Leasehold service charge advice

Discussion in 'OT (OFF Topic) Forums' started by GreetMe, Jun 1, 2017.

  1. GreetMe

    GreetMe Hardcore MB Enthusiast

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    I'd really appreciate some advice on this...

    Six months ago I sold my leasehold property. Shortly after completion I was told that there was a shortfall in the service charge payments that I'd made (because the payments are only estimates until the management company do their year-end accounts). I paid the shortfall and was told by the management company that that was an end to it.

    Fast-forward six months: earlier this week I received a request from my solicitor for an additional service charge payment. Apparently my buyer had to cough up more than expected because the solicitors on both sides misunderstood how and when the charges are worked out.

    It's my understanding that solicitors on both sides of a sale should retain a sum of money for just such an eventuality. Evidently they didn't do this or they didn't retain enough and now they're coming after me. The buyer has cleared the account (presumably they were getting grief from the management company) so the only money allegedly owed is to my buyer.

    It's also my understanding that once you've completed on a property, that's it: your financial obligations to that property end with the completion statement (isn't that the point of it?!).

    Putting aside the moral issue of whether I *should* pay, do I have any legal obligation to pay this? So far my (former) solicitor is asking nicely but I suspect their tone will harden if I push back.

    Sorry for the essay. :doh: :rolleyes:
     
  2. markjay

    markjay MB Club Veteran

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    I don't know the answer for fact, but I do know that solicitors always insist (as condition of the sale) on a letter from the Landlord (or his Managing Agent) confirming that there are no service charge arrears, and based on that I have always assumed that the legal position is that any service charge debt goes with the property to the new owner (i.e. this why the buyers' solicitors are adamant that the letter must be produced). Hope this helps.
     
  3. OP
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    GreetMe

    GreetMe Hardcore MB Enthusiast

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    Thank you. :)

    A telling fact is that the new owner has settled the account, i.e. as far as the management company is concerned there are no arrears. This is what I think has happened: the buyer has paid the arrears because it's their legal obligation to do so (as you say, the service charges are attached to the property, not the person). The buyer is understandably miffed that their solicitor made a mistake so they're attempting to get their money back by putting pressure on me via my solicitor.

    Having dealt with the management company during my period of ownership I have no doubt that they'd be coming after me directly if I owed them money.
     
  4. markjay

    markjay MB Club Veteran

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    ...and, if the Managing Agent does produce such letter and it then turns out to be incorrect, the buyer will likely claim against the Managing Agent's Professional Indemnity Insurance (is the sum is high enough).
     
  5. markjay

    markjay MB Club Veteran

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    In my view the buyer should claim against the Professional Indemnity Insurance of the solicitor that he believes made the mistake.

    Again, this is based simply on my own experience, not on any specific knowledge of legislation etc. So I may be wrong...
     
  6. Benzowner

    Benzowner Hardcore MB Enthusiast

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    My daughter recently had a similar issue with a property she sold. Her view, with which I agreed, was that on completion, the buyer's and seller's solicitors should have sorted it, they didn't so it's their problem! It went away and she has heard nothing since, that was nearly a year ago.
     
  7. OP
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    GreetMe

    GreetMe Hardcore MB Enthusiast

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    :thumb:

    There's a section on the service charge invoice from the management company that says both parties' solicitors should "consider making a retention to cover any shortfall difference between the estimated and actual costs for the year".

    I suspect that one or both of the solicitors failed to do this and now the buyer is trying to get their money back from their solicitor who's trying to get the money from my solicitor who's trying to get it from me. I can't see any other reason why this would have come via my solicitor.
     
  8. Benzowner

    Benzowner Hardcore MB Enthusiast

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    Probably because he doesn't want to claim on his insurance.
     
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  9. OP
    OP
    GreetMe

    GreetMe Hardcore MB Enthusiast

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    :D

    I've asked my solicitor (who isn't my solicitor any more because I sold the property six months ago) whether this constitutes legal proceedings against me or if they're just asking nicely.

    It's not a massive amount of money but I'm inclined to push this if I'm legally in the right. My buyer was a complete pain in the **** throughout the whole process and caused me no end of grief and expense. If they're now expecting me to reimburse them as a good will gesture then they will be sorely disappointed.
     
  10. flat6buster

    flat6buster Hardcore MB Enthusiast

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    Tell 'em to get poked. Sounds like a solicitor passing the buck. They do have teflon shoulder implants you know.
     
  11. OP
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    GreetMe

    GreetMe Hardcore MB Enthusiast

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    My thoughts exactly.
     
  12. OP
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    GreetMe

    GreetMe Hardcore MB Enthusiast

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    I've had the following advice from a conveyancing solicitor:

    "The standard conditions of every contract are that any service charge relating to your period of ownership should be paid by you. A prudent solicitor would make a retention, but even without one you should still pay as those are the terms of the contract.

    However, realistically for the buyer forcing you to pay would be virtually impossible if the amount is small, as it wouldn't be worth taking you to court. You should not respond to your solicitor and then your solicitor won't have instructions from you and can't do anything.

    So technically yes you need to pay, realistically, if you don't there may be no consequences. But you could end up being sued."

    So nice and clear-cut, then. Great. :bannana: :wallbash:
     

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