The problems caused by Estate Rentcharges has been a hot topic for property lawyers for the last few years and despite much talk about reform, they continue to be a significant issue for homeowners and their lenders. Many freehold titles (predominately on housing developments) protect amounts due for repairs and maintenance to Management Companies/a third party by reserving an Estate Rentcharge in their favour. Other titles may reserve a nominal payment to enforce positive covenants.
The concern for lenders is that under s.121 of the Law of Property Act 1925 where the rent charge is overdue for more than 40 days, the Management Company/third party can create a statutory lease on the property without the lender’s knowledge. The lease will take precedence over a mortgage, leaving the lender with a severely diminished or effectively worthless security.
Stewart Title Freehold Estate Rentcharge (Lender Only) Policy
Whilst the problem continues, increasingly lenders are looking for protection against these types of matters and Stewart Title can help.
“After discussions with property lawyers acting for homeowners and lenders, we have introduced a Freehold Estate Rentcharge (Lender Only) Policy,”
said Stephen Smith, Stewart Title’s Country Manager for the UK.
“Being able to offer a lender the security of this policy can mean that funds can be advanced, and your client can complete their purchase speedily and safely.”
With premiums starting from £16.80 (including IPT), this policy provides protection against loss by the lender if a statutory lease makes it impossible for them to adequately enforce their security over the property.
How to Order
The Freehold Estate Rentcharge (Lender Only) Policy is available on Stewart Title’s self-issue platform Stewart Online Solution or from the underwriting team at quotes@stewart.com.
For more details or to request a specimen policy, please contact us on 02070107820 or robert.kelly@stewart.com.
This article was submitted to be published by Stewart Title as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.
