Service charge and selling

Fireflyaway

We pay a service charge to OM Management and due to redundancy and other issues we fell behind with payments. I have negotiated a payment plan but there is still around £2500 outstanding at the current time.

We want to sell our house and I am worried this will hold us back if we have to settle the arrears first. Id like to sell up and then pay them back with the proceeds, but someone said I have to settle before we can sell.

Does anyone know if this is correct? Thanks.

princeofpounds

Yes you probably do need to settle before you sell.

AdrianC

Your solicitor should be able to negotiate with the management company, and agree with them whether or not they would accept payment from sale proceeds.

Fireflyaway

That helpful to know about the solicitor.

I can't see how it would be a problem as there will be enough equity to cover the debt. Also its not as if selling the house removes the responsibility I have to pay it. They could still find me and take me to court.

Perhaps its just a way that they hold you down to make sure they get the money. Fair enough in a way as I do owe them and its my fault. Not very helpful right now though!

G_M

It may also be possible to arrange for the debt to be passed to the buyers. The purchase price they pay woul be reduced to reflect the amount of debt they take on.

They would then pay the fees once they are the owners.

glasgowgirl80

I bought a flat where the previous owners owen about £5000 in management fees. The legal situation was that they had to settle that debt before completion of the sale, however this was something that my solicitor pushed for rather than something I think they 'had' to do. In our situation the debt would have passed to the new owners (not as part of the sale - i.e. an increased price of the property which is what G_M mentions but as an actual debt to myself). I would not have bought the property on that basis and therefore our contract stipulated that the debt had to be repaid prior to completion. In that instance I don't know how they paid it but it wasn't from the equity as we hadn't completed at the time.

When I sold the same flat I had to provide my purchasers solicitor with my management companies details so that they could ensure I was not carrying any debt when I sold. You may find that you have to do the same and end up in the position that my seller was.

I'm in scotland though so it may be different elsewhere.