Backdated service charges for years before I moved in

freesia25

Hello,

Since moving into my leasehold flat two years ago, I have been required to pay three service charges totalling over a thousand pounds, including additional fees for service charges that date back to years before I even lived there. The estate agency handling these fees, KFH, initially advised me to contact my seller's solicitor about a retention. However, I do not have their details, and some charges seem to predate even the seller’s ownership of the property.

Despite multiple polite follow-ups with KFH, they have stopped responding to my emails. Given the circumstances, I am now wondering whether taking the matter to a tribunal is the appropriate next step and whether it would be worth pursuing.

user1977

What has your own solicitor to say about it?

Marky4040

freesia25 said:

Hello,

Since moving into my leasehold flat two years ago, I have been required to pay three service charges totalling over a thousand pounds, including additional fees for service charges that date back to years before I even lived there. The estate agency handling these fees, KFH, initially advised me to contact my seller's solicitor about a retention. However, I do not have their details, and some charges seem to predate even the seller’s ownership of the property.

Despite multiple polite follow-ups with KFH, they have stopped responding to my emails. Given the circumstances, I am now wondering whether taking the matter to a tribunal is the appropriate next step and whether it would be worth pursuing.

You need to read your lease about what it says about service charges and who is retrospectively responsible for paying. To be frank, your solicitor should have ensured the SC accounts were up to date as part of the conveyancing process?

Yearly service charges are usually estimates and when the accounts are finalised each year, you either owe a little more or something maybe refunded to your service charge account. 

When a leasehold property changes hands, your solicitor should have asked for a a "service charge retention rider" in case (as you have found out) more charges are due after you move in. The seller can actually refuse to leave money on the account but your solicitor must inform you of this, then you decide if you want to take on that liability. 

Read your lease, i would suggest you can be liable for the previous owners unpaid charges but it would be unreasonable to be liable for the time before the previous owner lived there. 

eddddy

freesia25 said:

I am now wondering whether taking the matter to a tribunal is the appropriate next step and whether it would be worth pursuing.

You can go to tribunal if you believe that the service charge is not reasonable, but tbh, you haven't said anything so far that indicates it is not reasonable (except perhaps the '18 month rule' - see below).

There's a lot of legislation, case law and contract law that could apply to your situation - it depends on the facts of exactly what happened.



Here's a couple of possible situations:

1) KFH billed the previous owner(s) in the past, but the previous owner(s) didn't pay. In that case:

• the previous owners still owe that money
• but the freeholder can still forfeit the lease (i.e. repossess your flat - even though it's not you that owes the money)
• but that should have been picked up during conveyancing, and any outstanding service charges paid by the solicitors

2) KFH didn't bill the previous owners in the past, so they are retrospectively billing you now. In that case:

• you probably owe the money
• but your purchase contract would typically say that you can claim it back from the previous owner
• solicitors normally keep a retention (e.g. maybe they keep back £500 of the purchase money), so you can claim some or all of that money back more easily

BUT... there is a rule that leaseholders must be notified of service charge amounts within 18 months of them being incurred. So it might depend on whether the you or previous owners were notified of the charges within 18 months.

freesia25

The situation is that KFH didn't bill the previous owners in the past, so they are retrospectively billing me now for things far beyond 18 months of them being incurred. It seems the management company have consistently been very slow in invoicing for service charges from suppliers going back over a period of years.

Regarding my solicitor, I wouldn’t be surprise if they failed to conduct a thorough check before my purchase. Throughout the entire process, getting a response from them has been nearly impossible.

eddddy

freesia25 said:

The situation is that KFH didn't bill the previous owners in the past, so they are retrospectively billing me now for things far beyond 18 months of them being incurred.

So you probably owe KFH for any costs incurred in the last 18 months. (But in theory, you should be able to claim them back from your seller.)

For more info on the 18 month rule, follow this link and scroll down to "Limitation period on recovery of service charge costs"
https://www.lease-advice.org/fact-sheet/service-charges/

freesia25 said:

Regarding my solicitor, I wouldn’t be surprise if they failed to conduct a thorough check before my purchase. 

Enquiring about unpaid service charges is a very basic part of conveyancing for a leasehold property - so I doubt your solicitor forgot to do that.

But in any case, if the previous owners hadn't been billed, then there were no unpaid service charges.

freesia25

So I have established the 18-month rule broken by KFH for at least 2 of the past invoices I've received and informed them of this.

freesia25

Any advice on what next steps I can take given my management company has broken the 18-month rule but continues to ignore any contact I make with them?

DullGreyGuy

freesia25 said:

So I have established the 18-month rule broken by KFH for at least 2 of the past invoices I've received and informed them of this.

What are these services? 

How have you established that the previous tenants weren't informed that these costs were going to be incurred and recharged?

freesia25

The invoice descriptions only reference the Estate Deficit, Private Gardens Deficit, and Car Park Deficit.

The accompanying letter they sent with this explained that the charges accounted for increased general maintenance and cleaning costs due to wear and tear, as well as pandemic-related cleaning requirements.

KFH sent a letter apologising for the delay in issuing accounts acknowledging tenants weren't informed before, this doesn't excuse that they are far past the 18 months period.

Larac

So what was agreed in the conveyancing process.  I am buying a newbuild house (13 years old) where there is a deficit  for the last two years.  Money is being held back for those two years to cover this. The Management Company  in my case  who is First Port who are known 'Sharks are yet to produce the management accounts for the last two years - how they get away with this is a mystery!