Unpaid Service Charge

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    Unpaid Service Charge

    My husband and I bought a flat in December. At the time we purchased we knew that the previous owner was in arrears with the service charge. We were told that we could still complete as the payment were in dispute. We were also told we wouldn't be liable for the arrears that accrued before we completed.

    Now it seems the previous owner has still not sorted out the arrears. The Management Co are refusing to register us as the new owners, and therefore our purchase can't be registered at the Land Registry.

    Whats more the Management Co are now holding us responsible for the arrears, and say if it isn't paid within 14 days they will pass the matter on to their Solicitors to get the money.

    What is our position? I appreciate we bought the property and inherited the liabilities etc, but it doesn't seem right that we should be liable for the arrears as they were in dispute. We obviously have no problem paying the service charge from December when we moved in.

    Help!

    #2
    Originally posted by gemmak View Post
    My husband and I bought a flat in December. At the time we purchased we knew that the previous owner was in arrears with the service charge. We were told that we could still complete as the payment were in dispute. We were also told we wouldn't be liable for the arrears that accrued before we completed.

    Now it seems the previous owner has still not sorted out the arrears. The Management Co are refusing to register us as the new owners, and therefore our purchase can't be registered at the Land Registry.

    Whats more the Management Co are now holding us responsible for the arrears, and say if it isn't paid within 14 days they will pass the matter on to their Solicitors to get the money.

    What is our position? I appreciate we bought the property and inherited the liabilities etc, but it doesn't seem right that we should be liable for the arrears as they were in dispute. We obviously have no problem paying the service charge from December when we moved in.

    Help!
    You are correct when you say "I appreciate we bought the property and inherited the liabilities etc". The arrears are now your responsibilty, obviously this is something that your solicitor should of checked before completed the sale. The solicitor (or someone) should of informed the previous owner that the sale wouldnt go ahead untill the issue was sorted. As you appear to have been aware of the arrears situation its unlikey you could hold the solicitor responsible (as is sometimes the case).

    I wouldnt worry too much about the management company's talk of passing on arrears to solicitors, recovering service charge arrears can be quite a lengthy process and there are numerous provisions in law for you to defend yourself, although if they are refusing to register you as the new owners I can't see how they can on the other hand chase you for arrears ?

    You could 'take over' the disputed arrears yourself and try to understand why they are disputed and maybe appeal to an LVT.

    Andy
    Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

    I do not accept any liability to you in relation to the advice given.

    It is always recommended you seek further advice from a solicitor or legal expert.

    Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

    Comment


      #3
      Originally posted by gemmak View Post
      My husband and I bought a flat in December. At the time we purchased we knew that the previous owner was in arrears with the service charge. We were told that we could still complete as the payment were in dispute. We were also told we wouldn't be liable for the arrears that accrued before we completed.
      Who told you that? It's wrong.
      Did your solicitor arrange any undertaking/indemnity from V or V's solicitor (or an indemnity insurance policy)?

      Originally posted by gemmak View Post
      Now it seems the previous owner has still not sorted out the arrears. The Management Co are refusing to register us as the new owners, and therefore our purchase can't be registered at the Land Registry.

      Whats more the Management Co are now holding us responsible for the arrears, and say if it isn't paid within 14 days they will pass the matter on to their Solicitors to get the money.

      What is our position? I appreciate we bought the property and inherited the liabilities etc, but it doesn't seem right that we should be liable for the arrears as they were in dispute. We obviously have no problem paying the service charge from December when we moved in.
      You need to act fast. Your mortgagee (lender) will find out that the purchase Transfer and the mortgage have not been registered; and you + your solicitor will be in deep doo-doo.
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).

      Comment


        #4
        Originally posted by gemmak View Post
        My husband and I bought a flat in December. At the time we purchased we knew that the previous owner was in arrears with the service charge. We were told that we could still complete as the payment were in dispute. We were also told we wouldn't be liable for the arrears that accrued before we completed.

        Now it seems the previous owner has still not sorted out the arrears. The Management Co are refusing to register us as the new owners, and therefore our purchase can't be registered at the Land Registry.

        Whats more the Management Co are now holding us responsible for the arrears, and say if it isn't paid within 14 days they will pass the matter on to their Solicitors to get the money.

        What is our position? I appreciate we bought the property and inherited the liabilities etc, but it doesn't seem right that we should be liable for the arrears as they were in dispute. We obviously have no problem paying the service charge from December when we moved in.

        Help!
        Service charges and ground rent are debts on the property rather than personal debts and the fact the property has been sold does not concern the freeholder. He issues proceeding against whoever is the current owner. This is quite fair, the freeholder is not able to take up references usually prior to a long lease being assigned so cannot object to anyone coming in however flaky they may be financially

        However I do not think it is as bleak as you may think. Your solicitor should know that the debt attaches to the property. He also knew that the matter was in dispute. What steps did he take to safeguard you? You paid him a fee for professional services and you can righly expect him to have taken appropriate steps.

        As Jeffrey says he should have insisted that the disputed sum was held in a solicitors client account pending its resolution. Alternativley the lessee could have paid the sum under protest and then lodged an application with the LVT If he (ie your solicitor) has not done that then he will have to expalin what steps he took to safeguard you.

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