First time buyer and landlord - Flat bought on auction with hidden service and ground rent arrears

eddddy

saajan_12 said:

- Between you and freeholder / managing agent, ask if they can make an exception and forward you past bills so you can pay and then get the transfer going (though note they may not have to do anything) 

That would be the ideal solution - but there are 2 key problems.

1. Confidentiality. The freeholder shouldn't really disclose details of a leaseholder's arrears to anyone else, or send copies of a leaseholder's bills to anyone else (unless they have the leaseholder's consent).

In theory, the original leaseholder could make a GDPR complaint if the management company did that. In practice, it's probably unlikely - but a lot of companies might refuse to breach GDPR under any circumstances.


2. If the management company accepted ground rent and service charge payments from the OP, they would be acknowledging the OP as being the tenant / leaseholder.

So they are likely to return the payment to the OP.

I don't know if it's possible to get around this with a covering letter with the payment from the OP saying something like "This payment is being made on behalf of [original owner]. I am not paying it on my own behalf."

ashthemash

I have now written to the freeholder, the management company, the contractual seller's lawyers, the registered seller's lawyers but thus far no one has come back.  I am going to follow up until someone comes back 

eddddy

ashthemash said:

I have now written to the freeholder, the management company, the contractual seller's lawyers, the registered seller's lawyers but thus far no one has come back.  I am going to follow up until someone comes back 

What did you ask them?

Unfortunately, the other parties solicitors can't discuss anything with you. I doubt they'll even reply. 

And I doubt that the management company will be willing / able to help you either.


One option you could think about is writing to the registered owner of the flat, and offering them a deal. (If you don't know their contact details, I guess the tenants should be able to tell you.)

Maybe offer a deal like this:

"I understand from the management company that you have not paid some ground rent and service charge bills. So you still owe this money to the management company, and they will probably chase you for payment. However, if you wish, you can forward all the outstanding bills to me, and I will pay them on your behalf - as a goodwill gesture."


If you pay them on the registered owner's behalf, that will probably solve all your problems. But you don't know how much the bills will add up to - so it might cost you thousands.

ashthemash

eddddy said:

ashthemash said:

I have now written to the freeholder, the management company, the contractual seller's lawyers, the registered seller's lawyers but thus far no one has come back.  I am going to follow up until someone comes back 

What did you ask them?

Unfortunately, the other parties solicitors can't discuss anything with you. I doubt they'll even reply. 

And I doubt that the management company will be willing / able to help you either.


One option you could think about is writing to the registered owner of the flat, and offering them a deal. (If you don't know their contact details, I guess the tenants should be able to tell you.)

Maybe offer a deal like this:

"I understand from the management company that you have not paid some ground rent and service charge bills. So you still owe this money to the management company, and they will probably chase you for payment. However, if you wish, you can forward all the outstanding bills to me, and I will pay them on your behalf - as a goodwill gesture."


If you pay them on the registered owner's behalf, that will probably solve all your problems. But you don't know how much the bills will add up to - so it might cost you thousands.

I did not say exactly the same thing to everyone but it was essentially asking them to tell me how much the outstanding debt is so that I can propose some sort of solution. 

Thank you for your suggestion, I have the address of the registered owner so I will write to them. If I was him and someone were to offer to pay my debts off, I would jump with joy. 

ashthemash

eddddy said:

ashthemash said:

I have now written to the freeholder, the management company, the contractual seller's lawyers, the registered seller's lawyers but thus far no one has come back.  I am going to follow up until someone comes back 

What did you ask them?

Unfortunately, the other parties solicitors can't discuss anything with you. I doubt they'll even reply. 

And I doubt that the management company will be willing / able to help you either.


One option you could think about is writing to the registered owner of the flat, and offering them a deal. (If you don't know their contact details, I guess the tenants should be able to tell you.)

Maybe offer a deal like this:

"I understand from the management company that you have not paid some ground rent and service charge bills. So you still owe this money to the management company, and they will probably chase you for payment. However, if you wish, you can forward all the outstanding bills to me, and I will pay them on your behalf - as a goodwill gesture."


If you pay them on the registered owner's behalf, that will probably solve all your problems. But you don't know how much the bills will add up to - so it might cost you thousands.

There are dozens of things I am worried about but the big one is that I don't even know the ballpark figure. My best estimate is that its around £7000. The service charge and ground rent per year amount to around £2500. The registered owner has had the property for about 2.5 years. Unless there were rent arrears from before that time, that should be the outstanding amount roughly.

Hippycamper

Did you agree to take on the previous owners debt - because you are saying they cannot talk to you cos they don’t recognise you as the owner.

it’s a difficult one, have we all got the correct information?

Everyone I know who has sold a propert in England (is this taking place in Scotland) leaves the property debt free - then they get any profit.

eddddy

ashthemash said:

There are dozens of things I am worried about but the big one is that I don't even know the ballpark figure. My best estimate is that its around £7000. The service charge and ground rent per year amount to around £2500. The registered owner has had the property for about 2.5 years. Unless there were rent arrears from before that time, that should be the outstanding amount roughly.

I'd be surprised if a freeholder would let 2.5 years of arrears accumulate without taking legal action - so hopefully it's less than 2.5 years worth.

Because if they did let £7k of debt accumulate, they might have a £7k 'hole' in their finances. i.e. There could be £7k of insurance bills, communal electricity bills, and repair costs that they would be unable to pay.


 
I guess the 'nightmare scenario' is that the freeholder has already started legal action for forfeiture of the lease - and the registered owner has had notice served on them etc, but nobody has told you because you're not the registered owner. (I don't know if your solicitors would have found that info out in some way.)

When you contact the registered owner, maybe ask them if the freeholder has started any enforcement action already and/or ask them to send you copies of any letters the freeholder or management company has sent them (as part of the deal for paying their debt).

ashthemash

Hippycamper said:

Did you agree to take on the previous owners debt - because you are saying they cannot talk to you cos they don’t recognise you as the owner.

it’s a difficult one, have we all got the correct information?

Everyone I know who has sold a propert in England (is this taking place in Scotland) leaves the property debt free - then they get any profit.

I did not agree to take on any debt. The management company confirmed there was debt but would not tell me how much. Apparently in auctions for leasehold flats, it is not unheard of that there are arrears. The property is in England.

theartfullodger

ashthemash said:

First time buyer and landlord - Flat bought on auction with hidden service and ground rent arrears

Hi I purchased a flat with in situ tenants as my first ever property and this was through an auction. I know probably a lot of you are going to say I should have sought legal advice beforehand, I should have  .....................

A very valuable thread illustrating (some of the) risks buying at auction.   Hope anyone else tempted reads from it & learns.

(btw I bought a house at auction without ever even seeing inside it: Children, do not do this at home....)

You state you are first time landlord: Not entirely: Until notice(s) complaint with s48 & s3 are served there is no rent owed by tenant (s48..) and possible fines and criminal offence (s3) owner is not entirely fully the landlord: Have you had these notice(s) served please?? 

Done any education or training in being a landlord?  Strongly recommend that, urgently. 

ashthemash

eddddy said:

ashthemash said:

There are dozens of things I am worried about but the big one is that I don't even know the ballpark figure. My best estimate is that its around £7000. The service charge and ground rent per year amount to around £2500. The registered owner has had the property for about 2.5 years. Unless there were rent arrears from before that time, that should be the outstanding amount roughly.

I'd be surprised if a freeholder would let 2.5 years of arrears accumulate without taking legal action - so hopefully it's less than 2.5 years worth.

Because if they did let £7k of debt accumulate, they might have a £7k 'hole' in their finances. i.e. There could be £7k of insurance bills, communal electricity bills, and repair costs that they would be unable to pay.


 
I guess the 'nightmare scenario' is that the freeholder has already started legal action for forfeiture of the lease - and the registered owner has had notice served on them etc, but nobody has told you because you're not the registered owner. (I don't know if your solicitors would have found that info out in some way.)

When you contact the registered owner, maybe ask them if the freeholder has started any enforcement action already and/or ask them to send you copies of any letters the freeholder or management company has sent them (as part of the deal for paying their debt).

The management company said they had made a demand recently for the arrears so I assume the legal action hasn't taken place thus far.