Open retention and unknown costs on Repo – Should I complete today?

by Readers Question

10:06 AM, 5th January 2017
About 2 years ago

Open retention and unknown costs on Repo – Should I complete today?

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Open retention and unknown costs on Repo – Should I complete today?

We are buying a repossessed freehold property with shared common areas, car park spaces and gardens.fear

The management company have asked for a retention of the purchase price, but they would not specify how much or what for, they also served notice of major works on the complex which contains leasehold flats and freehold houses, but they would not tell us what our share of the cost would be.

The sellers solicitors are pressing really hard to exchange today and complete in 7 days and my solicitor would not ask them to postpone the exchange of contracts because he already asked that over Christmas when he was shut 23rd Dec to the 3rd Jan.

I am in very difficult situation of what to do, if I sign up, it means that I would be liable to any cost afterword or if don’t sign up, they might withdraw the contract and may go with some one else, and that means I lose the survey fees £600 and my solicitors fees, around £1000 and the property which I think

Would make a good HMO investment.

Any opinion or advise would be greatly appreciated.

Many thanks

Ghalib



Comments

Neil Patterson

10:10 AM, 5th January 2017
About 2 years ago

Hi Ghalib,

You cannot give someone a Blank Cheque retention. What on earth is your solicitor advising you?

If they want to complete they also need to tell you what the planned cost will be.

Don't be put under pressure by others to do something you are not comfortable with. There is no way they will find another buyer to complete in the next few days it will take to sort out these questions.

Steven Burman

11:09 AM, 5th January 2017
About 2 years ago

Ghalib

Please, please take Neils' advice. You could end up having to pay out far more than the money you would 'potentially' lose by delaying the purchase further.

I am not surprised the vendor is keen to get things wrapped up in 7 days as I suspect they may know more than they are telling you.

Please do not sign anything until you are 100% sure of the costs which you will be incurring.

Your solicitor should be giving you this advice.....you should consider using someone else in future.

Good luck

SB

Dylan Morris

12:06 PM, 5th January 2017
About 2 years ago

Not sure why a freehold property would be subject to management charges in respect of common areas, car parks and gardens. Unless you meant to type "leasehold".
You need who walk away here as it would be insane to buy a property with an open ended liability like this. Not only would you not know what you were letting yourself in for, would you have sufficient money to actually pay up ?
If you walk away your solicitor's costs of £1,000 seem very high. Better to lose £1,600 than lose ten of thousands.

Jamie M

12:35 PM, 5th January 2017
About 2 years ago

Don't go near it 🙁

Hattie

13:11 PM, 5th January 2017
About 2 years ago

Hi there
I have a freehold property btl but pay management fees to look after the communal open spaces - these are usually sold off if they were owned by the armed forces or suchlike therefore no council or water/sewage company had adopted the roads, sewers or open spaces at that time- so a management company would look after these spaces and charge each property owner an amount that would cover this yearly. I would get your solicitor to earn his money and ask which management company they use to do this and ask them about costs ect - but don't get pushed into anything - it seems a little fishy if you ask me.

Gary Nock

13:35 PM, 5th January 2017
About 2 years ago

Ghalib it is more than likely a leasehold property if it has service charges and communal areas. Although your solicitor should be doing this it is also up to the purchaser to exercise due diligence. Ask your solicitor for the following documentation, which in leasehold cases should be provided by the vendor or the company selling the repossession:

1. The Lease. Ascertain your liability as a proportion of the costs for the site;

2. Ask for the latest service charge demand for the property, and the level of arrears that the management company are seeking to retain;

3. If major works over £250 per unit are planned then ask for copies of the Section 20 Landlord and Tenant Act consultation notices for the property which should give an indication of how much the major works will cost;

4. Ask for a copy of the latest accounts for the development. See how much is in the "reserve fund" for major works. If there's nothing then the whole cost of the major works will come out of the leaseholders. And ask for an "up to date figure" on the reserve fund.

You might get the old "we can't do it it's data protection". Well someone is trying to hide things and if this info isn't forthcoming and acceptable then walk away. Something like this can cost you thousands. Honestly.

Ghalib Boutany

15:02 PM, 5th January 2017
About 2 years ago

Thank you so much guys, your advise and opinions are really appreciated. I have postponed the signing up till next week to give me time to go over the all the documents before deciding weather to go a head with it or no.

Really appreciate your help
Thanks
Ghalib

David Price

15:44 PM, 5th January 2017
About 2 years ago

Reply to the comment left by "Gary Nock" at "05/01/2017 - 13:35":

Ghalib if your solicitor is not already doing all the things that Gary suggests you need a better solicitor.

Colin Dartnell

16:02 PM, 5th January 2017
About 2 years ago

walk away!

John Frith

18:09 PM, 7th January 2017
About 2 years ago

I would also add to make sure that the vendor is aware that the delay is not coming from you, and that if they want the sale to proceed quickly (or at all) then they need to put pressure on the management company to provide the information that you need.

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