Leasehold & Management Agent - Please help!

JerKar

Hi Firefox and Richard,

Thank you both for your feedback.

Unfortunately I do not think we will be informing the Estate Agent of the exact reasons why we are pulling out, simply because we discovered after some months waiting for the outstanding enquiries to be answered that he was still trying to find another buyer for the same flat, even though he knew what the situation was. Furthermore he claimed (to another potential buyer) that it was OUR fault for the delay in completion! The cheek of the man! So rather than us doing the hard work and giving him a heads-up, we’ve decided that we won’t disclose our reasons and let him earn his wage himself. The vendor has not been particularly helpful in proceedings either (he hasn’t done any chasing of the Management Agent during this time) so I don’t think we own them anything either.

It’s a shame that someone else might end up in this situation. As FTBs we were a bit naive during the initial stages; anyone savvy enough in the house-buying process and decent solicitor will probably pick up on some issues much quicker than we did and nip it in the bud at an earlier stage.

I agree with Richard on both points about nobody else wanting to do the job, or paying for someone else professional to do it for them. However what might not be clear to the current residents is the potential extent of the problems. If these were brought to light, then they might be more inclined to do something about it.
Just wanted to clarify something with anyone that has any advice on this – if a Management Agent or Company cannot supply audited accounts for that particular property for the past 2/3 years, and the Company becomes insolvent (for non-submittal of accounts to Companies House), how would a potential seller answer this enquiry to the satisfaction of the buyers solicitor? Or essentially if there is no ‘creditable’ financial information at all for the past couple of years, would it still be possible to sell?

Best Regards,

JerKar

grey_lady

"There are a number of things outstanding, including whether the ground rent was paid and up-to-date, a copy of the buildings insurance (understandable, would have thought the vendor had a copy of this, but apparently not), audited accounts (3 years), Fire Risk Assessment and a copy of the Memorandum and Articles of Association."

The company who owns the land would be able to tell you if groundrent has been paid, but if you can't track them down then your solicitor would be able to ask the seller to put aside a certain amount of money to cover a couple of years ground rent. That's if the seller can't give you proof he has paid the ground rent up to date.

copy of the Memorandum and Articles of Association - wouldnt that be available from companies house?

buildings insurance and fire risk assessment, the seller wouldnt have that - I didnt realise it was necessary for a sale to go ahead, but I guess it makes sense that the lender might want to know there is buildings insurance from day 1.

The audited accounts thing is worrying, the fines are going to be in the thousands by now and the directors are probably being personally chased. They need to get a professional accountancy firm in asap.

But to answer your last question, I don't think it would prevent a sale - the not having the accounts available as there wasn't the last two years of accounts for my place when I bought, again the solicitor got the seller to lodge a certain amount with his solicitor for a couple of years in case there was a shortfall in the accounts that the residents needed to make up.

Might be different though if the company has actually been disbanded by companies house.

Personally it would put me off.

JerKar

Hi Grey Lady,

Thanks for your response.

Apparently the vendor has no recollection of ground rent being paid or seeing any accounts/statements related to it, nor any information regarding the service charges, payments, etc.

The Memorandum and Articles of Association are indeed available at Companies House – it’s a shame our solicitor didn’t think to look there first!

It is assumed that the building does have insurance, however with what we have uncovered over the past week or so, nothing can be taken for granted!

Thanks for your advice on whether the audited accounts would prevent a sell. We have definitely decided though that there are some serious problems in the overall competency of the Management Company and Agent, and we have no wish to burden ourselves with this. We will wait see if any further action is taken at Companies House in the near future.

All the best,

JerKar

Fire_Fox

JerKar wrote: »

Hi Firefox and Richard,

It’s a shame that someone else might end up in this situation. As FTBs we were a bit naive during the initial stages; anyone savvy enough in the house-buying process and decent solicitor will probably pick up on some issues much quicker than we did and nip it in the bud at an earlier stage.

Just wanted to clarify something with anyone that has any advice on this – if a Management Agent or Company cannot supply audited accounts for that particular property for the past 2/3 years, and the Company becomes insolvent (for non-submittal of accounts to Companies House), how would a potential seller answer this enquiry to the satisfaction of the buyers solicitor? Or essentially if there is no ‘creditable’ financial information at all for the past couple of years, would it still be possible to sell?

I think you are being unfair blaming the solicitor for not investigating the management company at Companies House - unfortunately it's commonplace for these queries to take months to come through, and unusual for management companies to be in the position you have uncovered.

In the current position it will be difficult to sell this property as mortgage providers will be reluctant to lend. If a cash buyer came along they may be willing to get involved and spend the time sorting out the management company issues if they get the flat for a heavily discounted price. In the absence of a management company their role with regards maintenance and documentation will revert back to the freeholder.