Request for old service charge deficit

briddj

silvercar wrote: »

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.

There was a retention, yes, but this has since been returned to me as it was 20 months ago.

silvercar

briddj wrote: »

There was a retention, yes, but this has since been returned to me as it was 20 months ago.

Seems to me that retention return was made too early. It should have been delayed until after the accounts were finalised, not by some fixed date.

briddj

silvercar wrote: »

Seems to me that retention return was made too early. It should have been delayed until after the accounts were finalised, not by some fixed date.

Okay, I obviously have no idea about this but obvious feels to me there should be sort of cutoff point before a previous owner can be chased for a deficit!

Irratus_Rusticus

briddj wrote: »

there should be sort of cutoff point

The lease and s20B and your completion agreement with the buyer.

If the lease (a two way contract allegedly) requires the landlord /agent to serve an account at the year end within X months showing how they spent the money collected in trust that year (they don't own the cash until they account for it) then that's the contract cutoff.

Then you have 20B covered above for what it is worth in practice. It ought to tally exactly with the year-end plus six months as otherwise the landlord is invoicing costs outside of the lease. Yes the overspent cost might arise just at the year end but accrual accounting should cope with that.

Then you have your completion agreement which in theory identifies all costs you have been charged to date (you aren't allowed to self-sign the LPE1-google a copy as it is quite a nice form really) or any notice from the landlord/agent as to any estimated excess for in the current year (when you are selling).

Sadly you can't rely on any of this as it is leasehold. Once witnessed an LVT allow a landlord's accounts and balancing charge though issued almost a year after the lease's 6 month deadline (counting from the year end stated in the lease). Panel said this was still within 18 months so was okay. So much for a binding contract and the binding legal definition of s20B.

If you have not been issued a bill in your name it could be the landlord is accepting defeat here where you are concerned. As for the buyer suing you, I'd say good luck with that for them. If anyone is at fault (not sure anyone is if the invoice is a copy, or if not then perhaps a lazy landlord/agent who may have no idea how to read or manage their own accounting software ) the buyer perhaps should be asking why the retention was refunded to you as said above before the final accounts were done for that year.

That is why a retention is agreed. It ought not to need rocket science but yet again, my aged aunt could set up as a leasehold managing agent.

On a moral line: if the retention you had back is a a significant amount then I would suggest repaying it properly receipted as paid. As you have not been invoiced you would need presumably to pay it to the buyer and if you cover it with a letter stating it's purpose clearly that ought to cover you and the buyer for double billing. If it matches the amount the buyer has informally invited you to pay then you are with the angels. Not sure the legal position if you agreed to pay it and got it back prematurely by "mistake"?

The usual advice to an in situ leaseholder is to pay first and complain later. Not that doing this will get any cash back. Sorry.

Mallotum_X

silvercar wrote: »

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.

That is for the Companies own financial statements - plenty are late anyway.

However the Companies Act does not cover the preparation of this type of building management accounts so the above dates wouldn't apply.

eddddy

You need to read the 'Special Conditions of Sale' that your solicitor drew up.

It sounds like there was a condition about a 'Service Charge Deficit' - which is why there was a retention.

If the condition says you have to pay a share of the 'service charge deficit' to the buyer... then you have to pay it.

The fact that the retention has been released probably isn't relevant (unless the 'special conditions of sale' impose some kind of time limit.)


So if it is written into the contract, I imagine the buyers would have no problem winning a claim against you in the small claims court, if they chose to do that.

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Edit to add...

To summarise... you probably don't owe any money to the freeholder because of what it says in the lease, but you might owe the money to the buyer because of what it says in the contract.

SmlSave

I haven't read all the replies but today we had a similar enquiry at work to which the boss replied....

That the current owner is, as a general rule, liable for all fees, even incurred by the previous owners. The management company can request up to six years.

So I'd wait for correspondence from your solicitor and their advice.