Service charge refund sent to someone else

Pigletntrekky

Hi
I sold my flat last January and before I could sell London and quadrant who bought the new building from bovis made us pay the service charge. The charge was an estimate as they had no idea what the charges would be, being a new build. Any how we paid around £2,300 by January so we could exchange. We also done a retainer £300 with solicitor in case we had not paid enough. Any how I found out l n q had released final service charge statement in September to the other owners and the April to April bill was £950 for the year. I chased l n q for a refund which they have said they have refunded the money to the new owner on their account. I’ve chased my solicitor and the new buyer said yes they have had a credit but all correspondence has stopped there. L n q say it’s for our solicitor to sort but I’m getting no where with anyone. That refund is my money not the new owners. Should I sue or do a section 75 claim. We got the £300 retainer back, which I said to the solicitor surely were covered for overpayment too?
Help? It’s a lot of money!
Thanks

cattie

I would have thought it was for your solicitor to sort out as it would normally be them that deal with such retentions & as you say, you should surely be covered with overpayment of such charges too.

Surely it would be easy enough for L&Q to debit the new owners account & send a cheque to you via your solicitor especially as buyers have admitted to receiving the credit & your solicitor can confirm that the refund should actually have been due to you.

What an annoying situation for you.

eddddy

L&Q has done the right thing in applying a credit to the new owner's account.

The new owner does not have to pay you any of that credit - unless they agreed that they would in the contract that you both signed.

Weirdly, in my experience, sale contracts often make the seller contribute to service charge under-payments...

... but they don't make the buyer refund service charge over-payments.

So the seller may not be required to pay you anything - but you need to read the contract you signed to make sure (or ask your solicitor to check the contract).

Pigletntrekky wrote: »

Should I sue or do a section 75 claim.

Unless your contract says otherwise, you don't have a legal basis to sue.

If you mean section 75 of the consumer credit act, no credit agreement is involved here, so the consumer credit act isn't relevant in any way.


Edit to add...

For what it's worth, you probably haven't really paid the full £2,300 estimated service charge.

It would have been apportioned when you sold the property, so the new owners would have paid some of it.

Pigletntrekky

I paid from April to end January £2300. The year ended April. I will chase solicitor again, can’t see how me paying estimated service charges overpayment going to the new buyer. I had no choice but to pay either otherwise L&q solicitor wouldn’t allow the exchange. I just can’t see how it’s legal to issue a refund on a different account and a different name. I thought section 75 would cover me for a service and a refund not received?
So annoying they have my money!

wimbatel

I had something similar - I sold my leasehold flat in October 2019.
I paid my service charges up front in full at the beginning of the year in January 2019, to cover me until end of December 2019. The charges were estimated and based on previous years.
When it came to exchanging, the new buyers wanted a retention ( they wanted £300 but we eventually agreed on £100 ) in case the bill came out higher than estimated once the accounts/expenditure were worked out.
I was advised if the expenditure turned out to be higher, so for example the actual bill was £350 more than what I had paid, the new owners would use the £100 retention for this and then be liable for the rest, even though I was living there at the time.
On the flipside though, if the bill came out to be a lot less, for example £350 less than what I had paid, I wouldn't get any of the money back that I had paid, it would go onto the account that was now in their name.
Either way, for my sale, neither party can approach the other to get money back/ask for payment. So they could either benefit or be at a loss because of this, and same for me - we both knew the risk.
Because I moved out in October I did also get part of the money back anyway which the new owner would be liable for once they bought the flat.

I have to admit that based on previous years, the actual expenditure has always been a lot higher than estimated, and I am fairly certain they are going to have to stump up the money to cover a much bigger bill as the £100 retention is unlikely to cover the difference in estimated and actual spending. I provided them with all the copies of previous estimated bills and actual expenditure and they still agreed to go ahead with only a £100 retention.
Even if they didn't end up needing to use the retention, in the grand scheme of things, losing the £100 doesn't bother me as ultimately I moved on to where I wanted to be and it would be a small price to pay.
Obviously your amount is a lot higher, but it depends what was in your contract? I would clarify with your solicitor and find out where you stand.
If the bill had been massive it could have gone the other way, leaving the new owner liable to pay for a period when they were not actually living there?
It all seemed a bit weird to me, but that was the information I got from my solicitor/what was in my contract.

ethank

Isn't the service charge related to the property and not you as a person. I thought that if you are due a refund, it is due to the owner of the flat at the time of repayment.

davidmcn

ethank wrote: »

Isn't the service charge related to the property and not you as a person. I thought that if you are due a refund, it is due to the owner of the flat at the time of repayment.

Exactly, any apportionment is dealt with by the contract between the buyer and seller.

Tiglet2

Pigletntrekky wrote: »

Hi
I sold my flat last January and before I could sell London and quadrant who bought the new building from bovis made us pay the service charge. The charge was an estimate as they had no idea what the charges would be, being a new build. Any how we paid around £2,300 by January so we could exchange. We also done a retainer £300 with solicitor in case we had not paid enough. Any how I found out l n q had released final service charge statement in September to the other owners and the April to April bill was £950 for the year. I chased l n q for a refund which they have said they have refunded the money to the new owner on their account. I’ve chased my solicitor and the new buyer said yes they have had a credit but all correspondence has stopped there. L n q say it’s for our solicitor to sort but I’m getting no where with anyone. That refund is my money not the new owners. Should I sue or do a section 75 claim. We got the £300 retainer back, which I said to the solicitor surely were covered for overpayment too?
Help? It’s a lot of money!
Thanks

I am trying to simplify, please correct me if I am wrong:
You paid £2300 in January 2019. You also agreed to a £300 retention out of the sale proceeds on completion. Total of £2600.
Management Co Final Accounts were published in September for the Accounting period April to April. Your solicitor, who held the retention of £300, sent the £300 back to you.
The final accounts show an actual expenditure of £950, leaving you out of pocket by £1650. This amount would be credited to the property, i.e. the new buyer.
Your solicitor was holding only £300 so this is all they can give you.
You will have to send your solicitor the statement showing your payment of £2300. Also if you still have it, the Solicitor's Final Account sent to you on completion, showing the flow of monies including any apportionments made up to completion for the sale of the property.

If you can provide evidence that you are owed £1650 (send your solicitor evidence of the £2300 paid together with the Solicitor's Final Account, they can compare it to the Management Co's Final Accounts. Then your solicitor can write to the buyer's solicitor, with the evidence, so that the buyer's solicitor can request that the buyer returns the overpayment to them, to be returned to your solicitor.

The new buyer is obviously not entitled to this credit, but if he ignores his solicitor's requests for the repayment, then you would have to consider the small claims court. It is unfortunate that you are entirely relying on the goodwill of the buyer to return that money. Your other alternative is to ask why your solicitor agreed to hold only £300 knowing that you had paid £2300 for service charges when the accounting period is April to April.

Good luck.

eddddy

Tiglet2 wrote: »

I am trying to simplify, please correct me if I am wrong:
You paid £2300 in January 2019. You also agreed to a £300 retention out of the sale proceeds on completion. Total of £2600.
Management Co Final Accounts were published in September for the Accounting period April to April. Your solicitor, who held the retention of £300, sent the £300 back to you.
The final accounts show an actual expenditure of £950, leaving you out of pocket by £1650. This amount would be credited to the property, i.e. the new buyer.
Your solicitor was holding only £300 so this is all they can give you.
You will have to send your solicitor the statement showing your payment of £2300. Also if you still have it, the Solicitor's Final Account sent to you on completion, showing the flow of monies including any apportionments made up to completion for the sale of the property.

If you can provide evidence that you are owed £1650 (send your solicitor evidence of the £2300 paid together with the Solicitor's Final Account, they can compare it to the Management Co's Final Accounts. Then your solicitor can write to the buyer's solicitor, with the evidence, so that the buyer's solicitor can request that the buyer returns the overpayment to them, to be returned to your solicitor.

The new buyer is obviously not entitled to this credit, but if he ignores his solicitor's requests for the repayment, then you would have to consider the small claims court. It is unfortunate that you are entirely relying on the goodwill of the buyer to return that money. Your other alternative is to ask why your solicitor agreed to hold only £300 knowing that you had paid £2300 for service charges when the accounting period is April to April.

Good luck.

You've missed out the most important point.

The OP is only due some money from the buyer, if the sale contract says they are due some money.

And it would be the sale contract that specifies how much money is due (not your calculations above).

Tiglet2

eddddy wrote: »

You've missed out the most important point.

The OP is only due some money from the buyer, if the sale contract says they are due some money.

And it would be the sale contract that specifies how much money is due (not your calculations above).

Agreed that the sales contract will only mention the retention, i.e. the £300 agreed (which has been returned), however if it can be proved that a service charge overpayment was owed to the seller, then the steps above would be advisable, but as I stated, it is very much is down to the buyer to repay that money. The solicitor doesn't hold it, but the credit on the buyer's account would indicate that there was an overpayment which the buyer is not entitled to. However, getting the buyer to repay it is not straight forward. The solicitor can only write to request it and if the buyer ignores the request, it would be down to the seller to either sue the buyer or write it off.

I have actually had this same issue with a client recently and we have successfully obtained a repayment from the buyer, once presented with the evidence.

eddddy

Tiglet2 wrote: »

Agreed that the sales contract will only mention the retention, i.e. the £300 agreed (which has been returned), however if it can be proved that a service charge overpayment was owed to the seller, then the steps above would be advisable, but as I stated, it is very much is down to the buyer to repay that money. The solicitor doesn't hold it, but the credit on the buyer's account would indicate that there was an overpayment which the buyer is not entitled to. However, getting the buyer to repay it is not straight forward. The solicitor can only write to request it and if the buyer ignores the request, it would be down to the seller to either sue the buyer or write it off.

So to summarise, your suggestion is that the OP should contact the buyer and essentially say something like:

"Would you like to volunteer to pay me some money as a goodwill gesture, because of the service charge credit you received?"

I agree it would be a nice gesture, if the buyer gave a gift of money to the OP - but given human nature, I think it's a bit of a long-shot.

Tiglet2 wrote: »

I have actually had this same issue with a client recently and we have successfully obtained a repayment from the buyer, once presented with the evidence.

It's nice that you found that 'long-shot' - a buyer who voluntarily gave a gift to your client (assuming that the buyer wasn't contractually or legally required to).

What business are you in?