Service charge demand relating to period before my occupation

[PDH]

I recently received a hefty SC bill of over £450 relating to the financial year before I purchased my property. £200 was set aside for this by the previous owner during the purchase process, however this doesn't even cover half of the full amount. Is it likely that I can recoup the full cost from the previous owner or did I sign away the right to demand this by agreeing to the £200? What's normal procedure here?

Thanks

[andydd]

Normally your solicitor/conveyancer would sort out this during the buying process, the amount of service charges would normally be known, £200 is very low and insurance would normally be a lot more than that for even the cheapest property.

[ram]

Service charges vary, as service charges for the next year are only rough estimates, and other work can be found to need doing in addition to the estimated costs.

The final cost of service charges incured in the previous year, can only be invoiced on completon of the work, maybe rectification of faulty workmanship, and invoicing is delayed, and is totted up once a year and demands sent out.

So work done the previous year, will eventual be costed up, and bill ( Demand ) sent to the person living at the premises.
The person responsible for paying the service charges, is the person who now owns the property, and that's you.

[PDH]

Thanks for your replies. I know that it's my responsibility but wondering why my solicitor didn't insist on a higher sum or - better still - just had it agreed that the previous owner would cover the full bill when the amount was known. So I assume this is not standard procedure then?

[ram]

YOU are benefiting from the work done at the property, be extra gardening or wall rebuilding, or paying the block insurance.
The seller is not getting any benefit at all, if he were to be forced to pay for services when he is no longer there and not receiving the benefit

As service charges are estimated, no one can know what the final figure will be, so it difficult for anyone to reserve monies upon a sale.
It can only be guessed at.

R.a.M.

[PDH]

Ok so that's all fine then, perhaps I should ask to pay for a couple of more years since I'm reaping all these amazing benefits from his previous SC payments? Sorry but I don't think that's how it works and that wasn't the question anyway.

[ram]

Sorry but I don't think that's how it works and that wasn't the question anyway.

Your question was : -

Is it likely that I can recoup the full cost from the previous owner or did I sign away the right to demand this by agreeing to the £200? What's normal procedure here?

Unless we / others are informed of the sale date, the accounting periods, the anticipated service charge estimates prior to sale, the actual service charges against estimated, if any work done prior was over and above the estimated service charges, the actual reason for the extra charge you complain about, and seeing the work done itemised via estimate and itemised for actual,
It will be impossible for me to give you an answer

The service charge accounts should have been finalised upon sale, so you are within your right to complain that it was all sorted out at point of sale, but that does not absolve you from work that was done, but not ready to invoice. ( Could have been emergency work done, that of course would not show up on the service charge estimates sent to your solicitor.)

Of course, the Management co that sent you the bill, may have got it wrong ?

[PDH]

The extra £450 (a 40% addition to the full year's charges) seems to fall under the general category of "repair & maintenance" without further clarification (which I have asked the freeholder for). I don't see what relevance this should have to my query though. Service charges are relating to the current upkeep of a property with the person(s) currently residing there benefiting from it - a view that's backed up by the policy of having previous owners setting aside a sum to cover any shortfall in the final accounts. I'm just wondering why this sum wasn't agreed to be the full amount of the shortfall instead of a more or less random sum & if my solicitor shouldn't have asked for this. It seems like there's no standard practice for this then - I'll wait and see what the vendors' solicitor gets back with.

[leaseholdanswers]

Likely as at the time the pattern of earlier expenses indicated that £200 would be adequate, however in the last financial period the freeholder spent rather more than was the case in the past.

The other issues is that freeholders rarely estimate what they will spend mid year as they ever know if there is going to be any extraordinary or unplanned expenses later on.

Do ask your solicitor to check to see if the amount provided £200 was absolute or the excess can be sought.

This is particularly relevant as if the lease was granted after 1-1-96 you are not liable for any payments for earlier periods and therefore the previous owner will be responsible for them, unless the contract provides that £200 was it and no more, in which case you have to pay on behalf of the former owner.

Ask your solcicitor.

[Gordon999]

Take note 450 pds is NOT a hefty annual service charge. The annual buildings insurance contribution for my flat was over 400 pds - 3 years ago but I am not allowed to mention the MA' s name .

[ram]

It's £ 450 on top of the budgeted service charge.

But as said, agreements were made on the information to hand at the time.

[PDH]

Thanks for the info LHA. The lease dates from before 1996 so that's no help unfortunately but solicitor is indicating I might recuperate the excess anyway. Slightly OT but the full charges for the year totals over £1600 which seems excessive for a small block of 6 flats with no lift.

[ram]

full charges for the year totals over £1600 which seems excessive for a small block of 6 flats with no lift.

For 6 flats that sounds an average figure

Service charges are not constant. They vary, as you know, dependant on the maintenence required.
Same way as your car service. Some years your service bill is 3 times the last years bill, as more wants doing,
4 tyres every 2 /4 years, etc etc.

You are entitled to ask for a comprehensive break down of the service charges.
Note, you may have to pay extra for that service, even if you go into the offices to inspect the invoices ( £ 30 per hour )
That's the only way to find out if the charges are excessive.

Some years you may only pay £ 900 each if no maintenence was required, and £3000 another year if a lot of maintenence was required.
Your lease will state to keep the place maintained and in good order, and that's what the service charges go towards.

[leaseholdanswers]

Thanks for the info LHA. The lease dates from before 1996 so that's no help unfortunately but solicitor is indicating I might recuperate the excess anyway. Slightly OT but the full charges for the year totals over £1600 which seems excessive for a small block of 6 flats with no lift.

As RAM points out £1600 is meaningless unless you look at what £1600 is made up of.
Sounds a lot is just that it sounds but its not a quantitatve analysis.