vendors to rectify the problems, agree to our proposed re-wording of the lease and answer some fundamental questions concerning the development. We did, however, achieve a position that we were comfortable would have been satisfactory. In the meantime, however, the circumstances of our client’s business changed and, with the advice of his IFA, with whom we worked closely, it was decided that the proposed purchase was not necessarily the best investment and our client accepted that he had been driven by his heart and not necessarily his head. The economic climate did not really favour the investment and the difficulties we had with the vendor were indications of future problems, as it would ultimately become our client’s landlord under the lease it proposed to grant. Although it was disappointing not to see the transaction through to completion, a combination of factors including time to reflect on our advice and the recommendations of our client’s IFA potentially saved our client making a purchase which he could well have ended up regretting for a long time.