Who owns refund from leasehold major works – seller or buyer?

by Readers Question

15:19 PM, 10th February 2017
About 2 years ago

Who owns refund from leasehold major works – seller or buyer?

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Who owns refund from leasehold major works – seller or buyer?

I recently bought an ex-council flat which got a huge bill mainly for window replacement. The information pack showed an unpaid bill of £26k for major works, with a comment saying they expect the final bill to be less. refund

The purchase was completed in Sept as urged by the seller and the seller’s solicitor paid off the major works bill on Oct 5. In Nov, I received a letter advising of a credit of £2.3k (credited to my account on Oct 10) for major works and an adjustment of £52.88 (credit) for service charge (credited on Sept 7). As the letter was addressed to me asking me for account details for the refund, I requested the management company to pay to me the £2.3k. The manager held it back and sought advice from both solicitors as it’s BIG. They have no problem for me to have the small credit for service charge overpaid, which is not consistent to me.

The completion schedule showed apportionment for service charge, a retention of £3k for major works and another small amount retained for service charge, but nothing was agreed in case there’s a refund. I agree the £3k retention is now not needed so will be returned to the seller, but I should be entitled to the £2.3k credit as I risk bearing any debit above £3k retained. Although my solicitor agrees with my common sense, the dept head refers to clause 6.3.5 of the Standard Conditions of Sale (5th edition) and thinks this £2.3k credit should belong to the seller. I don’t see any connection between major works and clause 6.3.5. My solicitor didn’t request the mgmt co. to refund me per my request, but at least didn’t tell them to pay the seller. The money would just sit in a pending account although I still see it in my account.

During my research, I found this link from Islington council: https://beta.islington.gov.uk/~/media/sharepoint-lists/public-records/housing/information/adviceandinformation/20142015/20150302apportionmentsandretentionsfactsheet.pdf It shows that retention and apportionment are different items. And refund is yet another item. Last bullet clearly says seller has to get agreement from buyer for refund I called Islington Council to ask from a seller’s position who didn’t agree on this and they said the best a seller can do is to ask their solicitor to ask for the refund to be passed on to them, but if the buyer doesn’t agree then they can’t do anything.

Can anyone advise on my position? What options do I have when my solicitor is not helpful to me? Specialist dispute resolution solicitor? Changing solicitor when sale has completed?Court?

Many thanks.

Kath



Comments

Puzzler

11:23 AM, 11th February 2017
About 2 years ago

I would think it belongs to whoever paid the bill for the windows, the management company? I believe it should revert to their funds. How can you have a credit against something you did not pay for? or did you agree to pay as part of the purchase?

Kath Jones

12:30 PM, 14th February 2017
About 2 years ago

The seller paid for it, not management company. To make clear cut, apportionment has been made at completion. To me, completion schedule states it all. In case there's a shortfall in major works that management company forgot to invoice the seller before, I will have to pay for it, not the seller. So why the can't I have the credit when completion schedule didn't say the seller would receive it? At least it's not agreed at completion. Is it something solicitors missed?

Puzzler

20:05 PM, 14th February 2017
About 2 years ago

Good question! They obviously didn't expect that. But why didn't the management company pay? I still think it belongs to the seller but you need further advice. Or to agree that it goes into the management company funds, The fact that you are now the owner and liable for future bills is not relevant. The seller overpaid a bill, simples.

Puzzler

13:34 PM, 4th April 2017
About 2 years ago

I just found the following which clearly states that any refund is due to the current owner in the absence of an agreement to the contrary. However as yours is a specific bill, I can't say if it would apply

http://arma.org.uk/leasehold-library/download/buying-and-selling-your-flat

Kath Jones

22:01 PM, 6th April 2017
About 2 years ago

Reply to the comment left by "Puzzler " at "04/04/2017 - 13:34":

Thanks.


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