what is a reserve fund?

Shaba_2

I am in the process of purchasing a 1 bed masionette in london. I will be having the top half of the house. The housing association will be my lanlord but i am buying the 80 year lease from them. its not shared ownership..

two thing..

what is reserve fund? and can i claim this money back?

also if the place has arrears of around £4000 would i be expected to pay this?

any info would be appreciated..

thanks

noyk

Not sure about the first question, someone on here will know though. The second q. - the answer is no you will not, the previous owners are responsible for it - it is their arrears and the debt should be sorted out by your and the vendor's solicitors.

silvercar

A reserve fund is monies that have been put away to fund future maintenance work. From the annual service charge a certain amount gets saved for future expenses.

I don't think you can reclaim it.

If there are arrears you need to find out if this is because the current owner is behind with their contribution or because the managing agents have spent more than there is in the pot on maintenance.

If the current owner is behind these would normally have to be cleared before the freeholder would be happy to register you as the leaseholder.

If the fund is in arrears then you need to establish how this is going to be corrected. If a large expense has recently occured and expected to be a one off for a while then the next couple of years service charges may correct this. Be aware that at some time the arrears will have to be addressed, possibly by an increased service charge or a one-off payment. If there are only two leaseholders to contribute that would make your share £2,000.

Shaba_2

thanks for answers guys.. the arrears are because the previous owner did not pay up.. it just added up over time.. he had a shared ownership and now i think the preivosu owner has been evicted and hosing association own the whole flat now.. I have posted a note to my solicitor about these questions and will post up the answers for future ref to aynone who might be in the same position...

thanks again.

clutton_2

i have a strong memory when i bought a leasehold flat several years ago that my solicitor told me that any managment debts were passed on to the new owner after a sale. Best to ask your solicitor

cattie

My understanding of leasehold properties has always been that outstanding service/maintenance charges can be passed on to new owners, so it's important for your solictitor to ensure there are no monies outstanding before buying the flat.

Things may have changed in the past 4yrs or so but better to be safe than sorry.