Reclaiming Ground Rent

Quorden

After some advice / opinions if possible regarding an issue that has come up following my daughters purchase of a flat.

Turns out that in the mad rush to complete on the property (got the keys two days before she went on a six month deployment) the matter of the outstanding ground rent from the previous owner was over-looked. 

Fully appreciate that she is liable regardless of whether or not she was the owner at the time so am settling this, however as both her solicitor and the vendors solicitor's are saying it is nothing to do with them I was wondering if the best course of action would be to issue a Letter Before Action to the previous owner to try and reclaim the money, before then possibly using the Money Claims service?

It's about #600 pounds, so not insignificant.

Racky_Roo

Ground rent is usually paid annually in advance. So if she moved in part way through the year she would have been been expected to pay the remaining ground rent to the seller.

Are you saying the seller owed GR for the time they had lived there? If so, your daughter's solicitor should have spotted this when they got the financials from the management co and they should have requested some money was held back to cover this.

If this hasn't happened then you can raise a complaint to the solicitor

eddddy

This can be a surprising complex topic.

• Were ground rent demands sent to the previous owner - which they failed to pay?
• Or has the freeholder only just got round to send out the demand

More generally...

• What did the LPE1 and TA7 forms say about ground rent when your daughter purchased?
• Did your daughter's solicitor make any enquiries about unpaid ground rent?
• Did your solicitor have correct information about unpaid ground rent, and make suitable adjustments in the completion statement?

If the seller made a misleading statement about ground rent (e.g. they said it was paid upto date, but it wasn't) there might be a basis for a claim.

If not, it depends on the type of issues mentioned above.

Quorden

Thanks for the response, appreciated. So yes, the ground rent was for the period 01.01.21 - to 31.12.21 and she completed mid November however is being asked for the full years charge as the previous tenant owner did not pay their bill.

From what I can make out the her solicitor raised it as a concern however the completion went ahead anyway, bit hard to find out the full detail as communication is a little difficult with daughter due to where she is based but am getting all the correspondence sent onto me so hopefully can see what went on.

Though if there is no recourse against the solicitor would the LBA be a route to follow? Not saying that there wouldn't be recourse against the solicitor but past experience has taught me that any dealings with them tend to drag on..

eddddy

Quorden said:

Thanks for the response, appreciated. So yes, the ground rent was for the period 01.01.21 - to 31.12.21 and she completed mid November however is being asked for the full years charge as the previous tenant owner did not pay their bill.

You say "the previous tenant owner did not pay their bill"...

So are you sure they were correctly sent a bill (addressed to the previous tenant owner) before completion?
- If so, the previous tenant owner is still liable to pay that bill - so the freeholder should be chasing them.**

But if the bill was sent out after completion, addressed to your daughter - your daughter is liable for the bill.


**But the freeholder can still forfeit the lease (i.e. repossess your daughter's flat), even if it's a previous tenant who hasn't paid their bill.  Which is why conveyancing solicitors should check this area carefully.


If the bill was sent out after completion your daughter may or may not have a case for claiming the ground rent from the previous tenant owner - it depends what her purchase contract said.

eddddy

... and just to add,

hopefully you are aware of the draconian measures freeholders can take if ground rent over £250 outside London (or £1000 in London) is more than 3 months late being paid.

Quorden

So I can see that the Ground Rent for 2021 was issued to the previous owner, found opened letters when we got the keys so we know they were aware of it.

The freeholder is saying that the debt is now my daughters responsibility and won't be chasing the previous owner, as you say they can still forfeit the lease so I'll be settling this regardless as don't want to open her up to any legal action when she returns.

Teddddy said:

This can be a surprising complex topic.

• Were ground rent demands sent to the previous owner - which they failed to pay? Correct, they were sent demands throughout the year.
• Or has the freeholder only just got round to send out the demand

More generally...

• What did the LPE1 and TA7 forms say about ground rent when your daughter purchased? - Am waiting for all the documents to be forwarded onto me.
• Did your daughter's solicitor make any enquiries about unpaid ground rent? They did and highlighted the fact that there was outstanding money, but can't seem to find anything about a resolution.
• Did your solicitor have correct information about unpaid ground rent, and make suitable adjustments in the completion statement? I do have the financials and no provision / reduction was made for the Ground Rent

If the seller made a misleading statement about ground rent (e.g. they said it was paid upto date, but it wasn't) there might be a basis for a claim.

If not, it depends on the type of issues mentioned above.

Suspect I don't have enough information to really know what the next steps should be, may have to wait until April to get it sorted,.
Appreciate you taking the time to look though.

Timbosaurus

It's quite routine when buying a flat to agree a retention (usually £1k or thereabouts) to cover any unbilled shortfall in service charges covering the period of the vendor's occupancy.  It would be perfectly reasonable to ask the solicitor to deduct it from this.  If this was agreed as part of the purchase contract, it would be held by the seller's solicitor, so your daughter might not be aware of it.

eddddy

Quorden said:

So I can see that the Ground Rent for 2021 was issued to the previous owner, found opened letters when we got the keys so we know they were aware of it.

The freeholder is saying that the debt is now my daughters responsibility and won't be chasing the previous owner, as you say they can still forfeit the lease so I'll be settling this regardless as don't want to open her up to any legal action when she returns.

Yep - so the freeholder is wrong. Because it was billed to the previous owner, it's still owed by the previous owner. But as you say, to avoid forfeiture your daughter should pay it.


To be honest, that might make claiming it back from the previous owner more difficult. In general, you can't pay a bill that's owed by somebody else, and then make a claim against that 'somebody else'.

So it really depends on what the purchase contract documents said - and whether the solicitor read them and advised your daughter appropriately. 



Edit to add...

What does the previous owner say? Have you asked them to pay and they've refused?

Quorden

Worth knowing that we could try and push the freeholder to chase the previous owner, thanks for that, worth a conversation at least.

In respect of trying to speak to the previous owner we had a response through their solicitors informing us that they are not prepared to enter into any correspondence on this issue. Bit blunt but at least we know where we stand with that.

Good point regarding the mess of paying someone else's bill, then trying to claim off them, they could always just claim they were in dispute or some such.

Will try the freeholder route then I'm beginning to think that the daughter may have to take this as a learning experience, every cloud and all that.

Good advice and appreciated as always!