Retention in respect of service charge period

MrsR47

Good afternoon - I hope someone can help.  I am currently in the process of buying a flat which has a management company responsible for building works etc.  The annual service charge is £1000.  We are hoping to complete soon but my solicitor has told me that the current owner has declined to hold a retention in respect of the current service charge period which means if there is a 'balancing payment' to make at the end of the service charge period, I would not be able to claim back any money from the seller for their period of ownership.

Is this acceptable or should I insist on something being put into the contract?  I am just worried about potentially having to pay hundreds of pounds for a period of time before I owned the place. 

Many thanks

Flugelhorn

A retention was certainly something that our solicitor arranged when we bought a flat - she contacted us after about 6/12 to check whether it was OK to release it back to the vendors - I think this happens quite often

user1977

There's a difference between not having a retention, and not having any right to claim back the money. Are the sellers actually saying this period would be your liability?

MrsR47

user1977 said:

There's a difference between not having a retention, and not having any right to claim back the money. Are the sellers actually saying this period would be your liability?

My solicitor has said, "You would not be able to claim any money back from the seller for their period of ownership, as there would be no retention funds to do so."

TripleH

I can understand a seller saying no retention for planned future works (to start after they've sold) but I don't see why you should have to pay for expenses incurred before you took ownership.

I assume this is where the year end is 30 June 2022, and the management company chase any expenses for that 12 months above what leaseholders paid?

eddddy

I guess the key question is: Why won't the seller agree to a retention? For example:

• Do they suspect/know that there is likely to be a large service charge adjustment?

• Or is it because their solicitor (perhaps a 'budget solicitor') is trying to deter them because of the extra work, and/or wants to charge them a big add-on fee for dealing with the retention?

I think I'd ask the estate agent to 'have a chat' with the seller, to explain that retentions are pretty standard when selling a leasehold property, and ask the seller why they're objecting to one.

user1977

MrsR47 said:

user1977 said:

There's a difference between not having a retention, and not having any right to claim back the money. Are the sellers actually saying this period would be your liability?

My solicitor has said, "You would not be able to claim any money back from the seller for their period of ownership, as there would be no retention funds to do so."

I suspect that's just sloppily-worded and they mean you wouldn't be able to claim any money back from a retention (because there won't be one), so you'd have to chase up the vendor and hope they pay up. So you may wish to clarify that first.

NameUnavailable

I would also ask your solicitor to check with the management company if they think that there will be any extra charges for the period concerned. If in doubt drop your offer!