Shared Ownership Flat selling issues-any advice?

davidl2014

Hello,

I am selling my shared ownership flat, all going smoothly with no problems (8 weeks into selling process), then the seller (their solicitor) contacts and asks whether we would pay a chancel insurance cost, which I did pay for the buyer (despite me having to pay for it as a buyer when I purchased in 2007). Buyer then requests that towel rails and doorknobs are affixed properly (did this in 5 min). Now the buyer is wanting me to pay the possible shortfall in service charge accounts- the account is currently in credit, no problems and never has been, however the end of year accounts do take a few months to sort out from Housing Association. Buyer is asking for a sum of money to be held with my solicitor for up to 12 months post completion to account for- if any-shortfall and if no shortfall I get the money back. My solicitor has advised not to do this, but instead to offer a sum of money as a "gift" in case of shortfall and then buyer doesn't contact me ever again.

I'm frustrated with this as when I bought I was advised by solicitor in 2007 and Housing Association that I take on whatever the service charge/rent account is at point of completion and thats it, no comeback to the buyer. I kind of feel like the buyer is wanting me to pay their bills. Any advice would be appreciated as I'm feeling like I'm being held to ransom and tempted now to say no to everything and find a new buyer!

Lunchbox

The towel rails and doorknobs issue is a bit ridiculous unless there was a serious problem with them, and you shouldn't have paid their chancel repair liability insurance.

However, any service charge arrears remain your liability (Landlord and Tenants Covenants Act, 1995), and the new buyer would be able to chase you for them. If there had been an underspend, would you not expect the overpayment refund when the end of year accounts are finalised?

davidl2014

No there was nothing wrong with them, literally 5min job tightening them. I wasnt aware of this law, I'll read up on it further. I would expect a refund yes. Just never heard of anyone having this issue before when selling!

Person_one

Its pretty standard with a leasehold flat that the seller pays a 'retention' to the solicitor that they hold onto until all the accounts are done for the last year you lived there. Then the service charges and ground rents will be apportioned and you will be responsible for up to the day before completion and the buyer from the day of completion. If you owe anything, it gets taken from the retention and the rest goes back to you. If you are owed any money back, the management company should give that to your solicitors to return to you along with the retention.

I'm rather surprised that your solicitor is advising against this. Are you happy with their work otherwise?

davidl2014

Yeah I'm happy with the work otherwise, no problems. I didn't realise this was a normal thing. When I moved in I paid a small amount on the service charges to bring the account up to date. The seller at that time wasn't responsible.

Kynthia

When I bought over ten years ago tge seller paid a retention to cover any adjustment in the service charge. So while it may not happen with every sale/purchase it is fairly common.

I wouldn't have paid the chancel insurance unless tge buyer was genuinely going to pull out and the sale was worth more than that to me. By doing that early on it's making you seem like you'll pay anything. Perhaps say that this is the last thing and you want to exchange ASAP.

Lunchbox

davidl2014 wrote: »

Yeah I'm happy with the work otherwise, no problems. I didn't realise this was a normal thing. When I moved in I paid a small amount on the service charges to bring the account up to date. The seller at that time wasn't responsible.

They should have been, I think you probably had poor legal advice. It may well have been that it was such a small amount it wasn't worth pursuing, but you're only responsible for rent and SC from completion date. Why on earth should you pay for rubbish collection, cleaning, communal electricity, management fees for dates that only the seller has benefited from? As you say, you would expect a refund if you've overpaid, so common sense would dictate you should expect to make up any shortfall when the accounts are finalised.

I have no idea why your solicitor is suggesting paying an amount as a gift though - you have no way of knowing what the final bills will be. Leaving a retention with the solicitor is fairly standard.

davidl2014

I was advised by my solicitor with the chancel insurance that I had to pay this for the seller so I did, despite me informing them that when I purchased in 2007 had to buy this!

I'll call solicitor tomorrow and query what amount needs to be retained.

Kyresa

If you already have a policy did you show this to your solicitor? A lot of them will benefit any successors in title ! Edit. You may have to top it up to current levels. Sometimes it is cheaper to buy a new policy than do this. You can also refuse and say if they really feel the necessity for chancel then they can provide it at their cost

Kyresa

Re your retention look how much has been underpaid on the last few years then go for the nearest £50 to the average.

davidl2014

Yes, I showed solicitor the policy aa it was one of the queries- they advised me I would have to pay the top up as the seller so I paid £50. Since 2008 there have been no under payments on the service charge account, it's actually in a little bit if credit at the moment (which I did ask if I could claim but was advised by housing association no.)