Service charge confusion after purchase

DG55

Hi,

Completed a house purchase in February, but just received a service charge bill for the period January - April. Obviously I wasn't there for a period of time so I don't want to pay that period. However, I notice that I and the seller have paid our solicitors an 'apportionment of service charge'.

Is this a normal thing to do? Who now pays the service charge / what happens to the 'apportionment'?

Another slight oddity is that I thought service charges needed to be paid upfront anyway...

I will of course be ringing the solicitor tomorrow to find out exactly how it will work, but just sort of wanted a heads-up first.

Any help much appreciated. Cheers all.

womble12345

I am selling my leasehold flat and have to leave some money with my solicitor after sale to cover such things, did your vendor do that?

2sides2everystory

DG55 your thoughts would initially be not disimilar to mine in the same situation although it should be relatively easy to work out yourself from copies of previous service charge demands for the same block management financial year how much is payable for your proportion. You could also call the managing agent if you have one (the people that probably sent you the demand). They should serve you pretty much as a customer (to be more precise through your purchase of the lease you will usually automatically be a member of the company that is their customer). They should be able to explain what the account for your property looks like at their end and can probably email you a copy of the latest accounts (could in theory be up to 21 months old i.e. year ending 2009 or 2010) and current service charge budget.

It would not have been up to them to apportion the service charge (that was for your lawyers) but they will be able to confirm what numbers they have so you can check two ways and also get to know them. In this matter they would normally be simply responsible for sending demands and reminders to whomever is currently on the members register for the property in question.

Your solicitor should be able to explain although I think many conveyancing solicitors no longer deal in exactitudes and as womble says, it now seems normal that they agree some kind of slush find limit with the other side to deal with adjustments/surprises of this kind after the event and pretty much lose interest after completion other than to act as a postbox.


On the question of why you have only now received the demand - well as I said, it has probably come direct from the managing agent who often end up playing catch-up with anything non-standard (if the development you've bought into is large then your Jan-April demand may not have been in the routine print-run). Sadly some managing agents are often less than diligent in sending the correct bills on time. If you have not received it already, then you will likely receive a demand for the current period very shortly. What you may have received may even be a poor rendition of an account for a past period and a period commencing April ? There are I think a myriad of computer systems in use out there to print these things.

As part of the completion arrangements I think blocks management companies (or more often their managing agents) may also charge an admin fee via your solicitor for handling the necessary member register changes and for other checks e.g. for ensuring there are no outstanding arrears in service charges when leases are sold e.g. £150.


Depending on how reasonable you think the annual charges are, and how well run the management of you block, then you might decide to get involved as a volunteer director of the leaseholder members management company so you can help keep things running smoothly.


Your solicitor should have made an effort to obtain a copy of their latest accounts. You may wish to find out from your neighbours when the next AGM is likely so you can at least go along and learn something of how your service charge is being spent in practice.

What I have described is a fairly typical setup but in the UK we have a weird and wonderful leasehold system which is riddled with worms. It is long overdue for proper reform. Your own setup may reflect something different. There is very little regulation.

pinkshoes

It's up to your solicitor to check if the service fee has been paid when you complete.

If it wasn't paid, then you are responsible (unlike other bills like gas and council tax, where the individual is responsible until they day they move out).

Sounds like it hadn't been paid, but the vendor transferred the month they owe to your solicitor, so I'd contact your solicitor, as this money should be yours.

loubel

DG55 wrote: »

Hi,

Completed a house purchase in February, but just received a service charge bill for the period January - April. Obviously I wasn't there for a period of time so I don't want to pay that period. However, I notice that I and the seller have paid our solicitors an 'apportionment of service charge'.

Is this a normal thing to do? Who now pays the service charge / what happens to the 'apportionment'?

You have to pay the service charges, but the apportionment is used to cover the seller's share up to the date you bought.

It should be shown on your completion statement as a reduction on the purchase price - you pay less to the seller in return for paying their share.

DG55

Thanks everyone.

Well I'm finding it extremely difficult to get hold of someone who will talk to me at the solicitors.

All I know is that I did not get any sort of discount on the price from the vendor based on the service charge, I certainly have paid in a certain amount which they have called an 'apportionment of ground rent and service charge'.

Would it not be the case that perhaps the vendor paid my solicitor an amount for this and my solicitors must now pay the managing agents the full amount up front for the rest of this period.

G_M

The 'apportionment' works either way.

It could be that the seller undertook to pay the charge for Jan - April (and you paid the seller a % to cover your period of occupation) but then the seller 'forgot' to pay. If so, your solicitor will need to chase the vendor.

Or you agreed to pay the service charge and the approtionment went the other way - you paid the seller a bit extra in the purchase price.

Either way, your solicitor's "Completion Statement" to you should show who paid what. Dig it out and have a look!