The Freehold Property Enquiries and Leasehold Property Enquiries forms have recently been reviewed to accommodate for frequently asked questions during a property transaction, which arise after the Freeholder has completed the standard enquiry forms, aimed at reducing the time spent on further enquiries in the course of transactions. The new versions of the forms should be used as standard from 11 January 2023.
What is an LPE1 and FME1?
The Leasehold Property Enquiries (“LPE1”) and Freehold Property Enquiries (“FME1”) are Law Society forms which are completed by a Landlord, or management company / managing agents (if they have outsourced their functions) which provides essential replies to the standard management queries.
Replies to LPE1 are requested on any Leasehold property transaction and replies FME1 are requested on a Freehold property where the communal grounds are maintained by a management company, more commonly on a new build development.
The LPE1 and FME1 will form part of a management pack. Although providing the LPE1 or FME1 is not a legal requirement, in most transactions, it is standard procedure.
LPE1 and FME1 forms are valid for a period of 6 months and if this time has passed, a Seller may be asked to obtain a new management pack or confirmation that all information remains accurate.
What are the changes to the LPE1?
The LPE1 form now includes the following:
- Details of who deals with the Deed of Covenant.
- Deed of Covenant is commonly required by a Freeholder to ensure that a buyer shall observe and perform the positive covenants affecting the Property following completion of their purchase. In most circumstances, this requirement is protected by a restriction in the title to the Property, which must be complied with. In some circumstances the restriction can be certified by any Conveyancer and in other cases it must be certified by the Freeholder/ Management Company and it is therefore essential to have the contact details of the company or individual responsible for the drafting and approval of the Deed of Covenant as well as being able to establish what fees, if any, will be charged to the buyer by the Freeholder/Management Company.
- Details of the procedure for obtaining a share/ membership certificate.
- Within many management companies and companies who are in ownership of the freehold title, proprietors will have a share in the same in order to be included within the day to day running of the building. Therefore, the buyer’s solicitor will be required to know how the share is transferred from the seller to the buyer on completion and any fees that the buyer will incu
- Confirmation of whether a Deed of Certificate has been served on the Landlord for remedial works required to the property.
- Due to the Building Safety Act 2022 which came into effect from 28th June 2022, leaseholder protections came into force resulting in leaseholders being protected from all costs related to the remediation of unsafe cladding. When these protections apply to a building, the Leasehold must submit a Deed of Certificate to their Landlord who will confirm whether they need to pay any monies.
- There are some additional questions in respect of remedial works following an insurance claim.
- It will be the landlord’s responsibility to implement buildings insurance on behalf of the tenant and as such, it will also be their responsibility to coordinate any remedial works. Therefore, a new question has been added, to elaborate on whether there are any outstanding works or notices.
- Confirmation of whether there is a restriction in the lease on keeping pets and the requirements.
- frequently asked question is whether pets can be kept within a property and if the same is absent in the Lease or requires specific consent, the LPE1 will provide the response in this regard.
- It also asks for details of any known enforcement notices served on the accountable person where the building is residential and is at least 18m/ 7 storeys, applicable to those buildings requiring an EWS1.
- After the Grenfell Tower tragedy, there has been much attention within the property sector regarding Fire Risk Assessments and an External Wall System Review (“EWS1”) being available. The ESW1 does not assess the fire risk like a fire risk assessment under the Regulatory Reform Fire Safety Order 2005. The EWS1, is a non-transferrable assessment to an owner of a building confirming the presence of combustible materials on the outside of the building. The form was introduced by RICS and is an important certificate for a number of lenders.
What are the changes to the FME1?
The FME1 form now includes the following:
- Details of who deals with the Deed of Covenant, details of which are set out above in the LPE1 section of this article.
- Details of procedure for obtaining a share/ membership certificate, details of which are set out above in the LPE1 section of this article.
- CA question in respect of where there is a fixed rentcharge, the extent of that rentcharge and the reason for it.
- Fixed rentcharges are included as part of the overall estate management charge which comprises of fixed and variable parts. A variable rentcharge will vary from year to year and is often referred to as service or management charge and is the property’s contribution towards the maintenance of the Estate. A fixed rentcharge remains the same and is often reserve as a nominal figure in the Estate Transfer, Whilst most historic rentcharges are due to be abolished in 2037, fixed and variable rentcharges are immune and will continue to be imposed so it is important to understand both the fixed and variable elements of the charges.
- Details of any transfer fee (particularly relevant for retirement properties).
- Transfer fees are most commonly requested by the freeholder or management company on retirement properties and freehold properties to cover the cost of administrative services for assignment. It is important to ensure that any Buyer is aware of this should they sell the property in the future.
- It now asks for a “menu of fees” for administrative services.
- It is most useful for a buyer and buyer’s solicitor to receive a menu of fees to ensure that they are fully aware of the costs involved which can be budgeted for by the Buyer and accounted for by the Buyer’s Solicitors on completion.
This article is for general information only and does not, and is not intended to, amount to legal advice and should not be relied upon as such. If you have any questions relating to your particular circumstances, you should seek independent legal advice.