Previous tenants service charges

boxer691

I just bought a flat Ex council. The council tell me that I am responsible for the previous tenants service charges. Its a leashold purchase. The landlord is the County Council. Its still within 4 months of purchase and I have had no warning of this. My son lives in the flat on a private basis with no rent or commercial interest. What can I do?

princeofpounds

Your solicitor should have done a search for outstanding service charges. Your first stop should be contacting them to ask about the issue.

Fire_Fox

Do you mean there are arrears on the service charge account, or the service charges going forwards? The new leaseholder adopts all rights and responsibilities of the outgoing leaseholder so you do have to pay IF there are arrears and this isn't an error. As Princeofpounds says, this should have come out during the conveyancing process so I'd want to know why.

Everything leasehold can be found here:
www.lease-advice.org/publications

Richard_Webster

The service charges for the previous tenant are for the previous tenant to pay... ask the council to write & confirm under which law/regulation they are entitled to expect any many from you: I'm sure they have no such right...

Oh yes they have. Your solicitor should have made sure that there weren't any arrears or the seller's solicitors should have paid them out of the sale proceeds. Didn't your solicitors explain about this to you?

boxer691

Richard many thanks. Please can you tell at what point should have my solicitor examined this? I'm presuming also that the sellers solicitor is bound to disclose the fact that monies were owed?

Thanks

blckbrd

Opinion on liability for the previous lessee's arrears differs. Reasoning given here:
http://www.brethertons.co.uk/Content/File/PDF/Property%20Management%20-%20Liability%20of%20Service%20Charge%20after%20a%20flat%20is%20sold.pdf

The LA/ALMO I worked for until recently doesn't pass on the debt to the new owner although they used to.

Fire_Fox

boxer691 wrote: »

Richard many thanks. Please can you tell at what point should have my solicitor examined this? I'm presuming also that the sellers solicitor is bound to disclose the fact that monies were owed?

Thanks

Long before exchange of contracts the buyer's solicitor will send a long list of questions about the level of service charges, planned major works, arrears etc. to the vendor's solicitor. These must be answered directly by the management company/ freeholder, who usually charge a large admin fee and are often painfully slow! IIRC the buyer usually pays the costs as you need the answers, but the vendor submits the questions as they have the professional relationship with the MC/ freeholder.

If there are arrears it is usual for the buyer's solicitor to advise that exchange of contracts does NOT take place until the bill is settled, because up to completion the debt is the vendors legal responsibility. In practice this sometimes means the buyer settles the bill in order to get the sale to go through! As RW says, other times it is agreed in writing that the arrears will be paid out of the proceeds of the sale.

Just off to have a look at Blckbrd's link!! :cool:

clutton_2

service charges are applicable to the property not the owner, if the previous owner did not pay, the new owner has to - as Richards says.. sounds like an inefficient solicitor....

if notices re repairs and invoices are not lodged properly with leaseholders, then i belive it to be the case that the most a council can claim is £250 ... if it is a huge sum it might be worth while contacting the previous owner to see if s/he still has the paperwork....

Fire_Fox

The £250 is for major works, not service charges unfortunately.

Richard_Webster

Long before exchange of contracts the buyer's solicitor will send a long list of questions about the level of service charges, planned major works, arrears etc. to the vendor's solicitor. These must be answered directly by the management company/ freeholder, who usually charge a large admin fee and are often painfully slow! IIRC the buyer usually pays the costs as you need the answers, but the vendor submits the questions as they have the professional relationship with the MC/ freeholder.

If there are arrears it is usual for the buyer's solicitor to advise that exchange of contracts does NOT take place until the bill is settled, because up to completion the debt is the vendors legal responsibility. In practice this sometimes means the buyer settles the bill in order to get the sale to go through! As RW says, other times it is agreed in writing that the arrears will be paid out of the proceeds of the sale.

Just off to have a look at Blckbrd's link!!

This is more or less right except that you don't need to hold off exchange as long as it is clear that the arrears will be paid by the seller's solicitors on completion.

A buyer's solicitor should always explain in a pre-contract report about how a proportion of the service charge will be due on completion and should also explain that very often the amount being claimed is only provision12 month period in question, an excess charge may be levied, some of which should be paid by the seller in relation to his period of ownership.

The link makes interesting reading and I have saved a copy to go through at my leisure. I think the point in practice is that assuming what is said is right then a buyer may have a defence to a claim for arrears of service charge but will have to fight a case and take these legal arguments up - which could in practice be quite expensive.

Even if a freeholder/managing agent is wrong he will maintain the amounts are due until court/LVT decisions make it abundantly clear that he is wrong!

blckbrd

It occurs to me that deeds of covenant were also dispensed with. Before my time, but that could be because there's no provision in the lease.

OP, did you sign a deed of covenant and is there provision in the lease?

As I understand it, if both then you have taken on liability for the debt. If you signed a deed but there's no provision you may/should be able to challenge and if you didn't sign a deed I'd say you can definitely challenge.

The link I posted earlier makes no reference to a deed of covenant so, apologies if I've made things more confusing!

Richard, could you comment please?