Special conditions of sale - Red Flag??

krmach

I'm reading through a legal pack of a property in auction which I'm interested in buying.

It includes 'Additional Special Conditions' and one of the items caught my eye:

"The amount paid on completion shall be a final figure and the BUYER shall be responsible for the payment of all monies due in respect of any rent, rent charge, service charge, service or insurance premium contribution of any similar outgoing including any excess charge notwithstanding when the same arose or became payable prior to completion."

Now that I'm re-reading this, I realised that the word NOTWITHSTANDING inserted in the clause is where I got confused.
Is it saying that the buyer will be liable for these charges unless these charges became payable before the completion?
(so seller's responsibility)

Or the Buyer will be liable regardless if these charges became payable before and after completion? (all responsibility to the buyer)

How do you interpret this? Thanks very much!

molerat

It is saying you will, on completion, become responsible for any outstanding amounts regardless of when they became due.

bod1467

As above ... it's the word WHEN that gives the context.

krmach

Thanks both, so for example the seller hasn't paid his electricity bills for years, and became due whilst in the process of conveyancing, I will be responsible in paying for these after completion?!

davidmcn

krmach wrote: »

Thanks both, so for example the seller hasn't paid his electricity bills for years, and became due whilst in the process of conveyancing, I will be responsible in paying for these after completion?!

No, it doesn't mention utility bills. It's only about costs they're liable to pay as leaseholder.

Ulfar

Make sure your solicitor gets a statement of any outstanding amounts from the freeholder.

Is the property a repossession ?

I ask this as normally any outstanding ground rent, service charges should be settled by the vendor prior to completion, except where it is a repossession. These amounts can be substantial so make sure you know for what you will be liable.

krmach

Thanks davidmcn. The seller is the owner of the property which is a freehold, I'm just concerned that it would include unpaid bills including utility or business rates which is substantial.

Thanks very much to all who replied, I feel like I'm 90% decided in making an offer -->>> so maybe not after the follow up replies!!!

Ithaca

That's often part of the deal with auction properties - you take on not just the property itself but potentially a whole load of other stuff hanging off it (including outstanding debts and charges).* So you'll need to make an assessment about whether the (generally) lower purchase price of an auction property plus any additional charges still gives you a decent deal. You'll need to do your research carefully before you bid so you are clear what you are taking on.

*Similar to when a company gets sold for £1... it's then up to the buyer to pick up the liabilities than come with it (usually massive debt).

krmach

Ulfar wrote: »

Make sure your solicitor gets a statement of any outstanding amounts from the freeholder.

Is the property a repossession ?

I ask this as normally any outstanding ground rent, service charges should be settled by the vendor prior to completion, except where it is a repossession. These amounts can be substantial so make sure you know for what you will be liable.

Yes that's what I was thinking. It is not a repossession and the seller is the owner who used the property for his own retail business. Also the property is under auction conditions so I know I have to be careful with the special conditions included.

Ulfar

Is the vendor selling the leasehold or the leasehold and the freehold/their share of the freehold ?

I may have missed it, is the property a house or a flat ?

Legally the vendor is technically two people in this transaction, a leaseholder and the freeholder. Just because they own the freehold or part of it doesn't mean they can get away with not fulfilling their obligations as a leaseholder.

If they are selling just the leasehold you would be in a position where you could be liable for debts run up by the vendor as part of the lease, to the freeholder who is also the vendor. This would be very cheeky as the vendor would have in effect run up debts that they are then getting you to take on and pay them for the privilege.

I suggest you speak to your solicitor for advice.

krmach

He is selling a freehold. There are no leaseholders. It refers to a two-storey commercial property without tenants/vacant.