Request for old service charge deficit

briddj

Hi everyone, hopefully one of you can help me out here.

I sold my old flat in June 2014, and today I received an email from the buyer saying they have been sent the service charge bill for 2014 with arrears of £633.

The service charge bill for arrears in 2014 has only just been served on them, dated January 29.

They say I am liable for £281 of this for the portion of 2014 when I owned the flat.

I have not received any official demand through my solicitor (and do not plan on paying until I do).

As it is now 20 months since the sale completed and I have yet to receive any kind of bill, has now time lapsed for me to be charged?

I know there is some kind of Section 20B rule about 18 months, but not sure if this is 18 months from the completion date or if that would even apply here.

Thanks in advance.

G_M

Did you ever pay for the 2014 service charge?
Was your share of the 2014 service charge for 2014 accounted for in the sale price?

If both answers are No, then you are responsible for the charge. You were the leaseholder at the time.

Pay the invoice.

Although it is strange that your solicitor did not calculate this into the final amount you received for the sale, this may have been due to it being and unknown amount at tat time.

briddj

No, you have misunderstood.

Yes, I paid my share of 2014. That was all squared off.

I am not being billed for the service charge for 2014. This is for a deficit on top of the service charge for the year. The property management company have only billed for this in the last two weeks.

Any more light you can shed?

piggeh

Was a retention agreed during the sale?

silvercar

We bought (in the UK) off overseas sellers, our solicitor insisted that some of the sale money be retained against any shortfall due when the accounts were made. It seemed more sensible than trying to track and trace and persuade to pay up, buyers that were thousands of miles away.

So you are liable for your share and the other option was for a retention from the sale money. So yes you do owe it.

G_M

briddj wrote: »

No, you have misunderstood.

Yes, I paid my share of 2014. That was all squared off.

I am not being billed for the service charge for 2014. This is for a deficit on top of the service charge for the year. The property management company have only billed for this in the last two weeks.

Any more light you can shed?

Then no - you have not "paid (your) share of 2014".

I am, of course, to some extent guessing, since I cannot read your lease from here. However, it is common in many leases for there to be an estimate made at the start of the year of what the services will cost that year. The leaseholders are then billed (monthly, quarterly, whatever) for their share on the basis of that estimate.

At the end of the year, the service provider (freeholder, management company etc) produces an annual account, showing the actual costs incurred during the year. This may be higher for any number of reasons eg
* the cost of electricity rose during the year
* the cleaning contractors, or gardeners increased their costs
* the doorphone system broke and had to be repaired/replaced
* tiles blew off the roof
etc

So then a final account is due from each leaseholder to cover the deficit.

What is surprising is that this was not sent earlier.

But the final account for 2014 was perhaps not calculated till spring 2015. And perhaps what happened was it was sent in your name to the flat, and the buyer ignored it, dumped it etc, (perhaps several times) and it is only now that they have contacted you (possibly under threat of legal action?)

Conjecture of course.

Irratus_Rusticus

briddj wrote: »

I know there is some kind of Section 20B rule about 18 months, but not sure if this is 18 months from the completion date or if that would even apply here.

Hi. As said above a landlord/agent may invoice in advance if the lease permits based on an estimate for the year. You naturally pay this as a conscientious leaseholder. s20B is blind regarding payments made on account.

At the year end, and also normally per the lease (read it or buy copy from land registry site), a year end account is served and with this will come any balancing charge invoice ( or perhaps a surplus is refunded!). But if it is a deficit invoice (balancing charge/excess charge or whatever name used) this is where s20B is important but only in legal theory. A cost must have been incurred^ no more than 18 months before the date when it is demanded. Not 18 months after the year end.

If the landlord/agent did not serve a s20B notice saying they had incurred costs in the annual period estimating a figure above their 'on account' charges (the notice must state an estimate more than the actual final costs so they can be on the safe side), then they have to get a balancing invoice out before 18 months has passed since they incurred the costs.

In effect, as long as the balancing charge is issued within 18 months of the start of the accounting year in question or within six months of that year end, the landlord/agent is okay for all of the balancing charge.

It is sadly common for incompetent agents (anyone can be one) to decide long after the fact that they spent more money in a period past and issue a very late balancing charge to the unwary leaseholder or even new buyer.

It is also sadly easy for agents to 'find' copies on file of old s20B notices or excess charge invoices to show a Tribunal as evidence they did ask within the 18 month limit. Hard to prove a negative, y'see.

If in your case the agents are not claiming they previously issued a year end balancing (excess) charge within 18 months of the START of the year in question and only sent the first one to the new owner two years on, then both the new owner and you (especially you) are in the clear...but only if the agents are honest about when they first issued the balancing invoice and that this issue is not a repeat copy.

Contrary to advice above, if you did not receive the balancing charge before you completed and the agents did not advise your solicitor that they had incurred more costs (which is what the LPE1 process offers them a good chance to do) then on face value s20B protects you from liability. If the agent is pursuing the new occupier this will likely be because they might use breach of lease against them for the debt even if it arose before they bought. They can't do that to you now!

But you need to be aware that leasehold is a very murky world and normal "legal rights" rules do not apply. If the agents claim they did send a balancing invoice within the 18 months but after you completed, the liability would be the new owner's not yours, as you had no obligation to pay more than was asked from you when you were there.

If however the agents argue they sent a previous balancing invoice at a date when you were still the registered lessee, then you have the hard task of proving a negative or be held liable if they pursue you for debt.

^ Even being clear on when a cost was incurred has taken up a lot of appeal time and may even now be different to anything said above but s20B in theory still exists. As does a legal theory that leaseholders have rights they can rely on.

Leasehold gives no clear-cut legal comfort on anything.

silvercar

If you don't sort it and the current owners don't pay, it will be an issue should they want to sell.

£281 is an awkward amount,. If you fail to pay is it worth the current owners taking you to court? If they didn't win then there is the hassle factor and court costs. If they did win they could get awarded court costs. If you have since bought a property, you could eventually get a charging order (if the debt was first proved in court).

The new owners could go to their solicitor and ask why there wasn't a retention. They could also get their solicitor to write to yours, that would then give you a legal opinion as to whether you should pay (as opposed to us internet randoms).

silvercar

G_M wrote:

But the final account for 2014 was perhaps not calculated till spring 2015. And perhaps what happened was it was sent in your name to the flat, and the buyer ignored it, dumped it etc, (perhaps several times) and it is only now that they have contacted you (possibly under threat of legal action?)

Legally a company has to produce accounts by 9 months after the year end. So 30 September 2015 would be the final date for 2014 calendar yr accounts.

briddj

G_M wrote: »

What is surprising is that this was not sent earlier.

But the final account for 2014 was perhaps not calculated till spring 2015. And perhaps what happened was it was sent in your name to the flat, and the buyer ignored it, dumped it etc, (perhaps several times) and it is only now that they have contacted you (possibly under threat of legal action?)

Conjecture of course.

Nope, all this information is above. The first request for payment to the current owners of the flat was on January 29. I have not event received any request for payment yet.

This is the whole reason I have asked the question, due to the time lapse.

You are misunderstanding where I am coming from too. If I an due to pay it I will pay it. But if I personally am billed AFTER the liability time I do not wish to.

briddj

Irratus_Rusticus wrote: »

If in your case the agents are not claiming they previously issued a year end balancing (excess) charge within 18 months of the START of the year in question and only sent the first one to the new owner two years on, then both the new owner and you (especially you) are in the clear...but only if the agents are honest about when they first issued the balancing invoice and that this issue is not a repeat copy.

Contrary to advice above, if you did not receive the balancing charge before you completed and the agents did not advise your solicitor that they had incurred more costs (which is what the LPE1 process offers them a good chance to do) then on face value s20B protects you from liability. If the agent is pursuing the new occupier this will likely be because they might use breach of lease against them for the debt even if it arose before they bought. They can't do that to you now!

But you need to be aware that leasehold is a very murky world and normal "legal rights" rules do not apply. If the agents claim they did send a balancing invoice within the 18 months but after you completed, the liability would be the new owner's not yours, as you had no obligation to pay more than was asked from you when you were there.

If however the agents argue they sent a previous balancing invoice at a date when you were still the registered lessee, then you have the hard task of proving a negative or be held liable if they pursue you for debt.

^ Even being clear on when a cost was incurred has taken up a lot of appeal time and may even now be different to anything said above but s20B in theory still exists. As does a legal theory that leaseholders have rights they can rely on.

Leasehold gives no clear-cut legal comfort on anything.

Thanks. This is a much more helpful reply!

There has definitely been no balancing invoice to either myself or the new owners before January 29 this year. Obviously it will be much harder for the new owners to avoid paying the balancing charge!

If it is beyond the time I should be paying for old charges on the lease I really don't want to have to (who would?).

I guess I now just wait for the new owner's solicitor to contact the solicitor who handled my sale? Obviously I won't be paying purely on the email sent to me by the new owner!