Large amount of service charge arrears from previous leaseholder

rliu

Hi wanted some advice as I have been sent a large leasehold service charge arrears bill from the management company (over £4,500) and from the invoice 99% of it (if not all of it as the breakdown of dates on the invoice is confusingly laid out) was for the period before I took over the lease. It is for gas charges, maintenance and also redecorations, and dated in three sections, two of which say balance as of 25/12/2018 brought forward and one saying 25 Feb 2018-25Feb 2019

I completed the purchase of the lease on 11 Feb 2019.

I am also having difficulty with getting the seller's solicitors to cover this cost, they are saying £2000 was agreed during the sales process, which is an outright lie as no explicit sum was agreed and my solicitors told me that around £2600 was the arrears on 4 Dec 2018 and this would all be covered by seller.

I have gone through their internal complaints process and they maintain the responsibility for paying arrears passes to whoever the current leaseholder is (which I don't think there is a default legal basis for, nor does it say so in the lease contract). I can now take it forward to the Property Ombudsman, just wanted to know from anyone with similar experiences whether I should bother or is this a waste of my time.

AdrianC

What does YOUR purchase solicitor say?

silvercar

Your solicitor should be sorting this out.

When we bought a flat our solicitor arranged a retention on the sale proceeds to cover any service charge owing.

rliu

AdrianC wrote: »

What does YOUR purchase solicitor say?

Not a lot - the guy who dealt with the purchase has left the firm, and his team leader was the one telling me the seller's solicitor is saying they only held back £2000

AdrianC

The individual is irrelevant. The file will contain all the information.

rliu

AdrianC wrote: »

The individual is irrelevant. The file will contain all the information.

Yeah I get your point they have to retain that information, but getting them to be prompt with responding is a different matter. I may have to complain about the solicitors as well separately, but was interested in what the managing company can do to me if I haven't paid them in the meantime. Of course they threaten the usual on court action to forfeit the lease or getting debt recovery agents etc., I suspect these are empty threats but just wanted to check this against someone else's experience.

boliston

As leaseholder you are liable for the debt and must pay to avoid legal action - you will then need to take action against your conveyancing firm for losses they have caused you to incur through their negligence

G_M

1) as leaseholder, you are liable to the freeholder/managing agent, for the arrears

2) you cannot complain to the seller's solicitor - you did not employ them

3) you can complain to your solicitor - you did employ them

4) your solicitor should have obtained from the seller (via their solicitor) full details of the service charges, and whether they were paid up to date. You should have see this. Were you not sent details?

5) the 'retention' (£2000 held back), is usually to cover any charges in the current year, since no one can know what this year's charges will end up costing. But previous years should have been checked and sorted!

eddddy

rliu wrote: »

... from the invoice 99% of it (if not all of it as the breakdown of dates on the invoice is confusingly laid out) was for the period before I took over the lease.
....
I completed the purchase of the lease on 11 Feb 2019.

The legal position is a bit complicated - but it sounds like your management company may be wrong.

Looking at the service charges before 11th Feb 2019...

1) If the previous owner (i.e. the seller) was sent a demand for the service charge before 11th Feb 2019, the previous owner is still liable to pay that bill.

2) If no demand was sent out until after the 11th Feb, you are liable for the bill (even if it relates to charges incurred before 11th Feb).

So the management company should be chasing the seller for any arrears of type 1).

BUT... there can be a big anomaly. Even though the seller owes the money, and not you - the freeholder can apply to forfeit the lease on the flat. So you would lose your flat.


Your solicitor should have made enquiries about all this when you bought, and...

• Made adjustments to the completion payment to deal with 1).

• Arranged a retention to deal with 2).

Edit to add...

What I've described above is the 'default' situation (based on Landlord and Tenant (Covenants) Act 1995).

But if there are specific terms in the lease or the sale contract, they can override the 'default' situation.

rliu

eddddy wrote: »

The legal position is a bit complicated - but it sounds like your management company may be wrong.

Looking at the service charges before 11th Feb 2019...

1) If the previous owner (i.e. the seller) was sent a demand for the service charge before 11th Feb 2019, the previous owner is still liable to pay that bill.

2) If no demand was sent out until after the 11th Feb, you are liable for the bill (even if it relates to charges incurred before 11th Feb).

So the management company should be chasing the seller for any arrears of type 1).

BUT... there can be a big anomaly. Even though the seller owes the money, and not you - the freeholder can apply to forfeit the lease on the flat. So you would lose your flat.


Your solicitor should have made enquiries about all this when you bought, and...

• Made adjustments to the completion payment to deal with 1).

• Arranged a retention to deal with 2).

Edit to add...

What I've described above is the 'default' situation (based on Landlord and Tenant (Covenants) Act 1995).

But if there are specific terms in the lease or the sale contract, they can override the 'default' situation.

Thanks for this, this is in keeping with what I've seen on the Government funded LEASE service just now - will give them a call also to clarify this.

I have asked the managing agents over a month ago, prior to this complaints process, whether they had chased the previous leaseholder for the arrears. They simply said the previous leaseholder was a live-out landlord (in response to my point I've never seen any post addressed to the previous leaseholder) and refused to confirm what correspondence they had sent him and what dates they tried to liaise with them. I suspect they know they will have a much better chance of getting a response out of me after the last leaseholder ignored them. I shall I think carry forward a complaint to the Property Ombudsman on the basis that the managing agents will not confirm what efforts they've made to liaise with the previous leaseholder - probably because it loses them the right to pursue me.

G_M

where the preveious leaseholder lived is not relevant.


But you should really be chasing your solicitor foranswers, and if appropriate, follow their complaints procedure.