Despite measures such as the Leasehold Reform Act being taken to protect Leaseholders, there are still a lot of issues facing flat owners in the UK.
One of the most prominent concerns is forfeiture, especially when a forfeiture clause is involved.
In her latest article, Leasehold Property Specialist Hannah Faith outlines how a Mortgagee Protection Clause can be used to reduce the threat of forfeiture.
What is a forfeiture clause in a lease?
In leasehold property, a forfeiture clause gives your landlord the right to terminate the lease. This means that they can take possession of your property.
Forfeiture usually happens if the service charge or ground rent has not been paid within the timeframe set out in the lease, often 21 days of being demanded by the landlord.
The Landlord can also forfeit the lease if any covenants (clauses which restrict you from taking certain actions) are breached.
What can tenants do about a forfeiture clause?
As we’ve discussed, a forfeiture clause can result in tenants treading on thin ice trying to avoid lease termination.
The last thing you want is to have the property repossessed after missing one payment or breaking a covenant that you didn’t know existed!
However, you can protect yourself by getting a Mortgagee Protection Clause included in the lease.
What is a Mortgagee Protection Clause?
A Mortgagee Protection Clause forces your landlord to give your lender 28 days’ notice before they take steps to repossess the property.
Your lender can then give you the heads up and either rectify the breach themselves or ask you to do so.
Do you need a Mortgagee Protection Clause?
A Mortgagee Protection Clause is often required by lenders.
Without the clause in place, your landlord can commence proceedings to forfeit the lease.
How to get a Mortgagee Protection Clause
You can get a Mortgagee Protection Clause included in the lease by using a Deed of Variation (DoV). This would vary the lease to incorporate a Mortgagee Protection Clause.
A Deed of Variation can also be used to reduce your ground rent, making things more affordable and reducing the chance of forfeiture.
Read our dedicated article on reducing ground rent here.
How much does a Deed of Variation cost?
This can depend on many factors, such as how long it takes for you and your landlord to agree to the Deed of Variation and/or how many things are being varied within the lease.
For a more accurate estimate, you can get in touch with our bright Leasehold Property Team to discuss your specific circumstances here.
Can a freeholder refuse a Deed of Variation?
If you’ve decided on getting a Deed of Variation, you’ll need to contact your freeholder.
The best way to do this is by looking for your landlord’s contact details in your most recent ground rent or service charge demand.
For further guidance on contacting your freeholder, you can read our dedicated article here.
Or, if you want further guidance or have any questions, you can get in touch with our team below.
Specialist Leasehold Property Solicitors – Deed of Variation
At Frettens, our specialist Leasehold Property Team are one of the largest on the South Coast and they would be happy to assist you.
Our experts can review your lease for you and assist you in getting a Deed of Variation to either vary your ground rent or get a Mortgagee Protection Clause included.
You can get in touch on 01202 499255 or by filling out the form at the top of this page. We offer a Free Initial Appointment for all new clients.
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