Seller in arrears on service charges

SBCN2

Am buying a leashold and everything is ready except for management pack which has not been sent for 9 weeks. Just found out today apparently the seller is in arrears on service charges and management company will not release pack until debt is paid. They have passed the debt to a collector.

the seller is employed and had turned down several offers before accepting mine so doesn’t seem to be in financial difficulties and  has always appeared keen to sell. We are now 3 months in. EA told me to give it a couple of days as seller and their solicitor are trying to resolve. My conveyancer said his impression from seller’s solicitor was they are keen to sell and appeared to be trying to resolve and seller needs to either pay what they owe or sing an undertaking with management company to pay with proceeds of sale. I really want this flat but don’t want this to drag out. I asked my conveyancer if after a couple of days we don’t get confirmation they have paid should ai give a month deadline for completion or ai walk. My conveyancer told me he personally would do this. He said losing me as a serious buyer would impact the seller as would take months again to sell, in current market risk the value would go down and any other future buyer would face same issue. Has anyone seen this happen before? Is it likely to get resolved? Should I give the one month deadline? Any advice would be much appreciated.

user1977

I'd have thought the obvious solution is for the arrears to be paid at completion - or perhaps the seller doesn't have enough equity to even do that?

GDB2222

I don’t see any point in deadlines. If the seller is motivated to sell, and is in a financial position to sell, he will do so. In the meantime, I would suggest having a look at other flats. The market is a bit quieter now than when you agreed this purchase, and you may be pleasantly surprised at what is available in your price range.

SBCN2

The seller has no mortgage

bouicca21

My seller was also in arrears.  The debt was deducted from the proceeds of the sale.

Flugelhorn

bouicca21 said:

My seller was also in arrears.  The debt was deducted from the proceeds of the sale.

I think that is what happens sometimes and may be a reasonable solution this time

Marky4040

SBCN2 said:

Am buying a leashold and everything is ready except for management pack which has not been sent for 9 weeks. Just found out today apparently the seller is in arrears on service charges and management company will not release pack until debt is paid. They have passed the debt to a collector.

the seller is employed and had turned down several offers before accepting mine so doesn’t seem to be in financial difficulties and  has always appeared keen to sell. We are now 3 months in. EA told me to give it a couple of days as seller and their solicitor are trying to resolve. My conveyancer said his impression from seller’s solicitor was they are keen to sell and appeared to be trying to resolve and seller needs to either pay what they owe or sing an undertaking with management company to pay with proceeds of sale. I really want this flat but don’t want this to drag out. I asked my conveyancer if after a couple of days we don’t get confirmation they have paid should ai give a month deadline for completion or ai walk. My conveyancer told me he personally would do this. He said losing me as a serious buyer would impact the seller as would take months again to sell, in current market risk the value would go down and any other future buyer would face same issue. Has anyone seen this happen before? Is it likely to get resolved? Should I give the one month deadline? Any advice would be much appreciated.

The lease often has a clause about the management fees & ground rent having to be up to date before a sale. This is what my lease states. usually the landlord or management company have to authorise the transfer of the lease but won't do so if any monies are outstanding. 

user1977

Marky4040 said:

SBCN2 said:

Am buying a leashold and everything is ready except for management pack which has not been sent for 9 weeks. Just found out today apparently the seller is in arrears on service charges and management company will not release pack until debt is paid. They have passed the debt to a collector.

the seller is employed and had turned down several offers before accepting mine so doesn’t seem to be in financial difficulties and  has always appeared keen to sell. We are now 3 months in. EA told me to give it a couple of days as seller and their solicitor are trying to resolve. My conveyancer said his impression from seller’s solicitor was they are keen to sell and appeared to be trying to resolve and seller needs to either pay what they owe or sing an undertaking with management company to pay with proceeds of sale. I really want this flat but don’t want this to drag out. I asked my conveyancer if after a couple of days we don’t get confirmation they have paid should ai give a month deadline for completion or ai walk. My conveyancer told me he personally would do this. He said losing me as a serious buyer would impact the seller as would take months again to sell, in current market risk the value would go down and any other future buyer would face same issue. Has anyone seen this happen before? Is it likely to get resolved? Should I give the one month deadline? Any advice would be much appreciated.

The lease often has a clause about the management fees & ground rent having to be up to date before a sale. This is what my lease states. usually the landlord or management company have to authorise the transfer of the lease but won't do so if any monies are outstanding. 

But as above, not rocket science to arrange for the authorisation to be simultaneous with the arrears being paid from the proceeds of sale. No different to a mortgage lender saying you can't sell because you owe them money.

eddddy

I guess it might help to understand why the seller is refusing to pay and/or refusing to sign an undertaking to pay.

For example, is it because...

• They don't have the money to pay

• They are disputing the service charge

• They have some misunderstanding - for example, they don't think they have to pay the advance service charge, because they are selling the flat

I wouldn't be surprised if it was a service charge dispute. You mention that debt collectors are involved. So now legal and debt collection fees could have added hundreds or thousands of pounds to their service charge bill - and maybe the seller is outraged and refusing to pay those fees.


If it is a dispute like that, the seller should be getting advice to pay the service charge (so the sale can go through) - and then challenge the charge at tribunal.

But their conveyancing solicitor and their estate agent might not know enough about service charge disputes and tribunals to advise them on that.

Marky4040

user1977 said:

Marky4040 said:

SBCN2 said:

Am buying a leashold and everything is ready except for management pack which has not been sent for 9 weeks. Just found out today apparently the seller is in arrears on service charges and management company will not release pack until debt is paid. They have passed the debt to a collector.

the seller is employed and had turned down several offers before accepting mine so doesn’t seem to be in financial difficulties and  has always appeared keen to sell. We are now 3 months in. EA told me to give it a couple of days as seller and their solicitor are trying to resolve. My conveyancer said his impression from seller’s solicitor was they are keen to sell and appeared to be trying to resolve and seller needs to either pay what they owe or sing an undertaking with management company to pay with proceeds of sale. I really want this flat but don’t want this to drag out. I asked my conveyancer if after a couple of days we don’t get confirmation they have paid should ai give a month deadline for completion or ai walk. My conveyancer told me he personally would do this. He said losing me as a serious buyer would impact the seller as would take months again to sell, in current market risk the value would go down and any other future buyer would face same issue. Has anyone seen this happen before? Is it likely to get resolved? Should I give the one month deadline? Any advice would be much appreciated.

The lease often has a clause about the management fees & ground rent having to be up to date before a sale. This is what my lease states. usually the landlord or management company have to authorise the transfer of the lease but won't do so if any monies are outstanding. 

But as above, not rocket science to arrange for the authorisation to be simultaneous with the arrears being paid from the proceeds of sale. No different to a mortgage lender saying you can't sell because you owe them money.

If you read my response properly before responding you'll see it says, in some cases you cannot transfer the lease until all accounts are fully settled. In my case this had to take place before completion, not during or after. This is the problem i suspect the OP is experiencing. 

SBCN2

bouicca21 said:

My seller was also in arrears.  The debt was deducted from the proceeds of the sale.

How long did it take to sort that out? Did it drag on for days, weeks or months?