Previous leaseholder never paid ground rent or service charge

Mark14

Hi All,

I made an offer for a property that was accepted afterwards I asked the estate agent to tell me the ground rent and service charge as it is a leasehold flat.

He phoned seller and they said they didn't know and it has never been taken out of their bank account.

Is this usual? should I be concerned?

Could their be any issues if I go ahead and buy the property e.g would I have to pay the freeholders shortfall of the previous owner?

Also this property was taken of the market a few months ago only to be put back on recently. Is this also a cause for concern?

Any advise, help or suggestions on how to proceed is greatly appreciated,


Mark.

G_M

If these amounts are owing you will inherit the debt.

Who is the freeholder (£3 to check here)?

Mark14

Thanks for the advise.

I found out the freeholder and it is a company called GPS Estate Limited they are property development company. What shall I do next?
I tried to contact them but no response.

xylophone

Have you seen a copy of the lease?

My recollection of buying a leasehold flat is that details of the freeholder and ground rent payable were in it.

G_M

xylophone wrote: »

Have you seen a copy of the lease?

My recollection of buying a leasehold flat is that details of the freeholder and ground rent payable were in it.

The freeholder will not be in the lease. The original freeholder will be - but the freehold may have been sold multiple times since then.

The amounts payable will be in the lease, but of course that gives no indication of how far back the arrears go.

If the current leaseholder has never paid, and has owned the lease for, say, 10 years, the arrears will be at least 10 times the annual charge. Of course, the previous leaseholder may also have not paid......

The freeholder might know. Or might not even realise they are due payment. Or even that they own the freehold.....

propertyman

My two threads will help you generally.

He phoned seller and they said they didn't know and it has never been taken out of their bank account.

Well that’s a completely stupid numpty response and the leaseholder is an idiot. Don’t rely on anything that they say, vendors are often stupid lazy and lie or make things up, so its best to be pleasant but not trust a word that they say, especially “ its not come out my account”.

If you asked them “that means you have been in contact with someone and gave someone your bank account details in order for say a DD to be taken and if so who and when”.
I suspect they say “er, none of that happened” and therefore their answer was utterly pointless.

Is this usual? should I be concerned?

You need to look at the lease and see who does what, and have a good look round at what is, isn’t or needs to be done. Do that now, not later.

Could there be any issues if I go ahead and buy the property e.g would I have to pay the freeholders shortfall of the previous owner?

Once you establish the above, it may be that if work has been done eg halls cleaned and lit, grass mown and roof repaired, that someone has done it and if that is the freeholder, then there is bill or cost to come.

Also this property was taken of the market a few months ago only to be put back on recently. Is this also a cause for concern?

Ask the vendor, on a second viewing, “why” politely & firmly and then be quiet and let them answer. How they react is as important as what they say.

My advice is make sure that the lease passes muster and that adequate arrangements exist in the lease to look after the building as well as the length of the lease, before progressing to far with surveyors mortgages and conveyancing.

https://forums.moneysavingexpert.com/discussion/4754355

https://forums.moneysavingexpert.com/discussion/4993381

AndyGuil

This happened on a property I bought recently. Our solicitor arranged with the sellers solicitor to take the money from the sale to pay everything owed and the late payment charges.

AlexMac

AndyGuil wrote: »

This happened on a property I bought recently. Our solicitor arranged with the sellers solicitor to take the money from the sale to pay everything owed and the late payment charges.

yes.... isn't all this what you pay your solicitor £500-£1k (plus disbursements!) to sort, rather than doing it yourself via ambiguous chats with the vendor?

AlexMac

oops, sorry- I hit submit too fast!

Having said that, I like you would prefer to know about service charges and freeholding/management arrangements, and how long the lease has left before making an offer and committing leagl and search fees.

We're buying a flat right now and were faced with the choice of two comparably priced places;
-one with only 80-odd years left to go, a £1.5k pa service/maintenance charge and a remote management company;
-the other with a share of freehold and £450 pa and an 800+year lease

it's clearly a no-brainer; a saving of £1k pa would buy a lot more mortgage for starters, and unsurprisingly, the shared freehold was much better maintained! Interestingly, both EAs had all the required info at their fingertips, whereas in the past I'd found getting this info was like blood from a stone!

As regards the previous failed sale, could be innocent, or it could be that someone else walked when their solicitor got answers?

So get answers or (threaten to) walk away?

Mark14

Everyone thanks for your advice and insight.

The situation at the moment is that I am still waiting for the estate agent to get back with the details of the lease, if there are any arrears and why the property was taken off the market and then put back on.

I put in an offer on the day of the viewing at the asking price and it was accepted (Estate agent said I would need to otherwise I would lose out). Having time to think about it I feel I was rather gulible and am thinking about offering a lower price due to the circumstances. I want to do this before anyone starts paying fees etc. Do you think this is a wise idea?

G_M

Mark14 wrote: »

The situation at the moment is that I am still waiting for the estate agent to get back with the details of the lease, if there are any arrears and why the property was taken off the market and then put back on.

I hope you are not going to rely in any way on what the estate agent tells you..........