Bills generated after sale completion for periods before sale completion.

Bibblybobblyboo

I completed the sale of a leasehold flat and I confirmed with my solicitor and the managing agent of the time that this drew a hard red line under matters.

My solicitor confirmed at the time and has reconfirmed since that I cannot be found liable to pay any money in the event that they decide to bill me after completion for money they wish I had been billed for before completion.

A newly incoming managing agent who took over after completion has now (after completion) billed me for some money that they say I should have been but was not billed for prior to completion by the former managing agent.

The newly incoming managing agent says that my solicitor is wrong in stating that I am liable to pay a bill that they generated after completion. They say I am liable to pay the bill that they generated after completion, because it refers to the time before completion.

Neither my solicitor nor the managing agent will provide me with their reasoning.

Does anyone know (not guessing but actually know from experience or profession) why the managing agent and/or solicitor are each holding their opposing opinions?

Does anyone know (not guessing but actually know from experience or profession) what law or jurisprudence is being used by both or either the new managing agent and/or my solicitor?

I expect this will have happened to other people, will be happening now and may also do in the future.

I hope I've asked my question clearly and provided the facts as well as possible. Please let me know if any more detail or context is needed.

Thank you!

Bibblybobblyboo

Typo: My solicitor confirmed at the time and has reconfirmed since that I cannot be found liable to pay any money in the event that they the managing agent or anyone else decides to bill me after completion for money they wish I had been billed for before completion.

EssexHebridean

Ask your solicitor to forward to you the confirmation from all relevant parties at the time of completion (freeholder, managing agent etc) that the apportionment statement they provided at the time  and which was paid prior to completion covered ALL costs you were liable for. Forward that to the new managing agent and explain that this has already been dealt with, and that they should not be pursuing you for this money. 

eddddy

Case law has established that:

• 1) Service Charge Bills dated before completion are the previous owner's responsibility - i.e. The previous owner owes the money to the freeholder / managing agent. (But there are major complexities.)

• 2) Service Charge Bills dated after completion are the new owners responsibility - i.e. the new owner owes the money to the freeholder / managing agent

It doesn't matter what period the Service Charge relates to, it's the date the bill was issued that is important.



BUT... typically...

• 3) The contract between seller and buyer would normally say that the buyer can claim Service Charges  back from the seller, if they apply to the period before completion

• 4) Your solicitor would normally arrange a retention of maybe £250 or £500, to deal with this situation. (i.e. some of the sale money is kept back by the solicitor.)

So, typically...

• The new owner has to pay the freeholder / management company; they send the bill to their solicitor; and the solicitor refunds the new owner from the £250 / £500 that was kept back

Regarding your solicitor's comment about a "red line"

It's possible that the solicitor has put special terms in the contract saying  "The seller wont refund any Service Charge bills received after completion". i.e. Points 3 and 4 above don't apply...

.. and so the new owner has to pay the Service Charge bill, and the seller won't refund the new owner.

DullGreyGuy

Think you've gotten it backwards @eddddy as the OP was the seller not the buyer in the transaction. 

Other than that slip up my understanding is that it ultimately comes down to when it was first billed, we were the buyers in our similar scenario but rather than a bill it was a very large rebate from the later company that clearly had happened not only under the tenure of our sellers but the people that owned it before them too but we solely got the benefit of it. 

eddddy

DullGreyGuy said:

Think you've gotten it backwards @eddddy as the OP was the seller not the buyer in the transaction. 
 

Thanks - So I've rephrased my comment to make it generic to a seller or buyer.

loubel

They cannot bill you as you are no longer the owner (I'm assuming that the new owner has served notice on them with their contact details). But, as eddddy says, they can bill the new owner and, assuming that the standard conditions of sale were not varied, the new owner can ask you to pay.

eddddy

@Bibblybobblyboo - some more thoughts.

Are you saying that the Management Company has sent you a bill with your name on it?  Is it at the flat address or your new current address?

If it's your name and the old flat address, I would strongly suspect that one of the following has happened...

• 1) The new owner hasn't served a valid Notice of Assignment - i.e. They haven't officially told the management company that they are the new leaseholders.

Or...

• 2) The new owner has served the Notice of Assignment - but the management company's accounts department didn't type the new name into the invoicing system 

Weirdly, option 2 above seems to happen quite often.

saajan_12

As between you and the freeholder / management co:

• You're liable for any bills dated in the period you were the leaseholder. That's defined by the period UNTIL the Notice of Assignment was served by the buyer.

As between you and the buyer:

• The buyer / solicitor would have agreed to serve the notice promptly upon completion
• You may have agreed to a retention and/or covering any bills relating to the time before completion even if they arrive for a certain period after. 
• OR, you may have agreed to just cut off at bills issued upto the completion date. This would usually come with further enquiries / evidence requested by the buyer to get an idea of what bills were upcoming. 

You need to read your exchanged contract or ask your solicitor to quote the relevant parts on which of those it is to be sure. 

Bibblybobblyboo

Thank you everybody - this is all very reassuring and I’m so grateful for your input.

Does anyone know what the caselaw relevant to this is?

I’ll let you know what happens, because I reckon this is way more common than readily available information on the internet suggests.

I also wish Martin Lewis would grab hold of this, as there are a lot of people who need a champion on this matter.

CLARIFICATIONS

The completion of the sale was handled absolutely normally with no special features, as far as I'm aware. There was no retention fund set aside. The managing agent of the time issued a final statement of apportioned charges and known costs which was cleared in full as would normally be expected to happen.

Everything billed before completion date was paid via my solicitor.

The ‘bill’ that I have received:

• was generated over 7 months after the completion date

• is an estimate for 6 weeks of ‘energy’ prior to the completion date

This ‘bill’ has my title, initials and surname on it. It is a paper bill. It was posted to the flat that I sold. I happen to still have Royal Mail forwarding and it reached me about a week and a half after it was generated. If I didn't have Royal Mail forwarding, I’d have no idea about any of this.

Very interesting to hear that one may be liable for bills dated in the period one was the leaseholder. That sounds very strange, as it would mean that the previous owner would have to cover the costs of the new owner, so long as the new owner ensured they didn’t bother to send off the relevant papers to the managing agent to inform them that they were the new owner. That can’t be right. Nevertheless, it doesn't seem to be at the root of this issue.

EXTRAS

On the estate in question, there are giant boilers in the basement which heat water. So there’s an energy company and a water company, which supply energy and water to the freeholder for the running of the estate. The freeholder gets their managing agent to pay that bill for the entire estate. The managing agent apportions the freeholder’s energy and water bills to the individual leaseholders/flats by square footage (I think) which is a common way to split up costs. For water and hot water that goes past the heatboards into the individual flats for hot water, the managing agent decides how much each flat/tenant used by means of headboards and meters. 

The money currently being sought from me is an estimate for 'energy'. It’s not entirely clear quite exactly what energy they are referring to. It’s being ‘billed’ to me by the managing agent via a contractor. This contractor is presenting itself as an energy company, with energy company-style ‘bills’ and a name and logo that appears as an energy company. They are not an energy company. The managing agent is trying to tell me that they have absolutely no responsibility for their contractor’s actions. Obviously that’s nonsense. However, they are refusing point blank to engage with me on the ground that they reckon they have no responsibility for their contractor's actions. I have therefore now written to their founders and CEOs urging them to set this straight.

It’s an interesting and further complication that between the completion of the sale and the issuing of the ‘bill’, the newly incoming managing agent (who took over after completion) sent me a welcome email, to which I replied explaining I was not a leaseholder or resident and made a GDPR Right To Be Forgotten request. This means that the new managing agent have to ensure that they and all other associated parties that they use to manage the estate including my block and my old flat do not have my data unless it's required for them to have it. They clearly haven't done this. All they say they've done is removed their own recollections of me. 

It also transpired at some point after completion that the buyer’s solicitors hadn’t notified the managing agent of the transfer AND my solicitors hadn’t paid the final bill. However, that was quickly remedied over the summer and prior to the date this new 'bill' was generated: my solicitor paid the final bill from the managing agent of the time way back earlier this year, the buyer’s solicitor sent in the relevant papers around the same time and I received confirmation and assurance that all was now sorted. 

@essexhebridean @eddddy@dullgreyguy @loubel @saajan_12

Bibblybobblyboo

another typo: Very interesting to hear that one may be liable for bills dated in the period one was NOT the leaseholder (ie after completion). That sounds very strange, as it would mean that the previous owner would have to cover the costs of the new owner, so long as the new owner ensured they didn’t bother to send off the relevant papers to the managing agent to inform them that they were the new owner. That can’t be right. Nevertheless, it doesn't seem to be at the root of this issue.