My house is a component leasehold – however I solely discovered after 17 years

Last year, my wife and I decided to sell our home and buy my parents’ house, as they were downsizing.

We put our cottage, which we had lived in since 2006, up for sale at £289,000 and had an offer from a neighbour which we accepted.

But a few days before the move, my solicitor informed me that the buyer’s solicitor wanted an issue with the title clarifying and had written to the Land Registry. Once they replied, my buyer pulled out of the sale on her solicitors’ advice.

We went ahead with our move anyway, and a few months later found another buyer. As the home had been on the market a while, this was at a lower price of £264,000.

Yet again, the problem with the title came up. My solicitor then looked into it and discovered that there was in fact a defect with the title.

I was always under the impression the property was freehold, which it is – but it turned out the land to the front and rear had two short leases on it.

The conveyancing solicitor I used to purchase the property missed this, which in my mind is a serious error. 

These two leases only had around 50 years left on them, and my new buyer pulled out as her lender would not provide a mortgage.

I contacted the solicitor that acted for me when I purchased the cottage. It said it was only legally required to keep paperwork for six years, so the records had been destroyed and it could be of no further assistance. 

It also said any legal claim would be statute barred at 15 years, and it had been 16 years since they acted for me.

I then contacted the Legal Ombudsman, which also said it couldn’t investigate because the documents had been destroyed.

I spent the next 12 months trying to purchase these leases. I finally bought them at a cost of £3,000, and sold the cottage for £255,000. My house stood empty for nearly two years while I still paid council tax, utilities and insurance.

It has cost me £40,000 in expenses and depreciation and caused a lot of stress.

Given many people stay in their home for decades, I don’t think this six-year paperwork rule makes sense. How is this fair, and is there anything I can do? M.S

Helen Crane of This is Money replies: Discovering that your home is not what you thought it was when you come to sell it is a nasty shock, but unfortunately it happens all too often. 

The problems with leasehold property have been well publicised in recent years. Generally, if a lease falls below around 80 years in length, the value of the home plummets because, when it reaches zero, the freeholder is able to take it back.

They may grant an extension, but are under no obligation – and this will come at a cost to the homeowner.

While this wouldn’t apply to your home itself, the prospect of not owning the land around the property, which is used to access it, would throw up all kinds of legal issues. This is why your first two buyers were advised not to go ahead.

The solicitor you hired when you bought the home made a serious mistake in not spotting this, and one that has cost you tens of thousands to address.

I completely understand why you are aggrieved at your former solicitor. You think it is their responsibility to compensate you for this grave error – but so far, the law has not been on your side. 

When lawyers make a mistake, their clients can bring what is called a professional indemnity claim. If a court agrees that they were negligent in their duties, they can be made to put things right for the client financially.

But as you have found out, lawyers are only required to keep records for conveyancing cases for six years – meaning such a case would be difficult to prove.

I spoke to three legal experts to ask their advice.

Was the conveyancer negligent?  

Peter Barnard, partner in the commercial litigation team at JMW Solicitors LLP, replies: I am sorry to hear of your predicament. In circumstances where the solicitor you used to acquire the property did not advise you of the defects in the title at the point of purchase, you may have a claim for professional negligence. 

These are claims where a professional, in this case a solicitor, fails to perform their services to the required standard.

In order to succeed with a claim in negligence, you would have to prove that the solicitor owed you a duty of care, that duty of care was breached, the breach was causative of you suffering a loss and that loss is recoverable.

It is likely that the failure to properly assess the extent of the land you were acquiring would amount to a breach of duty and that the breach resulted in the loss you have suffered. 

A court would likely assess that loss as the sums you have expended in acquiring the leases and potentially the differential between the sale price achieved and the sum that you had originally agreed to sell it for.

Can he claim compensation from the conveyancer?   

Peter Barnard replies: Despite the above, there are a couple of difficulties in terms of your circumstances which are likely to be insurmountable barriers to you bringing a claim. The first is that the original conveyancing solicitors’ file no longer exists. 

This will make the position almost impossible from an evidential perspective, as any solicitor acting on your behalf would need to have access to the original conveyancing file in order to show that the original solicitor breached their duty of care. 

Claims in tort can be subject to an extended limitation period of a further three years pursuant to section 14A of the Limitation Act 1980, where, at the time of the cause of action accruing the claimant does not have knowledge of all of the material facts. 

However, even this extension is subject to an overarching ‘longstop’ period of 15 years from the date of the negligent act. 

In the circumstances, your claim will be statute-barred, bearing in mind you bought the property in 2006. 

There is no other recourse available to you as the Legal Ombudsman caters for service complaints rather than losses suffered as a result of negligence. 

I appreciate that this is frustrating, and it is not at all uncommon for these issues only arise when property owners come to sell.

Why do these time limits exist?  

Ed John, Property litigation partner at Keystone Law, replies:  Limitation of claims (sometimes referred to as claims being ‘statute-barred’) is a policy decision that legal claims have a shelf-life to allow people to move on and recognises that unfairness is also caused by claims resurfacing decades after the events occurred.

The Lenders Handbook requires conveyancers to keep their file for at least six years after the mortgage, and it is normal for files to be destroyed after that time has elapsed.

Not all problems with title are subject to limitation. Where, for example, the Land Registry has made an error in the boundary line on the title plan or in the register, an application can be made to the registrar to rectify it and to pay compensation for the error.

This does not help in your case, but if a homeowner was to discover building defects which make a home unfit for habitation years after they purchased it, the limitation period has recently been extended. 

The limitation period was formerly six years from the date of completion of the works. This limitation period is now:

• 30 years for any dwelling completed before 28 June 2022; and
• 15 years for any dwelling completed accruing after 28 June 2022

What to do if you ARE within the time limits

Philip Askew, partner at Stone King, says: To help others who may find themselves in this situation, these are the next steps I would have advised you to take had you been within the 15-year time limit to make a claim. 

Your best first step would be to speak to your lawyer acting for you now, who will be able to explain your options to resolve the issue in addition to cost and time implications of each. These would then need to be communicated to the buyer or lender. 

One solution could involve indemnity insurance, which may not always be possible or acceptable to future buyers or lenders but it is the quickest and often most cost effective way of addressing title issues. 

If your current situation does not subject you to a specific deadline, your lawyer may suggest an alternative albeit more time consuming option. 

In either scenario, you should gather details of all costs you are now incurring due to your conveyancer missing the issue at the time of purchase and approach the firm that acted then, by contacting their complaints partner. 

They will have to review the file if still available, and suggest a solution where they accept liability, often to compensate you for your losses. 

If the firm is uncommunicative you may approach the Legal Ombudsman and consider other methods of pursuing a complaint further.

What to check in the title when you buy a home 

Ed John replies: It is a good idea when you buy a new property to check carefully that it is as expected. 

Where there is any doubt about the ownership, title, access or boundaries, asking your solicitor to double-check where the boundary lies can be a useful exercise.

When preparing a house for sale, your solicitor will usually prepare a ‘title pack’ for prospective purchasers, and anomalies can sometimes arise at that stage. 

If a sale falls through for any title-related reasons, check the position with your solicitor as it may be better to withdraw the property from the market and re-advertise it when the situation has been rectified.