Can any help explain the fees?

Marky4040

Hi There
I've received a cash statement prior to a sale completion and i don't understand what a mortgage fee is, could someone explain please?

Professional Charges Our legal costs
Mortgage Fee £60  (inc VAT)
Leasehold Fee £120 (inc VAT) 

Also, under "Disbursements", the block management company are asking for the annual service charge for 2022/23 (which is £800) to be paid to them by my solicitor even though its paid by direct debit every month and i am not in arrears.
They basically want me to pay until the end of the year and said they can't break it down to what i owe up to the end of May? Surely this isn't correct? I didn't get sent a service charge demand this year either just carried on taking via direct debit.  

TheJP

The mortgage fee is your solicitors fee for acting on behalf of your lender (i.e. paying off the balance of your existing mortgage or in the interests of the lender for a sale). Depends on when the management company's end of financial year is, you pay DD but may not mean you wont be in arrears by the time the sale concludes or they are billing you for the full financial year and then you deduct this from your buyer.

eddddy

Marky4040 said:

Also, under "Disbursements", the block management company are asking for the annual service charge for 2022/23 (which is £800) to be paid to them by my solicitor even though its paid by direct debit every month and i am not in arrears.
They basically want me to pay until the end of the year and said they can't break it down to what i owe up to the end of May? Surely this isn't correct? I didn't get sent a service charge demand this year either just carried on taking via direct debit.  

It's likely that it is correct - but it depends on exactly what your lease and other agreements say.


To illustrate, I'll assume your service charge year is April to March. So it's likely to be like this:

• On 1st April your full service charge of £800 was due. (i.e. You owed £800 to the management company) 

• The management company allowed you to pay your £800 debt in 12 installments (of £67 per month)

• Now that you're selling the property, they want you to pay off the remainder of the £800 that you owe them. (They're cancelling the installment option.)

But.... Your solicitor should apportion the service charge.

e.g. If you complete on 1st June, you'll have lived in the flat for 2 months of the service charge year, and your buyer will live in the flat for 10 months of the service charge year.

So the buyer will reimburse you with approx 10/12ths of the annual service charge fee. (i.e. 10/12ths of £800 = £667)

So it all balances out.

Marky4040

eddddy said:

Marky4040 said:

Also, under "Disbursements", the block management company are asking for the annual service charge for 2022/23 (which is £800) to be paid to them by my solicitor even though its paid by direct debit every month and i am not in arrears.
They basically want me to pay until the end of the year and said they can't break it down to what i owe up to the end of May? Surely this isn't correct? I didn't get sent a service charge demand this year either just carried on taking via direct debit.  

It's likely that it is correct - but it depends on exactly what your lease and other agreements say.


To illustrate, I'll assume your service charge year is April to March. So it's likely to be like this:

• On 1st April your full service charge of £800 was due. (i.e. You owed £800 to the management company) 

• The management company allowed you to pay your £800 debt in 12 installments (of £67 per month)

• Now that you're selling the property, they want you to pay off the remainder of the £800 that you owe them. (They're cancelling the installment option.)

But.... Your solicitor should apportion the service charge.

e.g. If you complete on 1st June, you'll have lived in the flat for 2 months of the service charge year, and your buyer will live in the flat for 10 months of the service charge year.

So the buyer will reimburse you with approx 10/12ths of the annual service charge fee. (i.e. 10/12ths of £800 = £667)

So it all balances out.

Thank you for this, it's exactly what the management company are saying when i called them earlier that the solicitor has to apportion what i owe on completion (in a few days). I've also pointed out to my solicitor that on the "cash statement" they've sent me, it shows the buyer has paid the remainder of the service charge and ground rent from completion date to end of March 2023.

I remember when i bought the property i had to pay the service charge to the end of the year prior to completion. Hopefully my solicitor will see their error.

canaldumidi

Marky4040 said:

eddddy said:

Marky4040 said:

Also, under "Disbursements", the block management company are asking for the annual service charge for 2022/23 (which is £800) to be paid to them by my solicitor even though its paid by direct debit every month and i am not in arrears.
They basically want me to pay until the end of the year and said they can't break it down to what i owe up to the end of May? Surely this isn't correct? I didn't get sent a service charge demand this year either just carried on taking via direct debit.  

It's likely that it is correct - but it depends on exactly what your lease and other agreements say.


To illustrate, I'll assume your service charge year is April to March. So it's likely to be like this:

• On 1st April your full service charge of £800 was due. (i.e. You owed £800 to the management company) 

• The management company allowed you to pay your £800 debt in 12 installments (of £67 per month)

• Now that you're selling the property, they want you to pay off the remainder of the £800 that you owe them. (They're cancelling the installment option.)

But.... Your solicitor should apportion the service charge.

e.g. If you complete on 1st June, you'll have lived in the flat for 2 months of the service charge year, and your buyer will live in the flat for 10 months of the service charge year.

So the buyer will reimburse you with approx 10/12ths of the annual service charge fee. (i.e. 10/12ths of £800 = £667)

So it all balances out.

.... my solicitor that on the "cash statement" they've sent me, it shows the buyer has paid the remainder of the service charge and ground rent from completion date to end of March 2023.

Has the buyer paid the management company, or you (via adjustment to the purchase price)?

eddddy

Marky4040 said:

I've also pointed out to my solicitor that on the "cash statement" they've sent me, it shows the buyer has paid the remainder of the service charge and ground rent from completion date to end of March 2023.

The buyer is almost certainly paying you "the remainder of the service charge and ground rent from completion date to end of March 2023".

That's why you have to pay the management company up until March 2023.

Marky4040 said:

 Hopefully my solicitor will see their error.

It doesn't sound like your solicitor has made an error.

Marky4040

canaldumidi said:

Has the buyer paid the management company, or you (via adjustment to the purchase price)?

The buyer's solicitor has paid the funds to my solicitor who has paid the management company on behalf of the buyer.

I remember i had to do this before i completed on the property when i first bought it.

The issue seems to be my solicitor saying "well this is the outstanding balance they've sent for your account" not realising that he is supposed to work out how much is owed on completion. The management company have said they don't work it out because they don't know when completion dates are, which makes sense. 

Marky4040

eddddy said:

Marky4040 said:

I've also pointed out to my solicitor that on the "cash statement" they've sent me, it shows the buyer has paid the remainder of the service charge and ground rent from completion date to end of March 2023.

The buyer is almost certainly paying you "the remainder of the service charge and ground rent from completion date to end of March 2023".

That's why you have to pay the management company up until March 2023.

Marky4040 said:

 Hopefully my solicitor will see their error.

It doesn't sound like your solicitor has made an error.

ohhhhhhhh........i see, this also makes sense. i can see i been totally thick on this one, your correct, i've read the cash statement wrong. I get it now

Although in my defence at no point did my solicitor say that haha