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Lender refusing to sign deed of covenant from management company

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  • GDB2222
    GDB2222 Posts: 24,673 Forumite
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    rachel230 wrote: »
    Umm - really??? Clearly you know because you were there.

    Amongst other reasons, just one of the reasons to use an independent solicitor not "recommended" by the developer.

    Agreed. If the solicitor failed to inform you of a rent charge, you may have a case against him.
    No reliance should be placed on the above! Absolutely none, do you hear?
  • silvercar
    silvercar Posts: 46,968 Ambassador
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    If you really really want the property, then knock on a few neighbours doors (or if new property ask the developer) and find out which lenders don't have a problem with this arrangement.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • eidand
    eidand Posts: 1,023 Forumite
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    Julw wrote: »
    Thanks all for your replies! I wasn’t informed or aware when purchasing the property and my solicitor brought it to my attention months into the process. The maintenance is £50 per year and my solicitor is confirming what the council are responsible for. It is still ongoing. Lender refusing to sign, MC refusing to proceed without. It’s due to the unlikely event of repossession I believe from the MC point of view. I just wondered if anyone had any advice on how to overcome this? Or as you said it’ll be a new lender or walk...

    You didn't do enough research. The maintenance charge is unregulated and can be increased whenever they want, to whatever they want and you have to pay it.

    If the roads close to your house are not adopted by the council, you will end up paying for their maintenance, repairs, insurance while at the same time paying for the full council tax. Make sure to check what covenants the property has, chances as they will charge for everything. Also, do not trust anything a builder tells you, get them to put everything in writing, then you have something when things go sideways, which they will.

    When you will try to sell this property, the management company will charge you £500-600 for the pack you need to give to the buyer and again, you will have to pay it, or they won't let you sell.

    When I say this is all a big scam, this is what I mean.
  • Julw
    Julw Posts: 5 Forumite
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    Thanks for your reply! I think that’s my concern, it’s not the yearly fee, but if I was to sell in the future would this be an issue? I imagine it would.
  • Julw
    Julw Posts: 5 Forumite
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    I’ve paid £250+ VAT for the management pack already so I think it may be the buyers expense rather than the sellers? Unless they charge both parties. I’ll have a final decision next week from the Lender, The Principality apparently agree and sign deeds of covenant, but I’ll be making my own decision too. It definitely seems like a money making scheme. Appreciate all the responses.
  • NatsW
    NatsW Posts: 1 Newbie
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    Hi, we're in exactly this situation ourselves. Not sure what to do, walk away and look for something else, although there doesn't seem to be anything else on the market at the moment. Check out the Home Owners Rights Network. They are on Facebook and have their own website. Looks like more and more lenders are refusing to lend on properties where the management company have the right to create a lease over the property if the management fee isn't paid within 40 days (whether it is demanded or not). The service charges are uncapped and unregulated. Think we'll be walking away.
  • tobywilsit
    tobywilsit Posts: 5 Forumite
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    The MC has the rights embedded in the law of property act which ensure that service charges bind the property - they have remedies to make the owner bankrupt and force a sale to a buyer who will be liable to pay. The MC doesn’t need the lender to be liable and asking them to be on the hook is neither market practice nor reasonable <



    Agreed with the above
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