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horse99
Posts: 22 Forumite
Hi everyone
Following on from my first time purchase of a flat in the summer, I have now received my first six month demand in advance, which broadly speaking is what I was expecting apart from a backdated amount from a previous year.
2018/2019
Balancing charge £162.32
Surely this should have been billed before now. I don't know what the works were as I wasn't here. It hardly seems fair to Bill me as I was not the leaseholder in that year. Are they allowed to do this?
It was an auction purchase so no legal pack and solicitor not to blame.
Where do I stand please.
Thank you
Following on from my first time purchase of a flat in the summer, I have now received my first six month demand in advance, which broadly speaking is what I was expecting apart from a backdated amount from a previous year.
2018/2019
Balancing charge £162.32
Surely this should have been billed before now. I don't know what the works were as I wasn't here. It hardly seems fair to Bill me as I was not the leaseholder in that year. Are they allowed to do this?
It was an auction purchase so no legal pack and solicitor not to blame.
Where do I stand please.
Thank you
0
Comments
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It is common for the service charge to be estimated for the coming year (or 6 months/whatever), and then to be adjusted at the end of the period based on the actual costs.
So if the costs of electricity rose, or the cleaning company increased their charges, or whatever, then an additional amount may be billed to the leaseholders.
The way this is dealt with in normal sales is that a retention is held back from the seller, and either used to pay any additional charge, or passed to the seller later if there is no extra to pay.
I suspect with an auction, it's 'buyer beware'.0 -
It was an auction purchase so no legal pack and solicitor not to blame.
Where do I stand please.
Unfortunately you'll probably have to pay it and you're to blame. This is usually covered by a retention organised by the conveyancer - it was your choice to risk not doing this during the purchase.0 -
Surely this should have been billed before now. I don't know what the works were as I wasn't here. It hardly seems fair to Bill me as I was not the leaseholder in that year. Are they allowed to do this?
It was an auction purchase so no legal pack and solicitor not to blame.
As others say, you are responsible for paying this.
There would have been a legal pack for an auction property.
The 'official' answer to your question is that you should have assessed the risk of a service charge shortfall before bidding, and adjusted your bidding accordingly.
The legal pack might have contained some service charge accounts etc, which might have helped you assess the risk.
Having said this, when I bought a flat at auction many years ago, the contract included a retention. So it might be worth double checking with your solicitor.0 -
They OP didn't use one...
I'm assuming that...It was an auction purchase so no legal pack and solicitor not to blame.
.... means that the OP had a solicitor, who was not to blame.
(But there would be a legal pack for an auction property, so the OP is probably mistaken about that.)0 -
The service charge for 2018/2019 might have only been finalised very recently.
My old flat's management committee AGM was in September and the accounts for the previous financial year were settled then. If the service charges collected covered expenditure then the excess went to the sinking fund, if the expenditure was more than the service charge income then we would have received a bill. In practice we never received a bill because the management company tried to keep the sinking fund healthy with decent inputs every year.
Liability for service charge falls on the leaseholder - you've taken over as leaseholder so it falls to you. Often solicitors will ask for retainer from the person selling the leasehold in case of a shortfall but if you bought at auction this wouldn't have been an option. When I sold my flat, the buyers solicitor asked for a £200 retainer which we couldn't claim for 15 months as we had to wait for the annual accounts to be finalised to ensure that our buyer could cover any unexpected service charges relating to the period of time we owned the flat.0 -
As has been said, it is usual for service charges to be finalised some time after the costs were incurred, so yes they can do this and as the current leaseholder you are responsible for paying them.
In a standard purchase the costs would be apportioned between buyer and seller and you would expect to have a retention in place to cover future balancing charges. In auction purchases it is more usual for the buyer to cover all such costs. You would need to read your contract to see what was agreed and you should have been able to view the service charge accounts in the legal pack before bidding. Fortunately it isn't a large amount in this case!0
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