Do you know the difference between Freehold and Leasehold? Does it matter?

What is freehold?

If you own the freehold, it means that you own the building and the land it stands on. A freehold estate in land (as opposed to a leasehold) is where the owner of the land has no time limit to his period of ownership. You won’t have to pay annual ground rent.

By owning the freehold of a property, you have the sole responsibility for maintaining the fabric of the building – the roof and the outside walls.

Houses are generally sold as freehold. However, please note flying-freeholds.

Service charges are not generally payable with freehold properties. However, take note that developers are now requiring owners of new build properties to contribute towards the maintenance of shared driveways and communal/estate landscaping. Check before you buy.

Generally, the only ways in which you can lose a freehold property is either by repossession by your lender due to non-payment of your mortgage or compulsory purchase.

 What is leasehold?

Leasehold means that you own a property (usually a flat) for a fixed term but not the land in which it stands on.  There is an agreement between you the Leaseholder and the Freeholder, the party who owns the land in which the entire block is situated. This document is a called the ‘Lease’.

The lease is usually long term, often 99 years, sometimes as high as 999 years. The lease also sets down the legal rights and responsibilities of either side.

Possession of the property will be subject to the payment of an annual ground rent. In addition to ground rent leaseholders will usually also pay service charges and their share of the buildings insurance.

The Freeholder will normally be responsible for maintaining the common parts of the building, such as the entrance hall and staircase, as well as the exterior walls and roof. However, other leaseholders might have claimed their “right to manage”, in which case it is their responsibility.

When the lease expires, ownership of the property reverts back to the freeholder.

A major consideration is, if you as leaseholder do not fulfil the terms of the lease; for example, by not paying the ground rent/service charges or breached a term of the lease then the lease can be forfeited, and you will have to give up possession of your property.

Taking the above into account, Freehold is generally the preferred option.

If you would like further information in respect of the above, please do not hesitate to contact one of our friendly team on 01279 466910 or send us an email to info@watson-legal.com.

Please also check out our website and obtain your FREE no obligation conveyancing quote  https://www.watson-legal.com/residential-conveyancing/

Does how you own a Property with a partner really matter?

The answer is YES!!

In an ideal world, moving house would be simple, fast, and stress-free. Unfortunately, in reality things are different. When you move house it is likely that there are a number of different factors sending your brain on overdrive.

The last thing you are going to be thinking about is: “how am I going to own/hold this property?”

In most circumstances unless your solicitor asks you, you will probably think “What is even meant by owning/holding a property?”

When you purchase a property there are two ways in which you can own the property. You can hold the property as joint tenants, or tenants in common.

Purchasing a property is huge financial step in your life. It is therefore important that you consider how the property is going to be owned.

Owning the property as joint tenants has several benefits. One of the most important benefits is that when one owner passes away, their share of the property is automatically transferred into the remaining owner’s name. However, you will need to notify the Land Registry of the change of circumstances.

When the property is owned as joint tenants you will automatically own the property in equal shares.

In contrast, if you own then property as tenants in common, when one owner passes away, the property does not automatically transfer to the remaining owner. Instead the interest in the property will revert to what is stated in the deceased Will. If a Will is not in place the Intestacy Rules will then apply. If you are an unmarried couple and there has been no provision for transferring the property, for example in a Will, then you may have difficulties remaining in your home. This is a scary thought!

The Intestacy Rules may result in the deceased share of the property being gifted to someone else. The living owner will then own the property jointly with the person whom the interest is gifted to. This can then cause difficulties as the new owner may want to sell the property.

Another important factor to consider when choosing how to hold the property, is whether you stipulate the percentage of interest each owner has in the property. This may be something to consider if one party is contributing all, or a large sum of, the deposit to the property. This can be detailed in a Declaration of Trust which is a legally binding instrument.

With the right preparations, your financial interest can be protected and future disputes are hopefully avoided.

At Watson Legal we pride ourselves in addressing each individual’s circumstances. If you require advice on how you currently own your property or if you are thinking of purchasing a property or simply would like more information, please call 01279 466910 or email info@watson-legal.com.

You can also get a FREE no obligation quote by clicking this link https://www.watson-legal.com/residential-property/

Holla, “We want prenup! We want prenup!”

1) What is it?
A prenuptial agreement AKA a premarital agreement or an antenuptial agreement, can commonly be abbreviated to prenup or prenupt.
It is ultimately a formal, written contract between parties prior to their marriage or civil union.

2) Are they legally binding?
As a result of the UK Supreme Court ruling in Radmacher v. Granatino (2010), prenuptial agreements are now given heavy evidential weight within the UK Family Courts, unless considered to be unfair.
That being said, while British courts recognise these agreements, they also still have the discretion to waive them.
Particularly if deemed to be unfair to any children of the marriage.

3) Why get one?
Tom Cruise and Katie Holmes had one.
So did Brad Pitt and Angelina Jolie.
Kim Kardashian and Kris Humphries did, too.
These three now-divorced couples all had prenups, but they are not just for the wealthy.
A prenup will preserve the expectations of the parties and prevent surprises in divorce proceedings. They assist by providing clarity to parties when an emotive topic such as ‘money’ enters into a relationship, especially when parties have a different attitude towards money.
A prenup can help to provide that peace of mind, particularly, if there are assets and/or property that would be difficult to split equally and if you, and/or your partner, have children from a previous relationship and want to ensure certain assets are preserved for them and protect their inheritance rights. (A Will is also essential in order to preserve and protect in this instance.)
A prenup can also assist where you want to protect inherited money, assets, savings, and future inheritance or retain control of a business or avoid outstanding debt.

4) What should be included?
Every prenup is bespoke to particular circumstances; usually a prenup will include provisions for division of property and spousal support in the event of divorce or breakup of marriage. It can set out the ownership of belongings, for example, money, property and assets. Prenups can contain a vast array of terms and conditions, for instance, terms for forfeiture of assets where a divorce ensues as a result of adultery.
The most basic of prenups lists an inventory of premarital assets that in the event of a divorce will remain the property of their original owner.

5) What happens if I do not have one?
Without a prenup, the starting point for the division of property and assets will generally be equality of assets between both parties.
The Court will look at the role of “economic provider” and “child carer/homemaker” as of equal value to the welfare of the family.
While this is generally the fairest distribution of a couple’s assets, in certain circumstances it can be considered unjust.

  • PRENUP CHECKLIST
    Must be drawn up by a qualified solicitor
    Parties must have independent legal advice to avoid any conflict of interest
    Parties must fully understand and voluntarily agree to it
    Solicitors must confirm it was entered into freely/knowingly
    Signed at least 21 days before marriage
    Assets/property must be fully disclosed

Case Study
Rebecca says that she feels ‘trapped’ in her marriage.
She is not happy anymore, but a few years ago she inherited a substantial sum of money from her grandparents in their Wills.
This is an eventuality that she was not aware of before her marriage, but that most solicitors when drafting prenuptial agreements take into consideration as a possibility.

As Rebecca did not stipulate in any prenuptial agreement what would happen in the event that she did inherit monies, this monies now forms part of the ‘marriage pot’ and will be divvied up between the parties accordingly.
It is one of the reasons that she is determined to keep trying despite her unhappiness.

Unfortunately, this is a scenario that occurs quite frequently and although a prenuptial agreement can sometimes have negative connotations, in this day and age it important to prudent. It does not mean that you love your husband or wife to be any less, it simply means that should the worst happen, both parties have a contingency plan.

If you would like to speak to us about the preparation of a prenup, please call us on 01279 466 910 to book in for your free 20 minute consultation.

Restrictive covenant and an employment contract

shaking hands

Every business has information that it considers both integral and invaluable to its success or perhaps a trade secret. Restricting the use of this information by employees upon the termination of their employment may be vital to the protection of the business or customer contacts. A former employee who has knowledge of technology, strategic information, customers or clients may be an attractive asset to a competitor seeking to encroach upon your market.

A restrictive covenant is a clause in an employment contract which prohibits an employee from competing with his ex-employer for a certain period after the employee has left the business. It can also prevents the ex-employee from soliciting or dealing with customers of the business by using knowledge of those customers gained during his prior employment.

Common types of restrictive covenants;

Non competition: –  This will place a restriction on a former employee working in a similar employment for a competitor. This type of clause will often include a duration and exclusion zone.

Non solicitation: – Will prevent a former employee poaching clients, customers or suppliers of the former employer, or even other employees.

Non dealing: – This will prevent a former employee from dealing with former clients, customers, suppliers. The additional benefit is this will prevent either party from approaching the other.

When a contract is drafted including restrictive covenants the following will need to be considered, as if the contact is drafted too widely it will be difficult to justify the enforceability of any covenant.

  • The breadth of the geographical area.
  • The length of time the post termination restriction is in place.
  • The activities that the employer is trying to restrict.
  • The interest being protected e.g. trade secret.
  • The restrictive covenant must directly relate to the employee’s employment.

Restrictive covenants may also require periodic reviews to maintain their enforceability as the reasonableness of the covenant is judged at the time the contract was entered into. In terms of enforceability, if an employer has reason to believe an employee has breached the post termination restriction, the most common remedy sought is an injunction.

If you require any further information about restrictive covenants or enforcement, please contact the team at Watson Legal either by calling 01279 466910 to book your free 30 minute consultation or email info@watson-legal.com.

NO FAULT Divorce – Does this exist?

Scissors cutting paper family

Divorce is often a time of battle and anguish. It puts families under pressure and there are all sorts of issues to sort out.

  1. Deal with the finances
  2. Limiting the impact on your children

Here at Watson Legal we are empathetic to your situation and aim to make the process as stress-free as possible.

There are a lot couples that have mutually agreed that their marriage is over. Unfortunately, divorce law at present can potentially make things worse for couples, forcing one party to blame the other, unless the couple are willing to wait two years to apply for divorce and they both consent.

The grounds for divorce are as follows:

  1. That your partner has committed adultery and you find it intolerable to live with them;
  1. That your partner’s behaviour is intolerable to live with;
  1. That your partner has deserted you for at least two years;
  1. You have separated for at least two years and your partner consents to the divorce;
  1. You have separated for at least five years.

Therefore the only immediate ground for divorce is either your spouse’s unreasonable behaviour or adultery. This can cause unnecessary distress to the parties involved, making an already difficult process even harder. The only alternative is waiting for two years if both parties consent. For many, waiting two years to sort out finances is not a feasible option.

This seems particularly meaningless and unfair given that the reasons for divorce make no difference to any financial settlement or children arrangement – the reasons are simply to allow the divorce to continue to the next procedural stage.

So in short, does a no fault divorce exist? Well yes! If you are willing and able to wait two years.

Do you think the law should be changed?

There has been a No Fault Divorce Bill, which has been debated in Parliament since 2015 so pending the outcome of deliberations, we may see some reforms in the not so distant future.

There is an argument that a no fault divorce damages the institution of marriage. If parties can divorce easily would this lead to parties not trying to reconcile their differences and working on their marriage? Would divorce no longer be the last resort, but the first option or an easy solution

We are open to your thoughts and suggestions and we would love to hear from you.

If you have any questions about this information or if you would like to book an initial free 30 minute consultation, then please do not hesitate contact us on 01279 466910 or email info@watson-legal.com.

Divorce – What about the children?

When a relationship breaks down the people often who it can affect most is your children. Whilst you may be trying to do everything you can to protect them, they will sense how you are feeling. One of the most important behaviours is, ensuring you talk positively about the other parent in front of them and enable your child to have a relationship with both parents.

Unfortunately, there are times when despite parents trying to reach a resolution, there is no other alternative but to get the help of the court. There are several orders the children can make in relation to children:

  • Child arrangements order
  • Specific issue order
  • Prohibited steps order

What is a child arrangements order?

A child arrangements order (CAO) is an order that regulates arrangements for a child that relate to any of the following; with whom the child is to live, spend time or otherwise have contact and/or when the child is to live, spend time or otherwise have contact with any person

Contact simply means the time that a child spends with an adult. There are several ways that contact may take place:

  • direct contact between the child and the person named in the order
  • overnight staying contact
  • supervised contact, and
  • indirect contact through letters or cards

A CAO may provide for the child to live with one parent only or it may provide for the child to share their time between both parents.

What is a specific issue order?

 A specific issue order determines a particular question in connection with a child. It can be used to resolve issues about a child’s upbringing, such as where the child should go school (e.g. state or private), whether they should receive religious instruction or whether they should have a particular form of medical treatment.

What is a prohibited steps orders?

A prohibited steps order imposes a restriction on a parent or other holder of parental responsibility that prevents them from doing something without consent of the court. They may be used, for example, to prevent a change of a child’s name or to prevent a parent from taking a child abroad.

If you would like to find out more or having difficulties agreeing to specific arrangements for your children, then please do not hesitate to contact us on 01279 466910 or email info@watson-legal.com to book your FREE 30 minute consultation.

Are your Terms and Conditions up to date?

Where you are starting a new business venture or changing your terms and conditions, there is always a never ending list of tasks to complete. Many businesses focus on getting their products / services prepared, finding customers and marketing themselves. For many entrepreneurs addressing Terms and Conditions remains at the bottom of the list but getting them right is crucial to ensure a healthy cashflow.

Neglecting Terms and Conditions for your business, could potentially affect your cashflow and may result in you spending money and wasting time on debt collection (please see our debt recovery blog for further information following the changes brought in on the 1st October 2017) or litigation. In addition, Terms and Conditions are not set in stone. They should be amended regularly to reflect your business if key terms are changed.

Correctly drafted and incorporated Terms and Conditions should act like a manual or recipe book for business and should have absolute clarity on every situation. It is imperative that they are well drafted.

What to Include in Terms and Conditions

  • Parties involved
  • A clear definition of any product or service provided.
  • Price and specification
  • Payment terms including when payment is due and interest payable on unpaid sums.
  • Any guarantee or warranties offered.
  • Delivery process.
  • Identifying the process if either party does not deliver, pay or wants to break the contract.
  • Liability for defective services, goods plus what amounts to breach of contract.
  • Confidentiality clauses
  • Notice Periods
  • Jurisdiction and governing Law.

Remember Terms and Conditions are specific to your business and ‘one size doesn’t fit all’. Having the correct Terms and Conditions will save businesses considerable expense in the long run, as it is more expensive and time consuming to take legal action against customers who do not pay or fund expensive litigation than it is to have the correct Terms and Conditions prepared at the outset of your business.

If you require any further information about Terms and Conditions, please contact the team at Watson Legal either by calling 01279 466910 to book your free 30 minute consultation or email info@watson-legal.com.

What are the foundations of your Business?

When starting out in business, it’s important to establish your business structure.

If you feel unsure then this is something that your accountant or legal adviser will be able to discuss with you. Choosing the right type of business structure can bring protection and tax benefits.

There are a number of business structures to choose from, but the main 4 are discussed in more detail below:

Sole trader

This is the smallest and simplest type of company structure, typically adopted by ‘one-man-bands’.

A market stall trader or hairdresser might choose this type of company structure as it is quick and easy to set up, has little in the way of ‘red tape’ and is inexpensive.

The down-side of this company structure is that there is little distinction between the individual and the business. You personally become liable for the debts of the business should it fall on hard times.

Also, as soon as you reach circa £40,000 in profit you will begin to pay 40% tax. Sole traders are also expected to register for self-assessment tax returns and will need to file a tax return each year and pay fixed rate class 2 NIC + class 4 NIC on any profit.

Contrary to the name, sole traders can employ staff; sole trader means that you are responsible for the business, not that you work alone. Sole traders that have a turnover in excess of £82,000 per year must also register for VAT.

Ordinary Partnerships

Where two or more people come together to run a business, a partnership may be formed to bring those parties into a legal formation.

As with the sole trader structure, partners are responsible for any losses the business makes and any charges it incurs. It is worth noting that you are responsible for losses incurred by other partners also, so be wary who you enter in partnership with.

If supplying larger businesses, their conditions may require you to incorporate before they will utilise you as a supplier. Partners share in the business’ profits and must be registered with HMRC, file a self-assessment tax return each year, paying income tax on their share of the profits as well as national insurance.

If you are earning in excess of £20,000 in profits you will be better off by registering as a limited liability company. A good partnership agreement is necessary to govern what will happen in the event of a partner leaving the business.

Additional benefits of a partnership agreements include clarifying the nature of the partnership, assignment of management duties, limiting your liability, sharing profits, removing partners and avoiding unwanted dissolution.

Limited Liability Partnerships (LLPs)

If you do not wish to be personally responsible for the losses or debts of a business you can set up a limited liability partnership. There are a minimum of 2 designated members and all partner responsibilities should be set out in a LLP agreement.

A LLP must be registered with Companies House, file an annual return and accounts with Companies House.

When the LLP is registered, Companies House will inform HMRC so there is no need to contact them separately.

Private limited company (LTD)

This is the ‘biggest’ and most complex type of business structure mentioned so far however it also provides the most security, credibility, scalability and tax benefits.

The most common formation is ‘private limited by shares’.

The limited company is an entity that is responsible for running your business. You become an employee of the entity and most likely you will appoint yourself as a director – responsible for running the company.

Any profit that is generated is owned by the company and after it pays corporation tax the company can share its profits.

Corporation tax for profits below £300,000 per year is currently just 20%. Bear in mind that although you may not be personally liable for the business’ debts, lenders may request a personal guarantee against funds: this can put your assets at risk.

VAT

With all business types you must register for VAT if the turnover will exceed £82,000 per year.

Your accountant will be able to advise on when is best to register. Our advice is, if cash flow is good, then you do not need to register for VAT until the threshold is reached. This way you will not have to pay VAT on sales but can retrospectively claim VAT against any purchases made in the last 4 years.

Entrepreneurs’ relief

When or if the time comes to sell your company, the government has an entrepreneur’s relief scheme, allowing just 10% tax to be paid on capital gains up to 10m in your lifetime.

If you are thinking of starting a new business or charging your business structure, Watson Legal can provide appropriate advice alongside your accountant. For more information or to book your free 30 minute consultation, please call 01279 466910 or email info@watson-legal.com.

 

What is Domestic Violence?

There is no legal definition of Domestic Violence. However, the Government announced in March 2013 the new definition of Domestic Violence would be as follows:

Any incident or pattern of incidents of controlling, coercive or threatening behaviour, violence or abuse between those aged 16 or over who are or have been intimate partners or family members regardless of gender or sexuality. This can encompass but is not limited to the following types of abuse:

  • psychological
  • physical
  • sexual
  • financial
  • emotional

How to deal with Domestic Violence?

Domestic Violence Protection Notice and Domestic Violence Protection Order

A Domestic Violence Protection Notice (DVPN) is an emergency non-molestation and eviction notice which can be issued by the police, when attending to a domestic abuse incident. A benefit of a DVPN is that it is effective from the time of issue, thereby giving the victim the immediate support they require.

Upon a DVPN being served upon the abuser an application by the police will need to be made to the Magistrates Court for a Domestic Violence Protection Order (DVPO) to be issued. If, the Court grant the Order it will prevent the abuser from returning to a residence and from having contact with the victim for up to 28 days. This allows the victim a degree of breathing space to consider their options. Both the DVPN and DVPO contain a condition prohibiting the abuser from molesting the victim.

It is important to note that ‘Domestic Violence’ does not just mean physical violence. As the definition above makes clear, it can be other actions that restrict or control another human being unreasonably.

Non-Molestation Order

If you have been the victim of domestic violence and the respondent is a family member, someone you are, or, have been in a relationship with or someone you are living with you can apply for an injunction from the Magistrates Court. A non-molestation order will protect you or your child from being harmed or threatened.

It is a criminal offence to breach the injunction and the person named in the injunction risks being arrested. Section 1 of the Domestic Violence, Crime and Victims Act 2004 provides that it is an offence to comply with the Order without reasonable excuse. The offence is punishable with a maximum of 5 years imprisonment.

If you need protection immediately, you can ask the Court for an emergency order. This can be issued without notice and therefore you do not need to inform the person you need protecting from.

Occupation Order

If you have been the victim of domestic violence and one of the following criteria is met, you can apply for an occupation order;

  • You own or rent your main place of residence.
  • You don’t own or rent your main place of residence, but you are married or in a civil partnership with the owner and you are living in the home. This is known as matrimonial home rights.
  • your former husband, wife or civil partner is the owner or tenant, and the home is, was, or was intended to be your shared matrimonial home.
  • the person you cohabit or cohabited with is the owner or tenant, and the home is, was, or was intended to be your shared home

The court can order an Occupation Order stating who can live in the family home or enter the surrounding area.

If an Order is granted the Magistrates will say who can live in the family home or enter the surrounding area.

If you require any further information about domestic violence, please contact the team at Watson Legal either by calling 01279 466910 to book your free 30 minute consultation or email info@watson-legal.com.

What is ADR?

‘ADR’ is the abbreviation of ‘Alternative Dispute Resolution

What is Alternative Dispute Resolution?

 ‘Alternative Dispute Resolution’ is a different way in which parties involved in a dispute can solve their problems and settle their arguments without having to attend court.

What ways are there? 

  1. Negotiation
  2. Mediation
  3. Round Table Meeting
  4. Conciliation
  5. Arbitration

What is Negotiation?

The negotiation process is an informal approach between the parties themselves or their lawyers. This is the quickest and cheapest way of solving issues. The people involved in the dispute enter into contact directly and privately to resolve their issues. There is not a third entity controlling the affected persons’ decision.

What is Mediation?

Mediation involves a third party who is independent to the dispute and therefore neutral. It appears to help the parties in reaching an agreement. The person is called a ‘mediator’ and they are not entitled to give their personal opinion about the dispute in question, but simply to facilitate between the parties. Their main duties are helping the parties to clarify their positions. A good mediator is a person who has been trained to give assistance to the parties in the way of researching good and satisfactory solutions. Mediators do not make judgments or decide the outcome of the dispute. They ask questions that help to uncover underlying problems, assist the parties to understand the issues and help them to clarify the options for resolving their difference or dispute.

What is a Round Table Meeting?

This is similar to mediation, however lawyers assist in narrowing the issues and aid the parties in reaching a resolution.

What is Conciliation?

A step further, is the conciliation process. It is managed by the conciliator, who has similar duties to the mediator, but with a very big difference, the conciliator is entitled to suggest solutions to the case. Conciliation focuses on what you and the other party want and tries to find a way of solving the problem. Both you and the other party can put your case but one of you may have to give way more, to find the best solution to the problem.

The principles of the conciliation process are:

Voluntariness: The parties have the right to withdraw from the conciliation process at any time.

Impartiality: The conciliator is not related with any of the parties. If this compromise is breached the parties can ask for changing the conciliator.

Confidentiality: The information given by the parties in the process is unequivocally confidential, it means that only the parties and the conciliator have access to it.

Good faith: The information given by the parties must be reliable. It is important to achieve a real solution to the case.

What is Arbitration? 

According to the Arbitration Act 1996, if the parties decide to initiate an arbitration process they will have to submit to an arbitrator usually from the Chartered Institute of Arbitrators (CIArb), to a panel of arbitrators or to an arbitral institution.

This is decided and appointed by the parties themselves or, if they do not achieve a settlement, the court can be asked to select one. This system is pretty similar to the formal procedure in a court with a judge. In fact, the decision taken by an arbitrator is called an ‘award’ and it binds the parties. If they do not obey this commitment the court can force them to do it. The arbitral award can only being taken to the court if it is questioned about serious irregularity in the proceedings or on a point of law.

Arbitration is an easier way of achieving an agreement because it offers: flexibility to choose the time, place and sort of procedure; speed, and cheaper costs.

The decision the arbitrator makes is legally binding. You will not be able to go to court later if you do not agree with the outcome. It is still usually cheaper than going to court.

IN A NUTSHELLnutshell1

NEGOTIATION Parties themselves
MEDIATION Parties with help of neutral third party.
CONCILIATION Parties with help of neutral third party who plays an active role in suggesting a solution
ARBITRATION Parties agree to let third party make a binding decision

If you require any further information about ADR, please contact our friendly team at Watson Legal either by calling 01279 466910 to book your free 30 minute consultation or email info@watson-legal.com.