Feel let down, and wondering what to do

[Olzki]

So... here's the situation...

I own a small coffee shop, and I thought I'd found my 2nd location. A little shop, with a flat above it, both empty, having been recently refurbed. I had a viewing, expressed my interest, and the estate agent wanted a proposal from me, to share with the owners. I did that making it clear that I would be living above the shop, and the shop was going to be a small, mostly takeaway coffeeshop. That was accepted, and so I advised my solicitor, and we've been sorting out the lease since. I had a surveyor go in, to check for any pre-existing problems, much to the opposition of the owners, who insisted it wouldn't be necessary as they had just spent 70k renovating both the shop space and the residential space.

I've just got the surveyors report, and in essence, the way that the shop space and the residential space have been separated has made both illegal. A shop cannot be opened there and no one can live there, not without extensive renovations, fire safety, planning permissions etc.

So, obviously I'm very disappointed, and won't be continuing with the property, but I'm also pretty angry at both my solicitor and the estate agents. I don't understand how the estate agents could have put the property on the market as a shop with a flat above it, or accepted my business proposal, when the owners' renovations have meant neither would be possible. I also don't understand how my solicitor has allowed us to get his far in the process, without uncovering some of these serious issues.

I'm wondering if anyone has any experience with this area, and has any ideas on how I should proceed. I've spent about 7K in solicitor's fees, and 1K on the surveyors report (with the estate agents and the owners insistent that it was completely unnecessary), and I'm angry, and can't figure out how this has happened?!?

 

[WaveJumper]

Well I am really sorry to hear about the issues you’ve had and can understand how you must be feeling. I know this is no consolation but just think if you had gone ahead as the owner was suggesting no checks etc they obviously knew they had not sought proper planning approvals and you should probably be thanking your surveyor and solicitor the latter I would have thought would have requested copies of planning approvals.

7k is a lot on fees but think about it you have had a very lucky escape. And please don’t be tempted to “save” money next time around, there’s many on this forum who went down that route and created major problems for themselves.

 

[swankypants69]

Surveyors always err on the side of caution

Who says you can’t live in the flat? The surveyor?

How is it possible to rack up 7k in solicitors fees? Seems excessive

 

[Olzki]

Here's a quote from the covering email from the surveyor with more detail...

We have carried out some research since our inspection and by reference to the public planning and building control registers at Brighton & Hive Council, we have discovered the current owner of the property has repeatedly applied for consent for a change of use to a single dwelling house. The latest application having only recently been refused in June 2021. Effectively therefore the owner appears to have only offered you the property by virtue of the fact they have been unable to obtain the planning consent required to create a single dwelling house.

However, they have now carried out all the works on the assumption they would have obtained the planning consent applied for. Unfortunately for them, Building Control will not grant approval for the works done on the basis of having a commercial business on the ground floor with an ancillary first floor flat for the reasons explained in the conclusions and in section 8.1 of our report. With the current layout, you will be unable to legally occupy the ground floor for commercial use without separating it from the flat above. Until the flat is made self sufficient, it will be unable to be legally occupied. This situation appears to have resulted from a complete mismanagement of the entire project where no work should have been done without first obtaining the planning consent required.

They go on to say that they're strong advice is to withdraw from the property.

Solictor fees were £5500 plus VAT. I did question it, but there was a lease to create from scratch, rather than one being assigned, and there was an RDD, along with all the searches.

TBC I am extremely grateful to the surveyor and to my solicitor for pressing the point of getting the survey done in the first place. I am frustrated at the estate agent for putting a property on the market that cannot legally be used for the purposes they were advertising it for, and for approving my business proposal, when neither part of my proposal (having the shop and living there) are legally possible.

(I am also now frustrated at my solicitor, as it sounding more and more like he overcharged me!)

 

[WaveJumper]

Why was your solicitor creating the lease and not the landlords

 

[MOIC]

The failed consent for a change of use should have shown on the searches your solicitor carried out. Ask him if that’s the case?

Employing a building surveyor is the reason to inform you of all the building and safety regulations. Apart from not having consent, it may constitute a fire hazard if there are no separate escape routes and consequently not having a fire certificate. It could be that the person using the dwelling is different from the person occupying the commercial shop on the ground floor in the future. A building surveyor must cover all the bases, otherwise he can be sued in the future.

The solicitor’s fees (given the work you have outlined above) should be no more than 2k tops, unless the 7k figure included the landlord’s fees. As @WaveJumper mentioned, it’s the landlord that prepares the lease.

What has your solicitor and the estate agent advised you should do at this stage (apart from pulling out)?

Has the property been misrepresented?

has there been subterfuge?

It seems to me that the owner, estate agent and your solicitor have something to answer for.

I would get advice from a new solicitor, although some may not want to apportion blame on another solicitor.

Get proactive.

 

[Deleted member 335660]

Here's a quote from the covering email from the surveyor with more detail...

We have carried out some research since our inspection and by reference to the public planning and building control registers at Brighton & Hive Council, we have discovered the current owner of the property has repeatedly applied for consent for a change of use to a single dwelling house. The latest application having only recently been refused in June 2021. Effectively therefore the owner appears to have only offered you the property by virtue of the fact they have been unable to obtain the planning consent required to create a single dwelling house.

However, they have now carried out all the works on the assumption they would have obtained the planning consent applied for. Unfortunately for them, Building Control will not grant approval for the works done on the basis of having a commercial business on the ground floor with an ancillary first floor flat for the reasons explained in the conclusions and in section 8.1 of our report. With the current layout, you will be unable to legally occupy the ground floor for commercial use without separating it from the flat above. Until the flat is made self sufficient, it will be unable to be legally occupied. This situation appears to have resulted from a complete mismanagement of the entire project where no work should have been done without first obtaining the planning consent required.

They go on to say that they're strong advice is to withdraw from the property.

Solictor fees were £5500 plus VAT. I did question it, but there was a lease to create from scratch, rather than one being assigned, and there was an RDD, along with all the searches.

TBC I am extremely grateful to the surveyor and to my solicitor for pressing the point of getting the survey done in the first place. I am frustrated at the estate agent for putting a property on the market that cannot legally be used for the purposes they were advertising it for, and for approving my business proposal, when neither part of my proposal (having the shop and living there) are legally possible.

(I am also now frustrated at my solicitor, as it sounding more and more like he overcharged me!)

Well, as already mentioned, it is not your responsibility to prepare a lease. The landlords should be paying for that. I am surprised your solicitor did not point this out.

You seem to blame the estate agent so you should complain to him and if you are not satisfied take up with the Ombusdman.
https://www.gov.uk/buy-sell-your-home/estate-agents

 

[Olzki]

Thank you so much to everyone who took the time to reply to my original post. Really useful information. I'm going to take legal advice re: the estate agents and the owners behaviour, and I will also be approaching my original solicitor regarding his fee, and why it is so much more than what most people seem to think it should have cost.

If anyone else has any comments or advice, please post them; they will be gratefully received.

Thank you!

 

[Lisa Thomas]

Another point...How much were you solicitors have been if the matter had concluded successfully and they had they acted to completion ?

How much did they originally quote and what % of work had been done by the time it all fell through?

 

[Olzki]

In reference to the solicitor's fee, here's how it was presented to me...

If we are to deal with the transaction as a whole (from start to completion) then there is much more to it than just reviewing and reporting to you on the provisions of the draft lease. For example, we will also need to:

• Carry out commercial property searches and report to you thereon.
• Raise requisitions/commercial property standard enquiries and report to you thereon.
• Obtain and review title/plans for the premises (I am assuming that the land is registered).
• Deal with the registration of the lease at the Land Registry as it is over 7 years in duration.
• Negotiate amendments to the lease with the landlord’s solicitors as necessary.
• Calculate SDLT and file a return with HMRC.

The price we have quoted (£4,950 plus VAT plus disbursements) is a fixed Agreed Fee which means it is capped, and not capable of variation (i.e. it is non-refundable).

Your other option would be to proceed on an hourly rate basis (i.e. monies on account). Our hourly rate would be £450 plus VAT. Disbursements are payable separately. There is no limit or cap on our fees with monies on account so it could work out more expensive than the Agreed Fee. We would need a minimum of £3,600 on account to start work on your matter.

When it was discovered that there would be a RDD, the solicitor fee increased to £5,750 plus VAT plus disbursements.

There was also an additional £800 for searches, detailed below...

Water and drainage. - £150 + VAT = £180
Local authority search – Official: £212.10 inclusive of VAT.
Sitecheck Combined to cover Radon, flooding risk, environment, contaminated land etc: - £225 + VAT = £270
Sitecheck planning (to check for any planning applications that may interfere with the property and surrounding area): £115 + VAT = £138

I've had more feedback since the original post from another small business owner I was talking to. He was horrified at the solicitor's fee. He felt it should have been about 2K.

If anyone has any thoughts on the solcitor's fees I have been charged, esp how they might be so much compared to what people in general seem to be thinking, I would very much like to hear them.

 

[fisicx]

That does seem a lot. Especially as there was no requirement to carry out the searches. If they had done their job properly they would have spotted the failed change of use thus negating any further work.

As an aside, when we recently brought a lease the total fees were well under £2k.

 

[Lisa Thomas]

Sounds like a Solicitors complaint might be in order.

 

[Dimo]

Years back when I went into retailing my solicitor's fees seemed excessive. I wrote to him asking for a breakdown of the fees, upon which he produced a new invoice for half the amount. Shyster.

Query fees enough and you may you get your bill discounted.

 

[Paul Norman]

1. Estate agents will attempt to sell anything. That is what they do. And with property, the risk and responsibility sits totally with the buyer, so they don't need to bother with that kind of stuff.

2. It's a real pain to have sunk that much money. You can congratulate yourself, though, that you did insist with the proper checks and lost just the £7k. I can assure you this puts you in the upper quartile of commercial property acquirers.

In essense you have done this right. The only difference might be to get the surveyors checks done before you incur solicitors fees.

Commercial property comes with it's own intriguing array of traps, illegally maintained property, breaches of planning, and ground pollution issues. It is not a fun arena, really.

 

[WaveJumper]

Whether commercial or private if you are looking at a place thats had lots of work first question you ask is let me have the planning application details and number, if they produce one go online and check it. if they don't have one your best to walk away. Very close friend was looking at a house just recently no planning application for extension and loft conversation and the owner had still not managed to get retrospective approval.