Leasehold - service charge after exchange before completion

jack1992

Hello

i exchanged 1 week ago, complete next week. Since exchange I received an ‘in advance’ bill for service charge from March (ie post completion) 

Do i need to pay it? Or do I just let the buyer know it’s due by 3rd March
thanks

Mildreds_Earrings

Hello @jack1992 I wouldn't pay before you complete but as you will complete next week, you will be liable for service charges from March onwards.  Your Solicitor may already have collected your March monthly service charge in the completion statement?  That is something that you will need to check with your Solicitor but that is what our Solicitor did when we bought a leasehold apartment and yes we were liable for service charges from the date we moved in.  Hope that helps.

princeofpounds

You should advise your solicitor. The two solicitors will 'apportion' the service charge bill to reflect the period of your occupation vs. the period of the buyer's occupation that this bill covers.

Given you say it is an 'in advance' bill, then you may not be required to pay anything, but it's not entirely clear from your statement when you move out, and which period this bill covers.

eddddy

You need to check with your solicitor.

Assuming your solicitor is doing a thorough job, he/she will be doing a service charge adjustment/apportionment. So in simple terms, the outcome will be either...

1. You don't pay the bill, and leave it for the buyer to pay.
2. You do pay the bill, and then the buyer pays you back via the solicitors

(I suspect it will be option 1, because payment isn't due until 3rd March - which is after the completion date.)

BernieW

In addition to the good answers from eddddy and princeofpounds ... be aware that your solicitor may arrange a 'retention' to cover currently unknown numbers when they become known ... or they may arrange an undertaking to pay those unknowns when known.
You're not completing at the end of the financial / service charge year - so you and the buyer don't know the exact figures, which be detailed in the Service Charge Accounts after the year end. Once those figures are published, the two solicitors will calculate how many days of the year are your responsibility - and that cost/amount ... and how many days of the year are the buyer's responsibility - and that cost/amount ... and then the appropriate money will be paid from the retention and/or returned to you.
Your number one action point is > send a copy of the 'demand' to your solicitor asap.

annetheman

jack1992 said:

Hello

i exchanged 1 week ago, complete next week. Since exchange I received an ‘in advance’ bill for service charge from March (ie post completion) 

Do i need to pay it? Or do I just let the buyer know it’s due by 3rd March
thanks

I too exchanged last week and complete next Friday.

I have been billed in advance for post-completion service charge for March 2021, as well as apportionment of 3 days in Feb, and was told of this many months ago, when I first got my quote from solicitor.

This was given as part of completion statement, which I paid today. There was a caveat added that if they don't have the money before, this could cause a delay to completion.

Solicitor is retaining and paying the apportionment and advance service charges upon completion, unless something horrendous happens and I don't complete, since obviously I wouldn't be liable for any days pre-completion.

*touch wood*

greatcrested

Mildreds_Earrings said:

Hello @jack1992 I wouldn't pay before you complete but as you will complete next week, you will be liable for service charges from March onwards. 

OP is selling, not buying I think.

eddddy

annetheman said:

jack1992 said:

Hello

i exchanged 1 week ago, complete next week. Since exchange I received an ‘in advance’ bill for service charge from March (ie post completion) 

Do i need to pay it? Or do I just let the buyer know it’s due by 3rd March
thanks

I too exchanged last week and complete next Friday.

I have been billed in advance for post-completion service charge for March 2021, as well as apportionment of 3 days in Feb, and was told of this many months ago, when I first got my quote from solicitor.

This was given as part of completion statement, which I paid today. There was a caveat added that if they don't have the money before, this could cause a delay to completion.

Solicitor is retaining and paying the apportionment and advance service charges upon completion, unless something horrendous happens and I don't complete, since obviously I wouldn't be liable for any days pre-completion.

*touch wood*

Yep.

Just to clarify - the key question is usually "When is the payment due?"

• If the service charge payment is due before the completion date, the seller is legally liable for paying the full amount to the freeholder (or management co)..
• If the service charge payment is due after the completion date, the buyer is legally liable for paying the full amount to the freeholder (or management co)..

Then the solicitors deal with any apportionment, sometimes by including a 'retention'.

shahzo

Hello,

We were served notice to complete by 30th January 2020 on a new build leasehold flat. Due to delays, we are now completing 30th July 2021 (1.5 years later).

We have just received an invoice which states the service charge and ground rent is payable from 30th January 2020. Is this correct as we thought we are liable to pay once we actually complete. The sellers solicitors are saying it is due to be paid from the contractual date 30th January 2020 as that was the original completion date.

Thanks in advance.

eddddy

shahzo said:

Hello,

We were served notice to complete by 30th January 2020 on a new build leasehold flat. Due to delays, we are now completing 30th July 2021 (1.5 years later).

We have just received an invoice which states the service charge and ground rent is payable from 30th January 2020. Is this correct as we thought we are liable to pay once we actually complete. The sellers solicitors are saying it is due to be paid from the contractual date 30th January 2020 as that was the original completion date.

Thanks in advance.

Just to clarify, what do you mean by "We were served notice to complete by 30th January 2020"?  

You're normally served notice to complete if you default on the contract by failing to complete. Did you default?

(Or there's an unrelated concept with new builds called "completion on notice". i.e. Once the flat is finished, you're given 10 days notice to get completion done.)


If you can clarify what happened in January 2020, it might help.