Problem with selling leasehold flat

Phil_87

Hi, I'm in the process of selling my flat which is leasehold and there is a problem related to the management company. The buyer's solicitor has requested accounts for the service charges but the management company won't provide this. Is this something that an indemnity insurance policy could cover e.g. if there are future costs involved with dealing with the problem such as legal costs, setting up a new management company etc?

eddddy

Why won't the management company provide the accounts?

An Indemnity Insurance Policy isn't really relevant. The buyer (and perhaps their mortgage lender) just want to know how much a year is spent on maintenance, repairs, insurance admin etc - to see if it's a reasonable amount, and that they can comfortably afford it etc.

Plus they want to know if there is any outstanding service charge that you haven't paid - or if the buyer needs to reimburse you for any future service charges you've paid.

Perhaps the bigger worry is that the Management Company appear to either be obstructive or incompetent, by not providing the accounts.

A lot of people wouldn't want to buy a flat in a block with an obstructive or incompetent management company.

Racky_Roo

Have you paid the fee for the sellers pack? the management company will want money for the info needed and if you've not paid then often won't pull the pack together. It should be your solicitor requesting this info from the management company, not the buyers solicitor.

greatcrested

Phil_87 said:

....The buyer's solicitor has requested accounts for the service charges but the management company won't provide this. Is this something that an indemnity insurance policy could cover e.g. if there are future costs involved with dealing with the problem such as legal costs, setting up a new management company etc?

It's a standard enquiy by the buyer.

It's a standard part of the managment company's service (for which many of them charge a fee).

Indemnity insurane won't help.

As a buyer, I'd run a mile from a property (mis)managed in this way.

Who employs the manco? Or to put it another way, who is the freeholder?

macman

As leaseholder, doesn't the OP already have a copy of the most recent accounts available already?

Phil_87

Thanks for the advice, my solicitor also said indemnity insurance probably won't be useful here.

Luckily the buyer doesn't need a mortgage. This is a small block of six flats, each with their own entrance (no internal common areas). The service charge is only about £70 per quarter, and the management company is only responsible for basic maintenance such as gardening and cleaning the gutters, as well as insuring the building which they are doing. They just haven't provided the documentation/accounts to prove that they are doing this because they think they don't need to.

I've paid all the required fees and we have the LPE1 form completed by the managing agent, and yes this is dealt with by my solicitor but they are of course also dealing with requests from the buyer's solicitor.

The freeholder is the same person who runs the management company.

Racky_Roo

OP, do you get a copy of the accounts each year (even if you don't keep them) and attend AGM's? If so, they must have them and are just being slow to produce them. If they don't send the accounts out annually and you don't have annual meetings to discuss the running of the block, then they are probably in the process of creating them. Have any neighbours sold in the last couple of years? might be worth asking them how quickly they received the info

Phil_87

I haven't been getting copies of the accounts. It seems that the management company is not creating these. Several other flats have sold, I've been told these sold without this issue coming up but I'm not sure if that's true because the lease requires the management company to produce these accounts.

I haven't heard any mention of meetings about the running of the block.

bouicca21

What sort of documentation do you get with the service demand?  

Phil_87

They just send an invoice for the service charge when it's due, which only shows the amount, when it's due and the bank details to send it to.

AskAsk

sounds like the management company is dodgy and is not keeping records of spending and receipts.  i am not sure what you can do about this, but maybe someone can advise how to deal with a dodgy freeholder.  he is the one responsible to you and not the management company as they are his employees.