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kenzie123
Posts: 88 Forumite
Hi all,
We are first time buyers and on the verge of exchange for a leasehold flat in London.
The issue is that we are aware that the vendor has service charge arrears up until July 2016 (that is what the latest statement shows). Our solicitor has requested a retainer of £150 and has insisted that an undertaking be included in the contract to ensure all payment of arrears is made on completion.
We don’t understand why this cant be paid BEFORE completion, which is only two weeks away. Our own solicitor has said that if the vendor does not pay then we could be liable to pay this ourselves. What also complicates the matter further is that the vendor lives overseas in Jamaica and her solicitor is in fact her sister who we have had some trouble dealing with so far.
Should we insist that payment of all arrears should be made before completion and request a higher retention be included of around £350 to cover any shortfall?
Many thanks
We are first time buyers and on the verge of exchange for a leasehold flat in London.
The issue is that we are aware that the vendor has service charge arrears up until July 2016 (that is what the latest statement shows). Our solicitor has requested a retainer of £150 and has insisted that an undertaking be included in the contract to ensure all payment of arrears is made on completion.
We don’t understand why this cant be paid BEFORE completion, which is only two weeks away. Our own solicitor has said that if the vendor does not pay then we could be liable to pay this ourselves. What also complicates the matter further is that the vendor lives overseas in Jamaica and her solicitor is in fact her sister who we have had some trouble dealing with so far.
Should we insist that payment of all arrears should be made before completion and request a higher retention be included of around £350 to cover any shortfall?
Many thanks
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Comments
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1) insisting on payment before Exchange of contracts is an option, but will delay matters. Possibly considerably.
* need to get seller to agree
* seller needs to find out exactly what is owed, and then pay it
* your solicitor needs to write to freeholder to confrm it's paid
* freeholder has to write back (and possibly charge for the admin of doing so!)
2) a retainer is a good alternative, but must be more than the anticipated arrears (just to be sure!). Do you know how much the arrears are?
To be honest, if it's just £150, it's hardly worth worrying about too much, but if it might be more.......
3) the undertaking is a good idea, but don't rely on it. The retainer is much more reliable especially as the seller is overseas.0 -
Well, it possibly can't be paid before completion because they need the money from the sale to pay it. Can't they get an undertaking by the solicitors to pay it? (same as they normally deal with paying off the mortgage)0
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Thanks both
we should have said that up to now the arrears are £460, dated from June therefore will have increased by now.
We do have an undertaking on the contract but our solicitor has said she can't guarantee they will pay their arrears despite the undertaking. If they didn't pay, I imagine we'd have to either pay the arrears ourselves, or pay another legal fee to pursue arrears from the seller.
Re: the retainer, our solicitor has said that the amount of £150 only covers any other shortfalls, and is nothing to do with the arrears owed.
We don't understand why this retention of monies can't include both any shortfalls and also the arrears?
To save headache post completion, we'd rather they paid before exchange of contract but are unsure they would agree to this. Their estate agent has said on email that the vendor will definitely pay on completion, so it's some assurance, but not legal and certainly not binding.
We feel we are the only party at risk here.0 -
My vendor was in arrears, the solicitors arranged for the arrears to be paid at completion - I.e deducted from the price and paid to the management company before releasing the funds to the vendor. It seemed to be straightforward. It certainly went through without a hitch.0
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You are joking yes?Thanks both
we should have said that up to now the arrears are £460, dated from June therefore will have increased by now.
We do have an undertaking on the contract but our solicitor has said she can't guarantee they will pay their arrears despite the undertaking.
Indeed. Seller is overseas - if he does not honour the undertaking you'll never see the money.
Re: the retainer, our solicitor has said that the amount of £150 only covers any other shortfalls, and is nothing to do with the arrears owed.
OK
We don't understand why this retention of monies can't include both any shortfalls and also the arrears?
Instruct your solicitor (don't 'ask') that you want a further retainer to cover the arrears specifically. If they are now £460 and rising, I would demand £800 (and review this if Exchange is delayed thus increasing the arrears. In addition to the £150 whatever that is for.
To save headache post completion, we'd rather they paid before exchange of contract but are unsure they would agree to this.
see my earlier comments - are you preapared to wait? weeks? Months?
Their estate agent has said on email that the vendor will definitely pay on completion, so it's some assurance, but not legal and certainly not binding.
:rotfl::rotfl::rotfl::rotfl::rotfl:
The EA simply wants the sale to go through ie for you to Exchange/Complete so he gets his commission.
a) he has no way of knowing what the seller will/will not do on completion
b) and frankly he does not care!0 -
There may not be spare cash to pay before completion, but retaining sufficient ON completion would be wise. Faced this when buying, and daughter had " loaned " mother at commercial rates, also placing a charge on the house (family, eh?). Daughter wanted charge to remain after completion, to ensure she bother swag. Solicitor wasn't quite convinced!
Otherwise, negotiate price down in expectation of facing the bill.0 -
If the seller's solicitor gives a solicitor's undertaking to discharge the arrears out of the sale proceeds on completion then the fact that the seller is overseas is irrelevant.
The solicitor can be hauled before the Solicitor's Disciplinary Tribunal for non-compliance with an undertaking if she doesn't pay! She won't want that.RICHARD WEBSTER
As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.0 -
Very true. But OP said:Richard_Webster wrote: »If the seller's solicitor gives a solicitor's undertaking to discharge the arrears out of the sale proceeds on completion then the fact that the seller is overseas is irrelevant.
The solicitor can be hauled before the Solicitor's Disciplinary Tribunal for non-compliance with an undertaking if she doesn't pay! She won't want that.
which is a very different kettle of fish!Their estate agent has said on email that the vendor will definitely pay on completion,
Given the circumstances Richard, would you recommend OP asks his solicitor to get a solicitor's undertaking, or a retention? And what are the respective pros/cons of each?0 -
Richard Webster and G_M - thank you - well we've emailed our solicitor today asking for a higher retention for shortfall and a further amount kept back (£900) for the arrears - not heard back yet and unsure if sellers solicitor will agree.
Sellers solicitor has agreed to the undertaking, I just mentioned the estate agent's comments for info.
However even the undertaking doesn't give us the protection we need - if they don't pay - by then we've already given our deposit. Your point about the Solicitors Disciplinary Tribunal is really useful.
To reiterate, we are wary of the situation also because the solicitor is also the vendor's sister.0
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