End of year balancing charge from the Management company. is it fair?

kiwi07

Today I've got an invoice from the Management company serving my flat. Its the End of year 2009 balancing charge of £48.82 from 01/01/2009 to 31/12/2009. The management company had a deficit and an invoice for my proportion of this loss. I've only bought the flat on 30/07/2009 and moved in on 06/08/2009. I think its a bit unfair to charge me this full amount. I pay service charge of £83 per month and think it's too much for the quality of work they do. What can I do?

BitterAndTwisted

That doesn't seem terribly much to me. It appears that they are quite at budgeting however.

kiwi07

It's just matter of principle. Why I have to pay in full if I've only been living since August?

tabskitten

Life is not fair.

BitterAndTwisted

Query it. Even though the service-charge accounting period might be a full year your apportionment might have been correctly calculated to reflect how long you've been living there. Property management companies often employ teams of accountants do these sort of dreary calcs. I used to work for one of them and they are used to answering questions like this. Is there no covering documentation with the demand to showing the expenditure and how they've arrived at the figure? There should be

Fire_Fox

oki1875 wrote: »

Today I've got an invoice from the Management company serving my flat. Its the End of year 2009 balancing charge of £48.82 from 01/01/2009 to 31/12/2009. The management company had a deficit and an invoice for my proportion of this loss. I've only bought the flat on 30/07/2009 and moved in on 06/08/2009. I think its a bit unfair to charge me this full amount. I pay service charge of £83 per month and think it's too much for the quality of work they do. What can I do?

What specific services are you paying for? Do you have a lift, gardens, car park or private road, heated communal areas? Do you have a breakdown of the overall charge levied? If not write and ask for one, you may as well use the opportunity to ask for copies of all the service contracts too, so you can see exactly what should be done and when.

It's standard practice for service charge estimates to be levied in advance and the books balanced at the end of the financial year. The overspend does not seem to be excessive, tho of course that depends on how many units are in your block. As leaseholder you have the right to query and, if necessary, dispute the charges levied. You do NOT have the right to simply withhold charges so please do not take this route unless you wish to get a CCJ.

Everything to do with service charges and leasehold explained in plain English here:
http://www.lease-advice.org/publications/documents/document.asp?item=14

oki1875 wrote: »

It's just matter of principle. Why I have to pay in full if I've only been living since August?

Because when you purchased the flat you inherited ALL the rights, responsibilities and liabilities from the previous leaseholder. That is why your solicitor will have checked there were no arrears on your flat's service charge account. Many FTBs have no understanding of what they are paying for and what the services cost. I suggest you read the above website, read your long lease so you understand what you should be paying for, formally request additional documentation and then come back here if you are not sure about what to do next.

IMO it is not worth getting involved in leasehold disputes that are a matter of principle, especially not when you are not familiar with the legislation. I have been disputing service charges for coming up to four years, it is incredibly time consuming reading the legislation, reading LVT decisions, preparing letters and attending meetings. Focus on the big stuff, so far I have saved £4K.

kiwi07

thank you all. The covering letter states that "accounts show a year end deficit of £1.173, an invoice for £48.82 is your proportion of this loss". There are 24 apartments in the building. In the same time they just recruited one more Estates Coordinator.... I still think £83 per month is a lot!!

kiwi07

Fire_Fox wrote: »

What specific services are you paying for? Do you have a lift, gardens, car park or private road, heated communal areas? Do you have a breakdown of the overall charge levied? If not write and ask for one, you may as well use the opportunity to ask for copies of all the service contracts too, so you can see exactly what should be done and when.

It's standard practice for service charge estimates to be levied in advance and the books balanced at the end of the financial year. The overspend does not seem to be excessive, tho of course that depends on how many units are in your block. As leaseholder you have the right to query and, if necessary, dispute the charges levied. You do NOT have the right to simply withhold charges so please do not take this route unless you wish to get a CCJ.

Everything to do with service charges and leasehold explained in plain English here:
http://www.lease-advice.org/publications/documents/document.asp?item=14




Because when you purchased the flat you inherited ALL the rights, responsibilities and liabilities from the previous leaseholder. That is why your solicitor will have checked there were no arrears on your flat's service charge account. Many FTBs have no understanding of what they are paying for and what the services cost. I suggest you read the above website, read your long lease so you understand what you should be paying for, formally request additional documentation and then come back here if you are not sure about what to do next.

IMO it is not worth getting involved in leasehold disputes that are a matter of principle, especially not when you are not familiar with the legislation. I have been disputing service charges for coming up to four years, it is incredibly time consuming reading the legislation, reading LVT decisions, preparing letters and attending meetings. Focus on the big stuff, so far I have saved £4K.

Yes, you are 100% right. I just spoke to the Management company and they said that "Because when you purchased the flat you inherited ALL the rights, responsibilities and liabilities from the previous leaseholder". She suggested that I can contact my solicitor. So I just agreed to pay it. However I remember my solicitor requested from the seller sum of £250 just in case there will be a deficit. Not sure what it was about. Is it worth to speak to my solicitor or just give up? Do I have to pay for a consultation?

Icey77

It's £48, in the long scheme of things this is not bad!

Surely your seller must have provided copies of correspondence from the management company and previous years maintenance fees and invoices should have been included with this ... did you look at them?

It will cost you far more than £48 to try and get out of it.

Richard_Webster

Yes, you are 100% right. I just spoke to the Management company and they said that "Because when you purchased the flat you inherited ALL the rights, responsibilities and liabilities from the previous leaseholder". She suggested that I can contact my solicitor. So I just agreed to pay it. However I remember my solicitor requested from the seller sum of £250 just in case there will be a deficit. Not sure what it was about. Is it worth to speak to my solicitor or just give up? Do I have to pay for a consultation?

Until I got to this comment I was going to say that OP's solicitor should have explained to him/her that this could happen and at least offer the option of making a retention to cover such charges. I routinely explain the point and say that I won't normally make a retention because it is a lot of hassle re-opening the file to recalculate the charges several months or a year or more later. I tell buyer clients that I can do this but I will charge them £60 plus VAT extra for fiddling around with it.

If like OP here a buyer contacts me later I point out that it was all explained in my pre-contract report and the option of making a retention explained.

When acting for a seller I try to resist making retentions because they are a lot of hassle, although to be fair to everyone, there is a good case for having them and most solicitor s do insist on them to protect their clients. One of my counter arguments is that the buyer usually forgets to make a claim on the retention with his solicitor and OP has just proved my point because he came on this forum instead of contacting his solicitor with a copy of the excess charge demand to invoke the protection provided by the retention. The retention would then have paid the seller's proportion of the excess leaving OP to pay the balance related to the time he/she owned the flat.

kiwi07

Richard_Webster wrote: »

Until I got to this comment I was going to say that OP's solicitor should have explained to him/her that this could happen and at least offer the option of making a retention to cover such charges. I routinely explain the point and say that I won't normally make a retention because it is a lot of hassle re-opening the file to recalculate the charges several months or a year or more later. I tell buyer clients that I can do this but I will charge them £60 plus VAT extra for fiddling around with it.

If like OP here a buyer contacts me later I point out that it was all explained in my pre-contract report and the option of making a retention explained.

When acting for a seller I try to resist making retentions because they are a lot of hassle, although to be fair to everyone, there is a good case for having them and most solicitor s do insist on them to protect their clients. One of my counter arguments is that the buyer usually forgets to make a claim on the retention with his solicitor and OP has just proved my point because he came on this forum instead of contacting his solicitor with a copy of the excess charge demand to invoke the protection provided by the retention. The retention would then have paid the seller's proportion of the excess leaving OP to pay the balance related to the time he/she owned the flat.

I am sure she actually retained £250 just in case there are deficit. I do remember she definitely mentioned about this retention. I spoke to her today about this excess charge demand and she said that she has to open my file and it's a lot of hassle. She said it's not worth it to go through all this as it's only £48.82. So I am afraid I have no option but just to pay it.