Service Charge Arrears from previous owner?

by Readers Question

16:40 PM, 12th October 2016
About 2 years ago

Service Charge Arrears from previous owner?

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Service Charge Arrears from previous owner?

Does anyone know whether unpaid service charges fall to a new owner? My solicitor says I should not have to pay the previous owners service charges because there was no way knowing these were outstanding.arrears

Whatever the reason I need to know whether I am on the hook, or whether I should resist demands for settlement.

Many thanks

Victor



Comments

Puzzler

19:21 PM, 12th October 2016
About 2 years ago

The solicitor should have established the status of the service charge account and it should have been brought up to date from the proceeds of the sale with you paying the pro rata amount for the period of your ownership as part of the purchase. If this did not happen your solicitor is seriously remiss as it is standard practice to ask for this information from the landlord or agent. Find out by looking at your completion statement and if there's nothing there ask them why. "No way of knowing" is therefore not true.

What period is outstanding?

David Lovegrove

22:12 PM, 12th October 2016
About 2 years ago

Is it the full service charges that were unpaid in the period prior to ownership or is it a case of the actual costs exceeding the estimated charges as the actual charges are often calculated some 6 months after the end of the accounting period.
As the new leaseholder I have been landed the excess charges in the past along with costs for "Major Works" undertaken before I bought but not billed until after I bought the property.
Now I am aware of this I ensure my solicitor holds retention on further leasehold purchases until such time as the accounts are signed off as actual costs prior to purchase rather than estimated.
These excess costs ,if any are then deducted from the retention.

Victor Saumarez

7:31 AM, 13th October 2016
About 2 years ago

Puzzler, that is my understanding. Unfortunately, the solicitor who dealt with this left the partnership and responses since have been scant. It is now too far down the road to involve them again. It has gone to court but was thrown out on a technicality. The management company won't let go and is harassing me. My fear is that if the battle prolongs they may force a repossession order. I don't know how feasible that it, but I'm certain they will try to prevent me from selling the property. It is very clearly not my fault. The sellers would have known, their legal representative probably knew, my solicitors should have found out and the management company may have been negligent in its failure to collect the service charge. Any reasonable party can see that, but the law may rule against it.

Victor Saumarez

7:41 AM, 13th October 2016
About 2 years ago

Reply to the comment left by "David Lovegrove" at "12/10/2016 - 22:12":

David, this was a full years service charge for the year prior to the deed of sale date. The charges are paid in advance and should have fallen to the previous owner. That is well established. However, they were in a mess. Service charges bumped 100% the following year due to mismanagement of costs. My experience with them has been unsettling. I have received several claims for arbitrary 'unpaid' service charges and ground rents that appear to have been administration errors. It is hard to trust and therefore comply when behaviour is erratic. My instincts told me to fight this one.

David Price

8:43 AM, 13th October 2016
About 2 years ago

So much depends on the lease but it is usual for the service charges to be associated with the property rather then any particular owner. Your solicitor should have ensured that all outstanding service charges were paid from the proceeds of sale (look at the contract to see what was agreed, it could be different) and if he did not then you should claim on his professional indemnity insurance.

Victor Saumarez

11:34 AM, 13th October 2016
About 2 years ago

David, I think you are right, Service charges fall to the property. I have just received legal advise to chase my solicitors regardless of the time that has passed.

Thank you everyone for very constructive and useful comments.

LVW4

11:59 AM, 13th October 2016
About 2 years ago

Reply to the comment left by "David Price" at "13/10/2016 - 08:43":

I agree with David. I had the same problem last year when I sold an apartment. My solicitor checked with the block management company (who I had appointed when I was Co.Sec.!), and they told her I had not paid the last quarterly service charge invoice. The completion date was looming, and I quickly checked my bank statement and with the management company, who confirmed I had paid but they had not reconciled their accounts when my solicitor asked. I told her, but she completed and deducted the amount from my proceeds of sale, saying I should claim the money back from the management company or the new owners. Despite having all the emails and letters supporting me, the management company refused to repay me, and after 6 months I threatened 'small claims'. They said they would defend their position, and would only pay me if the new owners' solicitor confirmed in writing, which they had already done at completion. My own solicitor went into radio silence; case closed, no more money to be made! 9 frustrating months later, I wrote to my solicitor's Partner, and a week later, I had the required correspondence from her, and a cheque in my account. Solicitors, especially more junior ones, don't like complaints, but it's your money!

Victor Saumarez

12:37 PM, 13th October 2016
About 2 years ago

Lou, your situation is similar but in reverse. I contacted my solicitors numerous times, but they either fobbed me off or didn't reply. I don't know if there is a way to compel them to respond appropriately? But I am going to try, even if I have to pay them.

LVW4

12:49 PM, 13th October 2016
About 2 years ago

Victor, your solicitors will fob you off and not respond because they believe they've done their job, been paid, and closed your file. They won't want to do any more work without being paid. But, they do not appear to have followed the required and expected process, and appear to be at fault. You should not have to pay them to resolve the matter. Identify the Senior Partner at your solicitor and send him a written complaint, with the threat to refer them to the Solicitors Regulation Authority if the matter is not resolved in your favour by a specific date; 2 weeks should be sufficient for them to retrieve your file from their archives and act accordingly. Be polite, concise, but firm.

David Price

13:31 PM, 13th October 2016
About 2 years ago

Also remember that the solicitors file is your property and you can ask for it at any time (not a copy, don't be fobbed off with photocopying charges). If the solicitor wishes to keep a copy for himself then it must be at his expense.

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