s20 notice served during conveyancing; who pays?

londonftbhelp

Hello all,

I am currently in the final stages of conveyancing to purchase a one bedroom flat in london. Im a FTB and its a c15 years old leasehold flat. the freeholder is a housing association.

I have just learnt that in 2021 the seller received a s20 notice regarding repairs required to the roof that the leaseholders of the block would have to pay for.

After my offer was accepted, the seller received a cost estimate that works out as 3000 GBP per flat and will take place, presumably, later this year.

I would very grateful for any advice regarding what is standard in this situation. Am I, as the buyer, expected to foot the bill? Would it be reasonable for me to ask the seller to pay for some, or all, of it?

Thank you for any advice.

GDB2222

If you offered on the assumption that the roof was in good condition, and would last for many years, it's perfectly reasonable to ask the vendor to reduce the price by £3k. The final bill is likely to be more, as cost overruns are more common than underruns, but you'll end up with a brand new roof. 

If the notice was served in 2021, why weren't you told about this by the agent?

Alderbank

londonftbhelp said:

Hello all,

I am currently in the final stages of conveyancing to purchase a one bedroom flat in london. Im a FTB and its a c15 years old leasehold flat. the freeholder is a housing association.

I have just learnt that in 2021 the seller received a s20 notice regarding repairs required to the roof that the leaseholders of the block would have to pay for.

After my offer was accepted, the seller received a cost estimate that works out as 3000 GBP per flat and will take place, presumably, later this year.

I would very grateful for any advice regarding what is standard in this situation. Am I, as the buyer, expected to foot the bill? Would it be reasonable for me to ask the seller to pay for some, or all, of it?

Thank you for any advice.

So nothing is agreed or owed yet. But soon the price will be agreed and the works carried out. Current leaseholders at that time will then receive the bills. 
Major works in the pipeline should have been questioned by your solicitor or declared by the seller. If your solicitor failed to make inquiries then a professional negligence action against his insurers might be possible, and if it was not declared there is a possibility that the bill does not have to be paid. 
The seller might say that he took this estimate into account when pricing up the flat.

Tiglet2

If enquiries are still ongoing, your solicitor would, I assume, have a copy of the S20 Notice provided with the Management Pack.  They should be asking the vendor's solicitor whether the works have been agreed, completed and/or billed yet and if the answer is no, not yet been agreed etc, then I would expect that your solicitor would require the seller's solicitor to hold a retention for (at least) a portion of the estimated cost of the works.  However the seller's solicitor might not agree since the works to the roof do not benefit the seller, but they do benefit you as the new owner.  

If the seller does not agree a retention in lieu of the works, then you could negotiate a reduction in purchase price to compensate for this unexpected additional cost (purchase price negotiations should be agreed through the EA).

eddddy

londonftbhelp said:

I would very grateful for any advice regarding what is standard in this situation. Am I, as the buyer, expected to foot the bill? Would it be reasonable for me to ask the seller to pay for some, or all, of it?

So eventually the freeholder will send out the bill - for £3k or whatever.

The date of the bill is important. If it's dated before completion, the seller will owe the money to the freeholder. If it's dated after completion, the buyer (you) will owe the money top the freeholder.


So you might want to ask your solicitor to put some special terms in the contract. Maybe something equivalent to...

If the bill is issued before completion, the seller has to pay it. If the bill hasn't been issued before completion, the solicitor will keep a retention of £4k (of the seller's money), to pay the bill when it eventually arrives.


Or whatever other terms you can agree with the seller.

londonftbhelp

Many thanks all for the responses. My takeaway is that it is not unreasonable for me to request the seller to cover the cost. The idea of a retention is a good idea so thanks to those that proposed that option.

To clarify - we have not yet exchanged contracts nor have we agreed dates to do so. My solicitor flagged the issue to me prior to their full legal report.

As a first step I will suggest to my solicitor that we ascertain when the works are scheduled to be carried out, and if they are not imminent that we request a retention of £4k to cover the works and any potential overruns. 

GDB2222

Wouldn’t it be simpler just to renegotiate the price? 

TripleH

Why do you think the seller should pay for the roof? They will receive no benefit for it being re-roofed.

Now them not telling you anything about it despite being served notice is different.

We had a s20 notice when we sold for balcony railings, we did agree a discount but it was only 10% of costs. Your seller may refuse to pay any or some of the bill because as said, they get no benefit for the work.

eddddy

GDB2222 said:

Wouldn’t it be simpler just to renegotiate the price? 

Not really. Because you don't know if the £3k bill will be issued before or after completion...

• They might agree to reduce the price by £3k... (and ask the mortgage lender for a revised offer, etc)

• Then the freeholder issues the bill for £3k before they've exchanged contracts, or even between exchange and completion. So the seller has to pay the £3k.

• So the seller gets £3k less for the property and the seller has to pay the £3k bill - so they've taken a £6k hit

Of all the ways of dealing with the problem, writing a "conditional retention" into the contract is probably easiest.

saajan_12

In principle, this is similar to house with the survey picking up a roof issue / fix needed. 
-> Did you know about the roof issue when viewing? 
-> Did you price in some element of poor roof condition when offering?
-> Did the seller price in some element of poor roof condition when accepting your offer? 
-> Are they planning on replacing with a new roof (vs a fix just to remedy a specific problem)? 

If generally NO, then try to negotiate the seller paying for most of the bill. If its a new roof, then partly that's to fix a problem and get back to the condition you thought you were offering on, but partly its also a new roof that you'll benefit from and will last longer than an x year old undamaged roof, so maybe you split the cost. 

Then the fact that its a S20 process rather than you doing the work just changes how you work out the mechanics as eddddy suggests. 

Sandtree

londonftbhelp said:

Many thanks all for the responses. My takeaway is that it is not unreasonable for me to request the seller to cover the cost.

Reasonableness doesn't really come into it... you may say you want a retention, they may say no and the price agreed already reflects the work needed.