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    • pacificdragon
    • By pacificdragon 6th Sep 17, 9:20 PM
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    pacificdragon
    Urgent advice needed please re management company
    • #1
    • 6th Sep 17, 9:20 PM
    Urgent advice needed please re management company 6th Sep 17 at 9:20 PM
    Good evening MSE forum,

    I have an urgent question that I would greatly appreciate any feedback/guidance or assistance.

    I am in the process of buying and selling, the sell side of my transaction is complete and my relate purchase is beginning to stall.

    The reason/background is as follows. The house I am purchasing is a freehold with no conveyancing problems. The road that the house is situated on is a private and not adopted by the local council. The owners of the road are the residents which comprises of 6 houses.

    The 6 houses have formed their own management company and are responsible for a very small road (end of a cul-de-sac) which is a small patch of grass and a lamp post. The grass area and lamp post are what is causing the problem in as much it is not a formal/recognised management company looking after it.

    The residents each pay £100 per year for the upkeep and since the houses were built 3 years ago there have been no problem. I'm now buying the first house to be resold and during the conveyancing process have come across numerous amount of hurdles relating to the management company.

    The management company are the 6 house holds and each year the directorship rotates to a new household. My solicitor has asked for a deed of covenant, membership certificates and other documentation that they would normally expect if this was a 'proper' management company.

    The resident who is currently the director is answering the questions my solicitor is asking but obviously no where near as satisfactory as is expected.

    We now have a Mexican standoff where no progress is being made, I obviously can't do anything to speed up or help and I'm now getting very concerned partly that the purchase may not happen and now partly if it does will this down the line cause problems for me trying to sell.

    If anyone is able to offer any advice or suggest something I can put forward to my solicitor. I would be extremely grateful, the same questions have been asked and answered unsatisfactory for the last 3-4 weeks and something now has to happen.

    Thank you in advance.

    Pacificdragon
Page 1
    • G_M
    • By G_M 6th Sep 17, 9:31 PM
    • 41,917 Posts
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    G_M
    • #2
    • 6th Sep 17, 9:31 PM
    • #2
    • 6th Sep 17, 9:31 PM
    1) is the solicitor asking these qustions on your behalf, or on behalf of a mortgage lender?

    2) if you, are you satisfied by the answers provided?

    3) if your mortgage lender, is the lender, or the solicitor on their behalf, categoricaly saying the answers are unsatisfactory and the mortgage will not be released?

    4) the constitution of the management company is irrelevant - it seems a fairly common set-up. 6 property owners own the road, and are managing it. What are the Q.s which are causing a problem?

    5) "numerous amount of hurdles relating to the management company." Unless you specify these 'hurdles', how can we advise?
    Last edited by G_M; 06-09-2017 at 9:36 PM.
    • pacificdragon
    • By pacificdragon 6th Sep 17, 9:58 PM
    • 5 Posts
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    pacificdragon
    • #3
    • 6th Sep 17, 9:58 PM
    • #3
    • 6th Sep 17, 9:58 PM
    Hi G_M

    Thank you for the prompt reply.

    All of the questions have been asked so far on my behalf, but today when speaking to my solicitor they did say they were also asking on behalf of my mortgage lender to protect their interest to. Which is why they are unable to take a view on any of the answers.

    The specific questions asked so far :

    I am required to enter into a deed of covenant as required by the leasehold for the private road. However the management company have not provided a draft deed for my solicitor to review and provide advice on.

    The management company make reference to the current owner of the property I am purchasing having a membership certificate for the management company. But the seller advises they are not in possession of such a certificate.

    Last question relates to the membership. Is an application required to become a memeber and if so who will draft the membership.


    The above are the formal questions, the replies my solicitor is receiving and the sellers estate agent give me are. The management company are very informal and when the houses were first built all the residents got together and decide this was the best way to run the road and set up a reserve fund should the need for cash arise. It doesn't appear any of the above has been done although I am concerned that similar questions must have been asked by conveyances for the first 6 occupants of the street.

    My simplistic view is that the agree to pay £100 each per year to cover cutting the grass and looking after the street light. However legally it is not simplistic which is why the conveyancing is at the stage of stalemate at the moment.

    Thank you.

    PD
    • AnotherJoe
    • By AnotherJoe 6th Sep 17, 10:01 PM
    • 7,588 Posts
    • 8,188 Thanks
    AnotherJoe
    • #4
    • 6th Sep 17, 10:01 PM
    • #4
    • 6th Sep 17, 10:01 PM
    Tell your solicitor to proceed as you are happy with the setup (if you aren't, look for another house) and you'll see if the lenders unwillingness is an issue.
    • G_M
    • By G_M 6th Sep 17, 10:14 PM
    • 41,917 Posts
    • 48,511 Thanks
    G_M
    • #5
    • 6th Sep 17, 10:14 PM
    • #5
    • 6th Sep 17, 10:14 PM
    There are thousands of similar informal arrangements. For flats, private land, roads, etc. Many (not all) work extemely well, and are far more cost-effective than setting up / appointing formal/professional management companies.

    If you are confident it works, and are happy to purchase, tell your solicitor to proceed.

    If your lender is not satisfied, they may over-rule you, but unless that happens your solicitor should follow your instructions.

    Have you spoken to (any of) the other 5 property owners? If not, why not? If so, how did you find them?
    • ThePants999
    • By ThePants999 6th Sep 17, 10:17 PM
    • 863 Posts
    • 1,010 Thanks
    ThePants999
    • #6
    • 6th Sep 17, 10:17 PM
    • #6
    • 6th Sep 17, 10:17 PM
    I think the solicitor's doing you a favour here. I appreciate that the management company is "very informal", and day to day that's going to be a good thing, but I'd want them to have their ducks sufficiently in a row to be able to sort things like the deed of covenant, which I wouldn't want to be signing without my solicitor's go-ahead - and I'd want confidence that when I come to sell, my buyer isn't going to run into a similar hurdle and perhaps be even more cautious!
    • pacificdragon
    • By pacificdragon 6th Sep 17, 10:34 PM
    • 5 Posts
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    pacificdragon
    • #7
    • 6th Sep 17, 10:34 PM
    • #7
    • 6th Sep 17, 10:34 PM
    on Friday when other people in the chain start to fire off the mandatory ultimatums I drove down to the street.

    Sadly it's a 200 mile round trip so I've not been able to visit as often as I would like. I spoke to the occupant who is shown as the director, but her son is living at the address and mother lives elsewhere in the country.

    He was very helpful and explained a lot about the neighbours and the street etc but couldn't provide any information about the management company. Which again showed a slight flaw in the management company. The person who should be the director is not living at the address.

    Today I asked if the exchange could take place but I was told that my solicitor was also looking after the interest of my lender. I'm stuck between the rock and a hard place, I'm not put off by the management company but I'm certainly more aware now of it's limitations.

    As thepants999 has said, the solicitor is obviously not letting me do anything impulsive, I have asked if there was any kind of indemnity insurance that could be taken to protect my interests but there's nothing obvious for an indemnity policy to protect me against.

    I just feel that this is not something that is that unique a large conveyancing firm hasn't come across this before and found an amicable solution.
    • G_M
    • By G_M 6th Sep 17, 11:07 PM
    • 41,917 Posts
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    G_M
    • #8
    • 6th Sep 17, 11:07 PM
    • #8
    • 6th Sep 17, 11:07 PM
    I just feel that this is not something that is that unique a large conveyancing firm hasn't come across this before and found an amicable solution.
    Originally posted by pacificdragon
    Well if either you, and/or your lender, are not prepared to take on the risk associated with this informal arrangement then there remain 2 solutions:

    1) pursuade the residents to set up a formal company

    2) walk away from the purchase
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