Compensation for amending legal title following home builders error

[wabisabi]

Hi everyone,

I recently purchased a new-build property from one of the big developers. The property is subject to an annual estate charge, and here's where the issue lies.

When I signed the transfer title documentation, it was clearly stated that the main road on the development would be put up for adoption by the local council. However, since then, the developer has changed their plans, and now the main road will be maintained through the estate charge.

Naturally, I was concerned about this unexpected change, especially given that the original legal paperwork clearly indicated that the main road did not form part of the charge, and therefore, I believed I was not liable for it. In response to my queries, the developer has suggested amending the legal documents to "correct" this error. They've also agreed to cover all legal fees associated with making this amendment.

My solicitor says that the discrepancy in the title at present may cause some issues if I were to sell the house at some point in the future.

My question is, what kind of compensation or fee should I request from the developer for agreeing to this change? By accepting this correction, I will now be liable for an additional charge for the road each year. Initially, I thought it might be fair to ask them to cover this additional amount I'll be paying for the road for the entire time I own the house.

After discussing this with a friend, they suggested that the developer will likely want me to enter into a Non-Disclosure Agreement (NDA) and if so I should ask for a higher fee if they want me to enter into an NDA. On the flip side, I am quite keen to let my fellow neighbours know about the issue in case this might be the same for them.

Any thoughts on what a reasonable compensation for this unexpected change might be?

[R0b]

Hi,

I think this may be a little more complicated than you might think or perhaps what your solicitor has told you, thought I'm curious what your solicitor has said that might cause issues in selling the property at a later date. I'm not a property expert but I've listed a few things that you might want to consider or take into account and/or discuss options with your solicitor or seek further separate advice on the matter.

1. If you have already completed the sale, why would you want to amend it so that you are now going to have to incur additional cost over the lifetime of you living at that property? There could be a number of reasons why the developer has decided to keep the road private but commonly it is due to cost and expense of having to meet the required standard for the road to be adopted and/or any other conditions the local authority requires (known as a Section 38 Agreement). This gives me two immediate thoughts:

a. The developer is in breach of contract and/or misrepresentation. You could take the legal route and either sue for damages or under a claim for misrepresentation you could seek to unwind the deal and revert back to your original position prior to buying the house. Property disputes are inevitably expensive so you should check if you have any legal expenses cover that might help you on this though are normally capped at £50-£100k.

b. You could refuse to do anything and keep things as they are and therefore not having to pay any service or other maintenance charges. There are likely to be legal consequences of that, such as you being legally locked out of your property as typically you have no right of way over a private road. Equally, the developer may take you to court/tribunal to have your deeds amended through some legal right so that they get what they want but there would probably have to be something in law that trumps your contract because that would be the starting point.

2. You are right to raise the issue of having to pay unexpected charges but I think it goes beyond that. You are effectively responsible collectively for maintaining the road (known as a 'frontager' i.e. someone who fronts the road). Questions you might want to ask/consider:

a. Who is responsible for deciding how and when the roads are maintained? Will this be a private management company, or a residents' association or will this be apportioned between each owner and in the case of this last point, how are the maintenance costs are shared. Will individuals be protected from liability to carry out repairs unless each of the owners equally agree?

b. Insurance coverages. You may want to take out private road insurance to protect against third party's claiming injury or damage to their vehicles if the road is in disrepair.

c. Will there be street lights on the roads and if so, is the lighting adequate? What about the size of the road, is it large enough to fit larger vehicles such as bin lorries? I've heard of some instances where the roads are too narrow for bin lorries to turn into and so each of the residents have to trek their bins up the road, or hill, to the nearest available road where they can be emptied.

After discussing this with a friend, they suggested that the developer will likely want me to enter into a Non-Disclosure Agreement (NDA) and if so I should ask for a higher fee if they want me to enter into an NDA. On the flip side, I am quite keen to let my fellow neighbours know about the issue in case this might be the same for them.

Until you sign the NDA, it's fair game so you are under no legal obligation to keep quiet until it is signed. If you do agree for any corrections to be made, you may want, to consider taking advantage of the situation by suggesting that due to the inconvenience this is causing you especially financially, you would like to be exempt from all future maintenance charges or pay a capped amount annually such as £100 which will be inherited by your successors (though that could be negotiated). Failing that you could suggest you will notify other owners who have concluded the sale of the issue which may cause more of a headache for them if there has been a number of sales already completed.

Really depends on the bargaining power you have on this but I would suggest that you do take some proper legal advice on the merits of any breach or claim and if it is worth while pursuing or using that as leverage to negotiate yourself out of any fees. As long as the language is clear, I don't see why you can't try to get what you want. As for a financial compensatory amount, that really depends and there's probably case law on how this has been calculated before which again will need expert legal advice.

[wabisabi]

Hi Rob,

Thanks so much for your detailed and thoughtful response. Your insights and suggestions have given me a lot to consider, and I appreciate your perspective on this matter.

To clarify the property does have an annual estate charge for upkeep of the site - carried out by a management company. But the road is a new addition which has increased the charge by ~30%. Regarding my solicitor's input, they pointed out that the management company might refuse to sign-off on the future sale of the house due to unpaid fees resulting from the additional amount due specifically for the road.

I completely agree with your observation that refusing to amend the paperwork would release me from any additional costs associated with the road. I am speaking to my solicitor on potential access issues and the developer's possible legal recourse.

Your point about notifying others being a headache for them is precisely why I feel more confident in negotiating a settlement. It's hard to gauge exactly how many other people will be in the same position but I suspect it will be at least 15 - 20 other households, if not more. I'm inclined to consider asking them to pay me for what the cost of the road would be over 60/70 year (lifetime) period in exchange for amending the paperwork. This would help address the financial burden that this change imposes on me. I have asked my solicitor to look into this, although for my own benefit, I don't suppose you might know the right terms that I could use when searching for relevant case law on financial compensation?

[R0b]

If your solicitor has suggested that the management co. might refuse the sale due to unpaid fees, it sounds like there might be a restriction on your title deeds that requires the management company's consent to sell the house. If there isn't a restriction on your title deeds then I don't see how the management company can refuse a sale. By the same token, if you were to refuse any amendments to your deeds to include road charges, I am unclear how the management company can refuse consent since you are not currently obliged to pay for the upkeep - on the face of it, any refusal of consent in that situation would likely give rise to you having reasonable grounds to take the management company to court and ask for an order for sale since they unreasonably withheld consent.

Asking the developer to pay you a sum of money over a period of time is one option, but you have to bear in mind that the sum of money will be based on estimates and 'what-ifs' as neither of you will know what the future holds in terms of the road which may prove more or less costly further down the line. Perhaps you may want to consider agreeing that you will be exempt from any contributions to the maintenance of the road(s) in question for a period of 60/70 years. That way, neither party has to fork out any cash and each get what they want. Obviously you need to do what you think best suits you, but all I can suggest is that you weigh up all possible options available and don't rush into the first one that sounds like it's the best thing to do without giving consideration to any other options.

As for any case law, I'm afraid I don't as I am no property expert but usually lawyers will pay for legal subscriptions that will have these cases readily referenced. Otherwise it would be a matter of doing your research but one of your keyword searches may be misrepresentation and property developer. There will no doubt be plenty of legal articles providing insight into relevant case law and current practice as well as the kind of compensation you might expect. I wouldn't get too bogged down in that right now as I'm sure you would want to employ lawyers to do that for you and save you time and effort.