Who's responsible for previous year's service charge deficit?

PlutoinCapricorn

Can I take my sinking fund contributions with me when I move?
No, the contributions that you make will remain in the account and be used when works are required. You may wish to make an informal arrangement with your buyer to take this into account. A buyers solicitor will always write to L&Q and enquire about the sinking fund balance. From experience a sinking fund will improve the saleability of a property as the repair burden on the buyer is reduced.
http://www.lqgroup.org.uk/services-for-residents/your-home/buying-owning/the-guide-to-sinking-funds/

AMILLIONDOLLARS

Hoploz wrote: »

I can see how this has happened. Presumably the seller had paid all that had been asked for. The overspend was only found out after they left - once the year's accounts were finalised. They would not have known that there was going to be a shortfall. Technically they should be responsible but this is a tricky one as it wasn't their fault and I wouldn't want to pay a year after I'd sold! Is it for large works they knew were being done?

As the previous owners had been paying into some kind of sink fund then it would be reasonable to request that the extra service charge be taken out of this.

As stated, if a credit had occurred what would you have done then?


AMD

athel

I believe that it should have been clarified by both sides whether the actual accounts of service charges were pending at the point of sale. This way at least we could have made informed decisions.
I cannot know what we would have done in a hypothetical situation, if a credit had occured. I guess this is something the seller should have thought about.

m0bov

When I purchased a lease hold, the Sol asked for accounts and asked for a retainer from both parties. I then only got it back once I sent a copy of the subsequent years accounts. You sol should have delt with all this.

athel

Thanks, m0bov, I agree. We should at least be made aware by our solicitor that fund retention is not their standard practice, and of the risks involved, at the point of purchase, not now (!).

££sc££

check with your solicitor whether they asked the housing association if there was likely to be an underspend in any accounts that were not yet finalised, as this is a pretty standard question. what was the housing association's response? I work for a HA and deal with the sale enquiries. we always get asked this, and how much should be kept aside for a retainer. it's unlikely that this could be covered by the sinking fund as they are usually set up for more major repairs, whereas these are likely to be un planned minor repairs, if they were not estimated for.

Fraise

I can't see how the previous owner's debt has become yours! I'd tell them to take a hike....management agents often charge money for old rope anyway. As for a sinking fund...that's done for major works....what sort of MAJOR works are you anticipating?:money:

Richard_Webster

Thanks, m0bov, I agree. We should at least be made aware by our solicitor that fund retention is not their standard practice, and of the risks involved, at the point of purchase, not now (!).

I don't do day to conveyancing now -( AND NEED TO CHANGE MY SIGNATURE LINES!) - but when I did, I provided a report in all relevant cases which explained the issue fully and went on to say that my experience was that in a lot cases people didn't ever ask for the momeny held back (but obviously not in this case....) and I would not ask for a retention unless the client asked me to do so.

In a few cases the clients did want a retnetion and we agreed one. In onew or towe otyher cases people contacted me some time after completion when they got the demand for previous year's escess charge and wanted to know where they stood - I referred them to the report I had sent them.

So really unless the solicitor was prepared to explain it all fully, he should have requested a rentention - even then he should have explained why he did that

Argghhh

i would begin conplaints procedure against the solicitor for the amount being chased for and make it clear you wont be paying for this chasing they have begun for you
reason she has only just asked other solicitor is because she knows she has dropped a clanger

bylromarha

££sc££ wrote: »

check with your solicitor whether they asked the housing association if there was likely to be an underspend in any accounts that were not yet finalised, as this is a pretty standard question.

We sold our house last year. We had a management company "looking after" (ie doing nothing) the parking area and lighting. One of the things we had to provide to the seller was a full and final statement of accounts from the management company. Our solicitors dealt with this as standard, so I'd be looking to your solicitor to sort as part of the house sale fees TBH.

If any charges comes up now for our buyer, I'll point the management company back to their own document.

Having said that, the management company were awful. We had charges deducted in 2011 for their poor service which they added back on in 2014 when we sold and knew they had us over a barrel as we couldn't sell the house unless the "debt" was cleared.

If the HA add it to your account, then they'll get the money back from you one way or another. Morally wrong, but they only care about their debt, not who pays it.