Flat sale foiled by lapsed insurance: A leaseholder lost out because the policy had expired, says Mary Wilson

SARAH HALE, a partner in a public relations company, has been trying to sell her flat in Putney, south-west London, for more than a year.

In March, she accepted an offer and prepared to sell. But when the solicitor acting for her prospective purchaser made the standard inquiries, he discovered that the building housing her flat was not insured.

Ms Hale says: 'I bought my one-bedroom flat six years ago on a 99-year lease. There are two flats, with a shop below, which prevents us buying the freehold. The shop has now been empty for 18 months.'

Ms Hale's solicitor investigated and learnt that the building insurance had lapsed in 1990. 'Obviously, my purchaser would not go ahead until he knew that the building was insured. My solicitors contacted the landlord, Alec Davies, in May, asking him to do something about the insurance - again in June and again in July. He said he would get the property insured and fax over the documents, which he has never done.'

The case is not straightforward as Ms Hale has not paid the ground rent of pounds 100 or service charge of pounds 25 a quarter during the past six years. She says she was never sent any bills, only a schedule of money owed - sent when she told the landlord of her plan to sell.

She owes about pounds 2,500 for past ground rent, service charges and also three years' gas and seven years' electricity; the landlord didn't install a gas meter until May 1989 and has never put in an eletricity meter. During those years, Ms Hale says, he did not send bills for either service.

Ms Hale says she is perfectly happy to settle the account, on the understanding that Mr Davies will get the money once she has found a buyer and once he shows documentation that buildings insurance has been taken out.

When Mr Davies sent his schedule of payments to the estate agent in May, Ms Hale's solicitor replied that she was willing to pay the sum he wanted, excluding the interest he was charging, and pointed out that the ground rent should be pounds 100 rather than pounds 150.

On 8 July, Ms Hale's solicitor wrote to say that he was still waiting for confirmation of the buildings insurance. The document did not arrive, and Ms Hale's sale fell through.

She contacted an insurance broker in an effort to insure the building herself, and paid pounds 160 on cover for her own flat - only to be told by her purchaser's solicitor that this was not enough. She then cancelled that insurance, which cost her pounds 20 in administration fees. She has now had to take her flat off the market.

She has lost the flat she was hoping to buy and about pounds 900 in fees for surveys and solicitors. Her own mortgage company, on hearing there was no buildings insurance, extended her own cover, so that is also costing her more.

Mr Davies told the Independent on Sunday that he now had a buildings insurance policy, but that he hadn't yet sent on a copy and 'would chase up the policy in the next few days'. He confirmed that he had not sent regular bills, but expected the ground rent to be paid anyway.

He said he sent Ms Hale a schedule in June 1990 (which elicited pounds 250 from her) and another one earlier this year. 'I am not trying to be awkward or difficult, but a landlord has to pay bills upfront and then recoup the money afterwards, and I am still owed quite a considerable amount of money. But I am sure we can sort this out.'

Daniel Polden, of solicitors Ross & Craig, says: 'This sort of case, where a lessee goes to sell their property and finds there are problems, is not that unusual. If a landlord does not insure the property, the lessee - under their contract - can take him or her to court to force the landlord to insure the building under the terms of the lease. But it takes time and it is expensive.'

Mr Polden says that although lessees can insure their own property, they cannot insure the whole building.

(Photograph omitted)