Merging Freehold and Leasehold for 'freehold on completion' property

Hi,<br> <br> I had read some threads here and noted that:<br> <br> An application to merge relies on a number of factors, namely&#160; <div>- Merger can occur&#160;where a leasehold estate in land, together with the reversionary estate, come into the ownership of the same person and are held in the same capacity.</div> <div>- There must also be a clear intention to merge the estates.</div> <div>- Any mortgage on the leasehold title must be discharged.</div> <div>- The lease is absorbed by the reversionary estate and thus determined. For details of the various situations that may be encountered, the treatment of beneficial easements affecting the leasehold estate and how to make your applications against any affected titles, please see Determination: on merger.<br> <br> <br> I'm little bit confusing.<br> <br> - Do same person mean a single person, or same people? Because our property is joint ownership (two persons), so will it be affected?<br> <br> - 'mortgage on the leasehold title' must be discharged, we did have mortgage on the property, but we told the mortgage lender that it's freehold (because freehold on completion). So, does it mean any mortgage on the property needed to be discharged and we cannot do&#160;mortgage anymore? If not, how can I know if our mortgage is on leasehold title? Because as far as I know the mortgage is on freehold, not leasehold. So, what does it actually mean?<br> <br> Thanks!<br> &#160;</div>

Hi Cherry - I will respond to the bits that you find confusing using the same order:<br> <br> -&#160; What we mean is owner(s) in same legal capacity, i.e. if two people are named on the leasehold title then they should own the freehold title in the same legal capacity.&#160;<br> <br> - If there is a mortgage on the leasehold title and none on the freehold title then the merger cannot proceed.&#160; The process that is often used in such cases is to discharge the mortgage from the leasehold title and register it against the freehold title as part of the merger application using a 'Deed of Substituted Security' from the lender.&#160; Section 2.1.2 of our <a href="https://www.gov.uk/government/publications/leases-determination">Practice Guide 26</a> refers to this.&#160;&#160;<br> <br> I hope this helps.&#160;

Hi Nimish, <div></div> <div>Thanks for the explanation.</div> <div></div> <div>Re. the second one. What if the mortgage is on freehold title, but not on leasehold title, does it mean no discharge is needed?</div> <div></div> <div>And 'Deed of Substituted Security' is the document I can ask from the morgage lender?</div> <div></div> <div>Thanks!</div>

Hi Cherry - a discharge is not explicitly required for the merger of a freehold title and leasehold title where the freehold has a mortgage on it, but it depends on specific circumstances.&#160;<br> <br> Yes, the Deed of Substituted Security is a document that has to be provided by the mortgage lender.&#160;

Thanks Nimish!