Does a managing agent have to declare a section 20 in a management pack?

16Carriages

Looking for advice.

Currently under offer, mortgage application rolling through. Buying a leasehold flat London 

I rang the managing agent just to scope some things out, the MA is telling me a section 20 was issued last year, the seller is telling me there hasn't been one and even if there was a reserve fund should cover the work they want to do. The seller has said its not mentioned in the management pack. The property needs a full renovation inside and as a result if I go ahead all my money will go on the renovation meaning I won't have any money to cover a section 20. 

Should I withdraw my offer?

eddddy

Just to give the background...

The managing agent will be asked to prepare a management pack. That usually includes filling in a form called a LPE1.  Here's an extract from a standard LPE1 form...





And the LPE1 goes on to request:



So that should answer many of your questions - and you can then ask any follow-up questions you have.


If this issue is likely to be a stopper (i.e. it might cause you to walk away) - you could ask your solicitor not to do any other work, and you could pause your mortgage application, until you have checked the LPE1. So you stop racking-up any more legal fees, valuation fees, etc until this is resolved.

But the problem is that Management Companies can be notoriously slow at providing Management Packs - so you might be delaying progress on the purchase by a number of weeks.

16Carriages

eddddy said:

Just to give the background...

The managing agent will be asked to prepare a management pack. That usually includes filling in a form called a LPE1.  Here's an extract from a standard LPE1 form...





And the LPE1 goes on to request:



So that should answer many of your questions - and you can then ask any follow-up questions you have.


If this issue is likely to be a stopper (i.e. it might cause you to walk away) - you could ask your solicitor not to do any other work, and you could pause your mortgage application, until you have checked the LPE1. So you stop racking-up any more legal fees, valuation fees, etc until this is resolved.

But the problem is that Management Companies can be notoriously slow at providing Management Packs - so you might be delaying progress on the purchase by a number of weeks.

The seller is a solictor, and has said he has the management pack and it doesn't mention any section 20's but the MA Is saying there has been a section 20 for last year and one will be reissued again

Mildreds_Earrings

16Carriages said:

Looking for advice.

Currently under offer, mortgage application rolling through. Buying a leasehold flat London 

I rang the managing agent just to scope some things out, the MA is telling me a section 20 was issued last year, the seller is telling me there hasn't been one and even if there was a reserve fund should cover the work they want to do. The seller has said its not mentioned in the management pack. The property needs a full renovation inside and as a result if I go ahead all my money will go on the renovation meaning I won't have any money to cover a section 20. 

Should I withdraw my offer?

I wouldn't withdraw the offer but I would insist on the management pack (paid by either Buyer or Seller, sometimes split 50/50) and specifically ask:

Has S20 been issued in the last 2-5 years and if so, what major works were carried out and what were the costs?

Is there any S20 planned in the next 2 years and if so, what are the major works and what are the estimated costs?

How much do you have to contribute to the reserve fund per month and how much is currently in the reserve fund?

All the best. 

eddddy

16Carriages said:

The seller is a solictor, and has said he has the management pack and it doesn't mention any section 20's but the MA Is saying there has been a section 20 for last year and one will be reissued again

So you/your solicitor don't have the management pack yet.

In that case, maybe ask your solicitor to make a specific pre-contract enquiry about it. i.e. The managing agent has told you verbally that a section 20 consultation has taken place, and the work has not been paid for. Can the seller clarify the situation.

What the seller has told you verbally won't be part of your contract. But written replies to pre-contract enquiries will be part of your contract.

(I guess it's possible that the person you spoke to at the managing agents got confused and told you about the wrong building.)

But you solicitor will probably want to get the LPE1 before making any pre-contract enquiries.