Deceased leaeholder-Service charges

purple_haze

Almost certainly the lease will have a forfeiture clause for non-payment of the service charge. The management company are threatening to bring proceedings to forfeit the lease. Although the debt belongs to the estate and not you personally, it would be in the interests of the beneficiaries of the estate to pay the service charge or the flat could be lost.

If the beneficiaries can’t afford to pay the service charge, either drop the sale price dramatically or put it in an auction – a lower price would be preferable to nothing at all.

Sa-ra-ra-ra

Agreed, but in my experience it is HIGHLY unlikely that they'd go directly for a section 146 for service charge arrears, and the arrears would have to be extremely significant for this to be considered even. Chances are that they'll refer to solicitors or a debt collection agency in the first instance.

It is unusual that a management company would spend the money chasing arrears in the case of the owner having passed away - they know that they'll get it at some point as they won't reciept a notice of charge without arrears having been cleared. It's not that unusual to agree to pay off service charge arrears with proceeds from a flat sale, even when the owner is selling.

LizinDevon

Hi
Thank you ..
yes Purple Haze (thank you)..there is a clause in the lease about non payment by the leaseholder of service charges and forfeiting the flat if its not paid;there isn't any information/provision in it if the leaseholder dies. The Citizens Advice Bureau, legal department, have said that they will draft a letter for our approval to be sent to the housing management company, but they haven't even seen a copy of the lease, they didn't ask for it. I beleive this is an important part of this issue..and before writing such a letter they should see all the facts involved at first hand.

It would be silly to go to the expense of the housing company taking legal action that requests the charges to be paid once the flat is sold as that is going to happen anyway!! Thats the Law (its the most clear cut thing about this whole episode : ) Considering the nature (customers) that the lease refers to and the area of this housing sector, perhaps the lease is too generic? the housing management company have a contingency fund and demand 1% exit fees of sales of their properties by leaseholders..(currently the exit fees are being investigated by office of fair trading) unless the deceased had huge debts so the proceeds of the sale of the flat were used to pay these leaving zero in the bank, they are gurenteed payment on completion of winding up of the estate.
Another aspect is, there are debts that come before the housing manmgement company's service charges for example dept Work and pensions.. (they have a higher pecking order) we have actually paid the housing management company not inline with the pecking order under probate procedure law because of their threat of court action..what about the other creditors that in law should be paid frist...when the house is sold?

We have dropped the asking price of the flat 3 times in the last year and have had viewings. Recently a couple were very interesting however they have to put thier house on the market first. It is on the first floor and the ground floor flats have taken preference so far. Higher priced and lower priced flats have been selling however it is slow. At the moment there are 6 flats for sale all within a cluster of 10k of each other. Ours of the highest, 2.5k more than the next one down..and the prices are not high.. Ha! Siblings : ) I suggested last year that we offer a years service charges as an incentive but my sister disregarded the idea..It is the highest only because the higher priced properties have now sold. I am trying to persuade my sister to advertise seperately to our estate agent to.
The housing management team will not allow any 'FOR SALE' signs to be put in the window unless it is their own. If we ask the estate agent to put one up in the window the housing management company ask the manager to enter the property and take it down if we don't.

Gosh..our mother would be so annoyed she loved her flat she was so happy and thought she had entered into a caring and environment; and that things would much smoother than they are.

regards LizinDevon

LizinDevon

Oh..there is just one 'For Sale' sign by the mamangement company in the garden on a post facing the road not in any flats unless they have flats for sale themselves...
Lizin Devon

LizinDevon

Hi
Well, I have spoken to a probate and wills litigation solicitor who deals with disputes. I hope i have interpreted their findings correctly so if this situation ever happens to you please check with a solicitor like I have done!! The Housing management company can insist that the service charges are paid withough interuption or they can take the ESTATE to court to insist that the charges are paid once the house is sold. They would have to do this each time an invoice has been issued (twice a year) for the service charges. All creditors could potentially insist on being paid however all usually wait until the assets have been collected in as the resulting court action outcome is the same;in this case the only asset is the the sale of the flat!

However the legal proceeding would be issued to the estate executors BY NAME and therefore those representatives of the estate would have associations with the judgment of the estate issued by the court. Although the executors would not be personally liable for the debt...the executors, on a credit search , would be linked to this deceased estate's judgement and therefore may affect their personal credit ratings in the future.

So, at present we are not in arrears as we have borrowed and scraped together the service charges until the end of August 2010...the charges amount to £1600 per year. The half yearly bill is due in September, we, the executors propose to offer £50 per month and no more (there isn't any more!) until the flat is sold and the housing management company can be fully paid back the amount oweing out of the estate funds. Therefore they would have recieved some payment at a level that is manageable. I expect they would prefer £200 per month at least however we just cant do it.

Any thoughts on this idea/compromise?

Liz in Devon

LizinDevon

A mistake...Sorry we have paid the service charges until August 2011!! oops!
LizinDevon