certified accountants - more than 4 dwellings or leaseholders?

[hideyspidey]

HI
Im very confused
On a service charge summary/statement should a certified accountant check and sign if more than 4 flats in the block or 4 leaseholders in the block
i.e 9 flats in block only 1 leaseholder or 9 flats and 4 leaseholders
Thanks

[ram]

What does your lease say on the matter ?

You do realise that it could cost up to £ 1000 to get certified accountant check the accounts, once the accounts have been prepared for issue.
If there is no need for a certified accountant to check, as per the lease, then don't waste your money.

[Gordon999]

The guide recently issued by Arma may help you

http://arma.org.uk/downloader/dx6.pdf

[hideyspidey]

thanks, it doesnt say anything but i understood that local authority service charge accounts had to be certified by their own certified accountant.

[Gordon999]

You can send an enquiry to the legal advisor at LEASE asking for the legislation which applies to audit of service charge accounts for a building with more than 4 leasehold units..

[andydd]

Gordon999,

We already know that, its the original S21 of LTA 1985, an audit is required IF the lease says so OR IF the LH asks for a summary AND there four or more properties.

Many FH try and do an audit anyway, they did this for me, the LVT bizarrely thought this was ok but there is a lot of case law that says that if the accounts are simple, and there are less than four properties there simply is no need for an audit, the FTT members in my case now appears to have realized this as in recent decisions they decide the exact opposite to my case. Even stranger my FH charging for an audit after the LVT but has now, five years later, started again !

[Gordon999]

When a flat is being sold, the buyer's mortgage lender will demand tto see 3 years audited accounts to judge their liability and exposure to arrears.

So if you want to sell without any problems then you need audited accounts to show to next buyers mortgage lender.

[andydd]

Gordon999,

Don't believe that at all, any future purchasers/conveyance would simply contact the FH and ask about amounts owning, many (perhaps the majority) of leases do not require an audit, the proposed S21 requiring audits of all was not bought into force, an audit is simply to check the accounts are true and accurate not to guarantee that any service charges are owing. I purchased my flat and there was no need to see audited accounts, just a simple check if any SC were owing.

[Cantabriana]

When a flat is being sold, the buyer's mortgage lender will demand tto see 3 years audited accounts to judge their liability and exposure to arrears.

Erm, no. Three years' service charge accounts are usually requested by the buyer's conveyancing solicitor. They do not need to be audited (unless the solicitor is very keen and has actually read the lease and has found that they are required by the lease; a rare occurrence in my experience)

Mortgage lenders don't come into the equation unles the person is re-mortgaging. And even then I have yet to come across a demand for only audited accounts.

There is pending legislation that would require audits for buildings of more than four flats but this has been "pending" for years and there is no sign of it becoming law anytime soon.

[Gordon999]

The mortgage lender usually appoints the buyer's solicitor as their solicitor who has to report on title and confirm any arrears in service charge account. This is my own experience in a past sale.

[Cantabriana]

any arrears in service charge account

Quite possibly but audited accounts would only show expenses and income for the relevant building and would not show arrears (or credits) against individual properties. You're confusing this with Statements of Account.

[Gordon999]

I had a past experience of trying to sell a flat completed in the first block of large development where developer was on site for 3-4 years. The developer produced " service charge accounts" for electiricity and cleaning costs for first block and included the maintenance cost for the entire large communal grounds and for night time security guard at estate entrance gate and for van costs to take prospective buyers to a show flat. The flat owners were charged the service charge amount stated in the sales info and so no one complained. But the servce charge account showed 30K in debt due overspending and when my prospective buyer applied for mortgage loan, the mortgage company refused his application giving reason as not able to identify which flat owed the 30K.

I had to apply to the County Court for a judgement on reducing expenses which should not be included in the service charge account and that was a bad experience for me .