Leasehold Flat Section 20

krishgan

Hi, I'm looking for some advice and opinions to do with a leasehold flat I've purchased.

I completed the purchase of a flat in February 2019 after submitting an offer in July 2018. Shortly after moving in I received a notification of estimates (part 2) for a section 20 piece of work that I was not aware of. Shortly after I received part 3 and received an invoice of £2000. Having checked the paperwork the seller had filled in the LPE1 form in October 2018 and stated that there was no outstanding section 20 work on the building. After pursuing the management company they sent a copy of the section 20 part 1 notice of intention which was sent to the seller in January 2019 (prior to completion of the property but post the LPE1 form completion by the seller). I have managed to delay paying the amount until now, and the management company are now asking for the sum to be paid.

I had spoken to a tenant of another flat shortly after receiving the section 20 part 2, and he led me to believe that this work had been outstanding and discussed but obviously nothing formal had occurred until the section 20 part 1 was sent to the seller.

I believe the seller is at fault for not disclosing this information but not sure where I stand with it all. Please can someone advise? I have contacted my solicitor who advises me to a speak to a colleague in their litigation team who charges £200+ per hour.

One other thing to add, the work in the section 20 had been started but has not been completed as more work was discovered as being needed to be done and thus another section 20 has been raised for £1400. I am also reluctant to pay this until the matter of the original section 20 has been sorted as these works are related to each other.

NameUnavailable

As part of the conveyancing process your solicitor should have asked the management company for details of recent service charges/accounts etc., and also details of any proposed works. What did they report back to you at the time about those aspects of your purchase?

If the section 20 was only issued after you had exchanged contracts then it's not an issue from the sellers point of view but again your solicitor should have been informed by the management company they were intending to do this.

krishgan

Thanks for the response.NameUnavailable said:

As part of the conveyancing process your solicitor should have asked the management company for details of recent service charges/accounts etc., and also details of any proposed works. What did they report back to you at the time about those aspects of your purchase? 

The managing agent did not disclosure any details of proposed works either.

NameUnavailable said:

If the section 20 was only issued after you had exchanged contracts then it's not an issue from the sellers point of view but again your solicitor should have been informed by the management company they were intending to do this.

The section 20 (part 1) was issued prior to exchange.
Do you believe the managing agent would be at fault for not disclosing this information?

knightstyle

We had a similar experience nothing on the LPE forms as the work had not been agreed to.
But we found out about it just prior to exchange as our solicitor had requested a schedule of works forecasted over the next few years from the managing agents. In the end we had £5k reduction in the sale price as the final plans and quotes had not been finalised. The works eventually came to over £7k and took several years to complete, repointing and securing balconies.
We eventually sold as more works were planned, lifts garage roofs and hallway fire doors all needed attention.
IMO it is your solicitor who handled the purchase who should have checked this with the managing agents before you exchanged

tacpot12

If you have insurance for the flat, do you have legal expenses cover? If you do, you should be able to get legal advice for free from your insurer. The question you need to ask is "Am I liable for the cost when I wasn't advised of the work but the seller was?" If you are not liable, then you can in theory tell the management company that they are sending the bill to the wrong person. If they take you to court, you can use your legal advice to show the judge that they are chasing the wrong person. 

However, I think this is going to end up that you are liable for the cost. You might be able to persuade the seller to contribute a little, but they are not getting any benefit of the maintenance work being done, you are. It is in your interests to pay such bills promptly as it will be you who ends up paying for the cost of the management company's litigation against you, as they will have to increase the service charge if their costs go up.  

eddddy

tacpot12 said:

The question you need to ask is "Am I liable for the cost when I wasn't advised of the work but the seller was?" If you are not liable, then you can in theory tell the management company that they are sending the bill to the wrong person. If they take you to court, you can use your legal advice to show the judge that they are chasing the wrong person. 

That's not how it works.

The OP says the service charge bill for the work was issued after the OP bought the lease. Therefore the OP is responsible for paying the bill.

The question is whether the seller should have told the OP about the work, before contracts were exchanged. Because then the OP could have reduced their offer by £2k (or whatever).

krishgan

Thanks all for the advice and opinions.

eddddy said:

The OP says the service charge bill for the work was issued after the OP bought the lease. Therefore the OP is responsible for paying the bill.

The question is whether the seller should have told the OP about the work, before contracts were exchanged. Because then the OP could have reduced their offer by £2k (or whatever).

Exactly this. If I had known about this work then I would reduced the offer to take this work into account but now as it stands there is the original £2000 bill and an additional £1400 for further work that has now been discovered .

I believe the seller and managing agent should have disclosed this information ahead of the exchange. Could it also be that my solicitor should have confirmed the information just before exchange as the LPE1 form was completed 4 months prior to exchange?

As the information was not disclosed, do I have an opportunity to raise a grievance to the seller/managing agent for not disclosing this information. Also, is it right for my solicitor to charge me for use of their litigation team when this particular dispute relates to information not disclosed prior to exchange of the contracts?

Thanks 

loubel

If the freeholder was anticipating major works when they completed the LPE1 then these should have been disclosed in the form. However, as they issued the Notice after the form was filled out then the seller should have passed this to you anyway(via the solicitors) so you would have to go after the seller for non-disclosure. This isn't covered by conveyancing fees so if you want a solicitor to assist you will have to instruct one and they will likely charge on an hourly rate.

NameUnavailable

krishgan said:

Thanks all for the advice and opinions.

eddddy said:

The OP says the service charge bill for the work was issued after the OP bought the lease. Therefore the OP is responsible for paying the bill.

The question is whether the seller should have told the OP about the work, before contracts were exchanged. Because then the OP could have reduced their offer by £2k (or whatever).

Exactly this. If I had known about this work then I would reduced the offer to take this work into account but now as it stands there is the original £2000 bill and an additional £1400 for further work that has now been discovered .

I believe the seller and managing agent should have disclosed this information ahead of the exchange. Could it also be that my solicitor should have confirmed the information just before exchange as the LPE1 form was completed 4 months prior to exchange?

As the information was not disclosed, do I have an opportunity to raise a grievance to the seller/managing agent for not disclosing this information. Also, is it right for my solicitor to charge me for use of their litigation team when this particular dispute relates to information not disclosed prior to exchange of the contracts?

Thanks 

I'm not sure on the legality of this - seems there was no work planned when the form was requested and this arose in the meantime. The vendor SHOULD have informed his solicitors who in turn should have informed yours and on to you. Imagine if the proposed works had been £50K!

The problem is that to go after your vendor for compensation is probably going to cost you more in legal fees than it will just to pay for the works, given that you are unlikely to be awarded the full amount as you will be getting the benefit of any works and of course properties do need ongong maintenance.

Personally I would put it down to experience.

eddddy

Often, the starting point is for you to instruct a solicitor to send a 'scary' letter to the seller claiming damages of £2000 (or whatever) for misrepresentation - with a threat of court action, if they don't pay. And see if the seller replies, and if so, what they say.

When my solicitor last suggested a letter like this, his fee for sending it was £60 + vat. (But that was a few years ago.)

For that price, the solicitor won't look into any details of the case, or give a legal opinion on whether you have a good case. Instead, they'll just send the letter and see what happens.



If you're really lucky, the seller might be scared into paying up. But they might also just ignore the letter - in which case you might have to decide whether you want advice from a litigation solicitor.