Service Charge mess post completion

AliceBanned

Hi, I was sent a message by my conveyancer today, cc'ing me into an email to my buyer's convenyancer and previous management company's solicitor, saying that I am in arrears. I completed on 28th March and paid up to 31st March (was on DD payments which i cancelled before moving out). My solicitor even did apportionment for the last few days so the buyer paid me £9 in final statement!

Now the management company is claiming I owe for the rest of the year as per the lease (which I can't find as I sold the flat so probably don't have). They also claim they can't add the new leaseholder to the account until I've paid up!! Well I won't be able to recoup from the buyer, and the solicitors seem to all disagree. Should I go to the SRA as this is a bit much, and I shouldn't be liable for new owner's service charge. Even the free holder said I was up to date. Just can't knock any sense into the management company, and they aren't going to get money from either of us if they continue to block the new buyer from having an account. 

Brie

Ask the management company for a copy of the lease agreement.  No copy, no payment.  

m0bov

It might well be the case that the lease is paid annually but the MA offer payment plans.

The sols should really have a retainer to cover this sort of thing. After saying a year, you claim back your share from the retainer.

Settling so quickly is obscured it's normally after a year. I would be complaining to your solicitor why they have failed to do this 

eddddy

As above, I suspect the situation is something like this... (I've guessed at some dates and numbers)...

• Your lease says you have to pay your advance service charge on, say, 1st Jan 2025 -  let's say it's £1200

• Your management company offered you a special deal - you can pay the £1200 in 12 monthly installments of £100

• You sold the flat in March and cancelled the DD - but you had only paid off £300 of the £1200 that you owed. So you still owed the management company £900.

So your solicitor should have paid the management company the £900 that you owe them, and then 'reclaimed' the £900 from your buyer.

If that's the case, you need to check your completion statement to see if that's what happened - or whether your solicitor did something wrong.

AliceBanned said:

Just can't knock any sense into the management company, and they aren't going to get money from either of us if they continue to block the new buyer from having an account. 

That's not really how it works.

If you don't pay service charges which you owe, the management company can start adding collection costs to your bill.

If the management company instruct solicitors, that might add £1000+ to your bill.

But hopefully the solicitors will get this sorted before that happens - and if it's the result of an error by your solicitor, hopefully they would pay any costs.

(As long as the solicitors don't blame you for the problem, for example because you didn't tell them about the monthly payment arrangement.)

AliceBanned

Thanks Eddy. Yes I told them about the repayment arrangement. 

They even claimed back from the buyer and it is listed in the completion statement, 3 days (£9) which I had ‘overpaid’ as I completed on 28th March.

i can pay the £1k but am reluctant to as I will not be reimbursed as I should be. I believe my solicitor messed up and my buyers’. I am stuck in the middle massively stressed about my credit file etc if I get a ccj. It’s so unfair. If anyone had told me I needed to pay prior to completion I would have obviously so yes I’ve not been advised correctly but no doubt the solicitors will all blame me.

AliceBanned

So do you think my solicitor made an error, as he thinks buyers’ solicitor should sort it out. After all they should notify their buyer of any outstanding payments, and refuse to go ahead until it’s all sorted. Instead I’m being told now when it’s too late for apportionment to happen. They’ve all gone quiet as I mentioned legal ombudsman in an email to all of them. It’s appalling.

AliceBanned

Brie said:

Ask the management company for a copy of the lease agreement.  No copy, no payment.  

Thanks agreed and I’ve now requested this. It’s post completion so I can’t be expected to have it.

AliceBanned

Also I cancelled my DD two weeks before completion thinking this was ok. The management accounts did send request for full payment. I responded that I was completing on 28th and never heard back. Not ‘you still need to pay’ etc. no advice. I’ve been thrown under the bus by all of them.

eddddy

There are a few possible reasons for the problem, including...

• 1) Your solicitor has done everything correctly, and the management company is wrong

• 2) Your solicitor has made a mistake - and you owe the management company the money, but you can reclaim it from the buyer

Based on what you say, it does sound like option 2 - but maybe there's some other key info, which you're not aware of.

Maybe the best plan is to leave it to the solicitors to sort out.

AliceBanned

Thanks Edddy. What worries me is that the management company sent me a notice after I cancelled the DD in March, demanding payment. I thought this was an error and that it was because accounts hadn’t been informed that I was due to complete on 28th and would not be legal owner for the rest of the year,

it would have been helpful if they had emailed to say that I still needed to pay. Basically on a technical point I have probably lost £1k and the solicitors technically may be able to blame me and so I won’t get the reimbursement that I should have if I had been made aware,

eddddy

AliceBanned said:

Thanks Edddy. What worries me is that the management company sent me a notice after I cancelled the DD in March, demanding payment. I thought this was an error and that it was because accounts hadn’t been informed that I was due to complete on 28th and would not be legal owner for the rest of the year,

it would have been helpful if they had emailed to say that I still needed to pay. Basically on a technical point I have probably lost £1k and the solicitors technically may be able to blame me and so I won’t get the reimbursement that I should have if I had been made aware,

You might be right. As you probably realise now, you probably should have sent that notice demanding payment to your solicitor, then your solicitor could have claimed the £1k from your buyer on completion.

BUT... I would have thought that your solicitor should have been able to tell that something "wasn't right" by looking through the documents.

I guess it depends on exactly what your management company said in the docs they sent your solicitor, and/or what docs you sent sent the solicitor.



From a different angle... trying to get reimbursement from the buyer

Assuming you used the Standard Conditions of Sale (5th edition), this is what they say about apportionment of service charges:



6.3.5 talks about potentially getting reimbursement from the buyer after completion. But it says "When a sum to be apportioned is not known... at completion".

The buyer might argue that the sum was known at completion - because you already had the bill - so 6.3.5 doesn't apply.

But I'm no expert on this, so I don't know what a court would decide.


TBH - I think you might have a stronger case against your solicitor, than against the buyer - but like I say, I'm no expert.