Selling a flat and buyer wants a rider for £600 to cover any unexpected charges

Queenie_73

Please help here as I dont' think this is right.

I am selling a flat and the buyer is now asking for a rider of £600 to be withheld from the asking prioce to cover any unexpected bills for the period for when I owned the property to be held until the final service charge bills for the year have been audited. Is this normal? Can I insist that it works the other way round too, so if there was an overpayment in service charge they pay me back the money?

I used the buyers solictor when I bought the property and wasn't advised to do this. In my eyes this is like buying a car and expecting the seller to pay for breakdown and the next service when its due!!

Am I right ot refuse?

Totally confused as never sold a property before so can only base this on when I purchased the property.

All help appreciated

dotdash79

I wouldn't do it, who would hold the £600? how would you agree to it being released?

I wouldn't do it

Queenie_73

My solicitor will hold it but I am really not happy with this request
I might suggest we wait until the accounts have been audited if they insist

spacey2012

Keep it on the market

HildaM

I was in the same situation as you are, back in March. I was very reluctant to pay, especially as I knew our flats were actually in the 'black' to the tune of over £1,000 per flat which had been building up, and wasn't earmarked for any particular project. I thought (like you) that I should actually have a refund as I had paid in for 22 years and that amount had built up and up and now I wouldn't see the benefit.

Anyway, I was told that they wouldn't exchange on the property unless we agreed to this retention (held by our solicitor) and that it was quite common, so we had no choice.

We are keeping in touch with one of our ex neighbours and AS SOON as the end of year accounts are published we will be applying for our retention back.

By the way, at first the solicitor said we would get 'nearly all' of our money back if it wasn't needed, but I queried this and it changed to we would get it all back.

kmmr

Queenie_73 wrote: »

I am selling a flat and the buyer is now asking for a rider of £600 to be withheld from the asking prioce to cover any unexpected bills for the period for when I owned the property to be held until the final service charge bills for the year have been audited. Is this normal? Can I insist that it works the other way round too, so if there was an overpayment in service charge they pay me back the money?

To go against the grain, I think that is fair enough. You are liable for all costs up to the date you sell it, and if your managing agent/freeholder/whoever is charging the service charge is unable to provide a final amount then it is fair for a small amount of money to be retained to cover it. If there is an overpayment, then yes - you would expect to get it back.

Otherwise the purchaser has a liability they would have to pay, and then try to chase you.

In essence you are unable to 100% confirm that all costs you are liable for have been paid. Since it is your side that can't provide the value, then it seems fair enough to me that you leave a small amount there to cover these unknown costs.

suestew

I think it's normal to be honest. I sold a flat back in 2007 and around £300 was held in retention, after the year was out I made sure I got this back. It will be held by your solicitor so the buyer will not see any of this.

propertyman

This is absolutely normal.

Unless your service charges are invoiced in arrers, ie after the money was spent, they will in most cases be estimated in advance.

Any overspend will be yours to pay/shared between you and any underspend, likewise.

If you moved out your buyer is not responsible for the electricity you used over an above your monthly amounts, is he?

Queenie_73

Thank you everyone for the comments and advise. I will discuss with my solicitor and see if we can agree to a lower amount

Kynthia

I did this years ago. My solicitor had £500 held from the purchase and wrote to me a few month later to ask if any outstanding charges had been billed for. I said no and the funds were released to the seller.

G_M

Perfectly normal, and reasonable.

The money is held by a solicitor, so the buyer cannot make off with it.

Whether there is a 'contingency fund' built up over 22 years, as in HildaM's case, is irrelevant. That comes from the annual charge and is ready for when the roof needs replacing or whatever.

The issue is the apportionment of the annual charge. Seller is liable for this up to Completion date, and buyer thereafter.

But if the seller is unable to tell the buyer
a) what the actual annual charge will be and therefore
b) whether he (seller) has paid his share

the buyer is left exposed. After all, if there is a shortfall, the freeholder/management company will chase the new owner (buyer), not the vanished old owner (seller).