Completion Settlement Finances

nickylabron

Hi,


I recently sold my leasehold flat to a buyer and after we completed, my solicitor sent me the final statement of balance. All was well, so I thought, until I received a letter from the buyer a month later threatening small claims action for a portion of the rent money from May.


Basically, the sale completed on May 10th. I was told, by my solicitor, towards the end of April to continue paying as normal and everything will be pro rated and worked out by the sale. Therefore, I paid my mortgage, service charge etc as normal on May 1st. I also received the rent money off the sitting tenant for May.


The buyer is now asking for the rent money from 10th May - 31st May. My solicitor said the onus was on the buyers solicitor to include this money in the settlement and they didn't.


So if the buyer takes me to small court, where do I stand please?


Thanks in advance for your help

mrginge

Had you agreed to pay them this rent and they just forgot to add it to the settlement?

davidmcn

Easiest to phone your solicitor, surely? What does your contract say about it?

SmashedAvacado

The most likely reason for the situation you now have is that the solicitors messed up between them.

The contract will have apportioned rent but this obviously wasn't reflected in the statement. It is likely that you owe this money. Check with your lawyer. Just because the completion statement was not accurate, it does not mean that your contractual obligation is extinguished.

If your lawyer confirms it is owed, they will be effectively admitting to a mistake. That will be awkward for them. They might choose to ignore your question because admitting negligence is not ideal for them.

Just because you technically owe it, does not mean you have to pay it. They are unlikely to sue you for it. I would wait for an answer from my lawyer before doing anything. But then it becomes a moral question. Do you pay money that you owe?

Tiglet2

Send a copy of the letter you have received to your conveyancer and let them deal with the seller's solicitor. It will take time to sort out but this is part of a leasehold transaction. It may be that you will be liable but you should not deal with the vendor directly, make sure it is done through the acting solicitors at the time of the purchase/sale. Was there a retention in place? If so, it may be that some of this can be used to pay for arrears.

SmashedAvacado

Tiglet2 wrote: »

Send a copy of the letter you have received to your conveyancer and let them deal with the seller's solicitor. It will take time to sort out but this is part of a leasehold transaction. It may be that you will be liable but you should not deal with the vendor directly, make sure it is done through the acting solicitors at the time of the purchase/sale. Was there a retention in place? If so, it may be that some of this can be used to pay for arrears.

are you suggesting she builds a time machine?

The deal has been done.

Tiglet2

My solicitor said the onus was on the buyers solicitor to include this money in the settlement and they didn't.

The deal may have been done, but the buyer should have sent the letter via his own solicitor, who would contact the OP's solicitor. Solicitors acting on behalf of sellers will sell without being too diligent about the rightful figures as, in accordance with solicitors protocol, it is the buying solicitor's responsibility to check and do their due diligence to protect their client. If they did not do this then the buyer is probably out of luck and his recourse is to his acting solicitor. OP need not get involved - either forward the letter to your solicitor or ignore. Bit like insurance on a car - you let the insurance company liaise between the parties, you don't get involved.

SmashedAvacado

Tiglet2 wrote: »

The deal may have been done, but the buyer should have sent the letter via his own solicitor, who would contact the OP's solicitor. Solicitors acting on behalf of sellers will sell without being too diligent about the rightful figures as, in accordance with solicitors protocol, it is the buying solicitor's responsibility to check and do their due diligence to protect their client. If they did not do this then the buyer is probably out of luck and his recourse is to his acting solicitor. OP need not get involved - either forward the letter to your solicitor or ignore. Bit like insurance on a car - you let the insurance company liaise between the parties, you don't get involved.

Diligence on checking a completion statement is not the same as diligence on the property

If the money is owed the money is owed, and just because there was a completion statement that had the wrong numbers on it, that does not mean that the money is not owed

You are right that the buyer would have recourse to his solicitor but that would not make the primary obligation of the obligation of the seller to pay what is contractually due to the buyer. The contract will have provisions in it dealing with apportionment.

G_M

I think I disagree with the consensus of advice above!

A price was agreed for the purchase of the property. The price to be paid on Completion was contractually agreed and took into account various factors such as any amount due for Fs & Fs, service charge over/under payments, and, in this case, rent from the tenant (sitting or otherwise).

The agreed amount was paid by the buyer and the property was handed over by the seller.

Contract satisfied.

That is why it's important before Completion to have such matters sorted out.


However I accept it is possible my interpretation is wrong, so when one of the 'resident' solicitors comes along I'm happy to be corrected.

parkrunner

I have no idea of the law but for me the money is morally owed so I would pay it. People make mistakes.

mrschaucer

parkrunner wrote: »

I have no idea of the law but for me the money is morally owed so I would pay it. People make mistakes.

That's why we have contracts. That's why we employ solicitors. To avoid "mistakes" and to avoid arguments about morals.