When and who should inform me of a property defect.

adli82

Hi Everyone


I am currently in the middle of trying to purchase a leasehold flat/apartment, I have paid the solicitor to complete searches etc. and for a home buyer report to be carried out. The solicitors have now flagged up that the seller has had to pay into a sink fund over the last three years on top of the standard service charges, for the issue of roof repairs being required. We are talking in the region of 5-6 k extra.


The issue I have at the moment is that I feel someone should have disclosed this information before I paid my solicitor and survey fees. This is clearly a known defect, as the seller has even said so in the report as to why the service charges have been higher.


The surveyor has stated they cannot access the roof or see its condition in their report.


At what stage should a potential buyer be told about a defect to a property, as in my opinion this would have affected my buying decision and saved me £700 so far.


The main problem is that these repairs have still not been completed and I am still unaware of whether the leaseholders have paid out all the money to get the repairs completed. Obviously I don't want to put myself in the position of getting a larger service charge bill after completion for however long these repairs drag on for.


I've probably gone off point a little, but in a nutshell if I'm not happy with the outcome of what I get told about the roof works, I wont be going ahead with the sale and I feel I will be unfairly out of pocket. Do I have anything here I can challenge?


Thanks in advance

G_M

It's good news for you that there is a sink fund. So if/when the roof needs work, the money will already be there (at least some of it).

If major repairs are planned, this will be revealed by the freeholder (or their management company) when your solicitor requests the freeholder pack.

Simby

Why don’t you request the further detail, I.e how much of the upcoming works is now covered you mention a roof. How big is the sink fund currently.... is the sink fund planned to continue at 5k contribution per year etc... I am assuming you mean 5k per year not 5 k over 3 years...

A sinkfund is actually a really good thing generally as it means there is money to cover maintenance like new roofs, without you getting a huge bill.

Then you can make a decision.

adli82

G_M wrote: »

It's good news for you that there is a sink fund. So if/when the roof needs work, the money will already be there (at least some of it).

If major repairs are planned, this will be revealed by the freeholder (or their management company) when your solicitor requests the freeholder pack.

By the looks of it the sink fund has been set up in order to cover the costs of the roof repairs, my main concern is does the seller/estate agent have a duty to disclose the works needed before I got to this point . Thanks

adli82

Simby wrote: »

Why don’t you request the further detail, I.e how much of the upcoming works is now covered you mention a roof. How big is the sink fund currently.... is the sink fund planned to continue at 5k contribution per year etc... I am assuming you mean 5k per year not 5 k over 3 years...

A sinkfund is actually a really good thing generally as it means there is money to cover maintenance like new roofs, without you getting a huge bill.

Then you can make a decision.

The sink fund has been put in place as a result of the repairs being needed, so over the last 3 years the leaseholders have been billed around 6k for this each ontop of the standard service charges.



I have requested for my solicitor to get answers for a whole range of questions relating to it, I was just wondering if the Seller or Estate egent had a duty to inform me about the repairs before getting to this stage. Thanks

AdrianC

adli82 wrote: »

I am currently in the middle of trying to purchase a leasehold flat/apartment, I have paid the solicitor to complete searches etc. and for a home buyer report to be carried out. The solicitors have now flagged up that the seller has had to pay into a sink fund over the last three years on top of the standard service charges, for the issue of roof repairs being required. We are talking in the region of 5-6 k extra.

OK, so you've been told before you've reached the point of exchange...

The issue I have at the moment is that I feel someone should have disclosed this information

They have.

...before I paid my solicitor and survey fees.

So before you placed an offer, effectively, since you get started on that more or less as soon as the offer's accepted, assuming no waiting for a chain to form.

This is clearly a known defect, as the seller has even said so in the report as to why the service charges have been higher.

Ooookay... So the vendor's told you, and your solicitors told you that the management company accounts have shown them... But you want more?

At what stage should a potential buyer be told about a defect to a property

You need to make sure you know everything you want to know before you exchange.
Seems like everything's working well, because that's happened.

as in my opinion this would have affected my buying decision and saved me £700 so far.

Did you ask anybody if there were any upcoming works to the common areas before putting an offer in?
Did you ask the EA? Do you know their client, the vendor, told them?
Did you ask the management company or the vendor? What did they say?

The main problem is that these repairs have still not been completed and I am still unaware of whether the leaseholders have paid out all the money to get the repairs completed.

That's exactly what a sinking fund is for. Think of it as a savings account for work on the shared parts of the building. The leaseholders have all been paying into that savings account, so that it's got a healthy balance in place to pay for upcoming works. This is a good thing - because it means you don't have to put that money in. Is it going to be enough? Who knows? Have they started to get quotes for the work yet? Is there a timescale?

Obviously I don't want to put myself in the position of getting a larger service charge bill after completion for however long these repairs drag on for.

That sinking fund is always going to ebb and flow. Occasionally, you'll get an s20 demand for money on top. It sounds like that's not happened in this case - they're simply building the sinking fund up to cover it, rather than sending an extra bill later.

I've probably gone off point a little, but in a nutshell if I'm not happy with the outcome of what I get told about the roof works, I wont be going ahead with the sale

Which is, of course, your prerogative. But it's a situation that's always going to happen with every flat. You can also look to revise the offer, of course.

and I feel I will be unfairly out of pocket. Do I have anything here I can challenge?

No. You've done your pre-purchase due diligence - and it's done its job. You've found out things that may affect your buying decision before you're tied to the purchase.

You don't have any contract with the vendor or the EA at all - so nothing to challenge.
You have a contract with your surveyor and conveyancer - and they've both done their job properly, so nothing to complain to them about.

G_M

adli82 wrote: »

....... does the seller/estate agent have a duty to disclose the works needed before I got to this point . Thanks

No.
It is the freeholder who decides when/if repairs are needed.
It is the freeholder who obtains quotes for the work.
It is the freeholder who decides how much should be built up in the sink fund.


All that information should be revealed in the freeholder pack.

csgohan4

OP perhaps leasehold is not for you, you think 6 k is bad, wait when there are more requests for repairs in the coming years

As you knew it was leasehold, you could have enquired about repair costs, your solicitors have done their job and highlighted an issue to you,

G_M

I would be far more concerned if buying a leasehold flat if there was not a sinking fund.


In that scenario, if any repair comes up, you'll be suddenly required to find the money.

eddddy

adli82 wrote: »

...my main concern is does the seller/estate agent have a duty to disclose the works needed before I got to this point . Thanks

The law has got a lot tougher in this area in recent years.

Estate Agents have a duty to disclose material information, which they knew or should have known (whether you ask them or not).

Here are some selective extracts from The Property Ombudsman's Code of practice.

You can judge whether you think the Estate Agent has broken the rules:

7i You must by law comply with the Consumer Protection from Unfair Trading Regulations 2008 (or the Business Protection from Misleading Marketing Regulations 2008 where applicable). The Consumer Protection from Unfair Trading Regulations 2008 require you to disclose any information of which you are aware or should be aware of in relation to the property in a clear, intelligible and timely fashion...

All material information (*) must be disclosed and there must be no material omissions which may impact on the average consumer’s (*) transactional decision (*).


7k For leasehold, commonhold and freehold properties where the owner has a legal obligation to contribute towards the maintenance costs of a shared amenity, material
information would include, but is not limited to the following:
• Amount of service charge (*), and when payable;
• Amount of any event fees (*), and when payable;
• Amount of reserve fund (*) contribution and when payable (if not already included in other charges);
• Approximate total amount of reserve fund;
• Details of any event-related fees and charges payable under the lease that are triggered by certain circumstances or events;
• Details of any other fees / charges contained in the lease, commonhold community
statement or title deeds.

You must take all reasonable precautions and exercise all due diligence by asking the seller to declare such information in writing. Where you have doubt or information is missing you should ask further relevant questions of the seller.

Link: https://www.tpos.co.uk/images/Codes_2019_a5/TPOE27-8_Code_of_Practice_for_Residential_Estate_Agents_A5_-_Effective_1_June_2019.pdf

Edit to add...

The NAEA have created a form that they suggest Estate Agents should ask Leasehold sellers to fill in:

It includes the question:

13H. Is there any planned or ongoing major work to this property or the building it’s contained within? If ‘Yes’ please provide details of the work.

Link: https://www.naea.co.uk/media/1045931/property-information-questionnaire-leasehold.pdf

So if the estate agent was following the NAEA guidelines, they should have known about the roof.

adli82

eddddy wrote: »

The law has got a lot tougher in this area in recent years.

Estate Agents have a duty to disclose material information, which they knew or should have known (whether you ask them or not).

Here are some selective extracts from The Property Ombudsman's Code of practice.

You can judge whether you think the Estate Agent has broken the rules:




Edit to add...

The NAEA have created a form that they suggest Estate Agents should ask Leasehold sellers to fill in:

It includes the question:



So if the estate agent was following the NAEA guidelines, they should have known about the roof.

Im guessing with it only being a suggested form they are not required to use it.


I was mainly just thinking if at the start of the process I had been told the roof needed to be repaired I wouldn't have gone on to make an offer and instructed a solicitor etc. I would have looked for something else.



It would seem that finding this information out during the rest of the process is as it should be and ok.