Service Charges during Probate

John_Chip

Hello,


I am buying a flat where the owner is deceased and the estate is in probate.


The purchase is taking longer than I thought. My solicitors made me aware ages ago that around 2K of service charges were due in early June - no problem, I have money put aside for this.


But now due to some issues with the probate and the estate the purchase is not likely to happen until 'end of June'.


So - what happens to the service charge payment? Who pays it? Does it get paid by the executors? Or can they hold it over until exchange and ask me for it?


The building is a well managed block with a good management company.


I'm not trying to 'dodge' the 2K payment - but what are the various parties legal obligations here?


Is it just a case of whoever owns the property at that exact time pays the bill?


Best Regards


John

AnotherJoe

Its up for negotiation but really the estate of the deceased should pay it since they are the owners at the time. OTOH I suppose you will get the benefit going forward?

So they can ask you to pay but I would push back, maybe you'll agree 50/50 ? Depends how much you want it, how hardball they want to play, etc.

John_Chip

I don't want to play hardball over it - but at the same time I don't want to just jump in (via my solicitor) and say I'll pay it.


I suspect - due to the slow progress so far - that the 2K will be 'service charge arrears' at time of completion.


Then I guess it gets paid by the vendor - or we come to a deal (as ultimately I do benefit from this payment for works)

davidmcn

I don't see any reason why the norm shouldn't apply i.e. all costs are paid by the vendor and apportioned at completion.

G_M

When the service charge ecomes due, the owner must pay.

If the sale has not Completed by then, then the Estate should pay (and you should seek proof that they have done so).

If you own the property when the SC becomes due, then the bill will come to you. But you and the seller (Executers) should have calculated what % of the period the SC covers is for the periods before ad after Completion, and the money due on Completion adjusted to reflect your respective periods of ownership.

This is all standard practice in conveyancing.

AdrianC

The fact it's a probate sale is irrelevant. Normally, the vendor is liable for all service charges up to the date of completion - but it's a matter of negotiation between vendor and purchaser.

The only thing that matters is that what's included in the exchanged contracts is what happens at completion.

saajan_12

What period do the charges relate to? As far as the freeholder / management company are concerned, they collect payment from the leaseholder according to the lease. So in early June, if the sale hasn't completed yet, then the estate/executors must pay. Once completion occurs, if the bill hasn't been paid, the freeholder would chase the leaseholder at that moment i.e. you.

You can agree with the vendor who pays and how much to apportion depending on who owns the property for the period that the charge applies for. e.g. if the charge is paid in advance for 1 June 2017 - 31 May 2018 and if you complete 1 July 2017, then the vendors could pay in early June when it is due and you could pay the vendors back 11/12 of it (by adding to the purchase price) as you're getting the benefit of the 11 months of service charge while you own the property.

Ofcourse this is up for negotiation.

John_Chip

Thanks to all of the above for the information.


The charge is for future re-decoration work - charged in advance as per the lease.


So I guess it would be payable by the vendor as it becomes due - then paid back to the vendor by me at exchange ?

sparky130a

John_Chip wrote: »

Thanks to all of the above for the information.


The charge is for future re-decoration work - charged in advance as per the lease.


So I guess it would be payable by the vendor as it becomes due - then paid back to the vendor by me at exchange ?

No, that's for you to negotiate.

ThePants999

Whoever owns the house when the bill falls due should pay it. But I'd expect negotiation to follow - e.g. if I, as the vendor, paid a bill that covered a post-completion period, my default expectation would be that the buyer would pay me a portion of the charge matching the proportion of the period for which they'll own the property.

G_M

John_Chip wrote: »

Thanks to all of the above for the information.


The charge is for future re-decoration work - charged in advance as per the lease.


So I guess it would be payable by the vendor as it becomes due - then paid back to the vendor by me at exchange ?

So this is a one-off event, not a regular service charge.

Then it is completely down to negotiation.

You might argue that this is a cost you had not anticipated when you made your offer, so you expect the vendor to pay.

The vendor might argue that you are the one who will benefit from the redecoration, so you should pay.

As for the issue of the date it ecomes due, this is less relevant in a case like this of a one-off payment. If you fail to reach an agreement, the vendor might well ignore the invoice even if he receives it before Completion, in which case the management company will come after you for payment once you own the lease.

So unless you are happy to pay it in full yourself, get negotiating.