Management fees
Discussion
I have just sold a property and the property is subject to management fees. We pay these once a year in advance.
The solicitor asked me what I wanted to do about this, either ask the management company for the money back or the buyer. I told them just do whatever they would normally do as not my area of expertise. Well turns out they did nothing.
So, I call the management company and they tell me they do not refund and solicitor should have sorted it.
I call the solicitor and they say they completed the transaction now so cant go back to the management company or the buyer (the last part I understand).
Any advice?!
The solicitor asked me what I wanted to do about this, either ask the management company for the money back or the buyer. I told them just do whatever they would normally do as not my area of expertise. Well turns out they did nothing.
So, I call the management company and they tell me they do not refund and solicitor should have sorted it.
I call the solicitor and they say they completed the transaction now so cant go back to the management company or the buyer (the last part I understand).
Any advice?!
Make sure the buyer knows the fees are paid up to future date X, so they dont get stiffed. How much are we talking about? <£1000 and be happy you just gave your buyer a bonus. More than that, time for a coffee without biscuits with your solicitors about their fees, and a possible reduction.
I don't want to make it worse for the OP, but he said he paid up front annually? Was there ever a saving or overspend on the actuals at the financial year end?
Not only should his solicitor ensure that the fees were understood to be already paid and accounted for in the property sale but they should also have done something to guard against the OP not getting any savings due.
When I bought my last flat my solicitor held a small amount in escrow from the sale amount due to the vendor for this balancing payment. When the actuals accounts were produced by the freeholder the escrow amount was released.
Not only should his solicitor ensure that the fees were understood to be already paid and accounted for in the property sale but they should also have done something to guard against the OP not getting any savings due.
When I bought my last flat my solicitor held a small amount in escrow from the sale amount due to the vendor for this balancing payment. When the actuals accounts were produced by the freeholder the escrow amount was released.
Its something that should have been addressed as part of the sales negotiation.
If not addressed at the outset of the negotiations, for example with the fixtures and fittings list, it would automatically stay with the property. As you said to the solicitor 'do what you would normally', if they would not normally look to address management fees paid but would address 'unpaid management fees' which is the normal issue raised by the buyers solicitor, then you wont have much come back.
If you want to you could extend this further, a good management fee should generate a 'sinking fund' for repairs so that the residents don't need to find large lumps of money for windows, roof repairs etc. at short notice. If there is one in place do you want your share of this refunded (I have been asked the question as a Management Committee Board Member). Again this is normally NO as the sinking fund is committed to the upkeep of the property and is not regarded as returnable when one occupant moves out.
If not addressed at the outset of the negotiations, for example with the fixtures and fittings list, it would automatically stay with the property. As you said to the solicitor 'do what you would normally', if they would not normally look to address management fees paid but would address 'unpaid management fees' which is the normal issue raised by the buyers solicitor, then you wont have much come back.
If you want to you could extend this further, a good management fee should generate a 'sinking fund' for repairs so that the residents don't need to find large lumps of money for windows, roof repairs etc. at short notice. If there is one in place do you want your share of this refunded (I have been asked the question as a Management Committee Board Member). Again this is normally NO as the sinking fund is committed to the upkeep of the property and is not regarded as returnable when one occupant moves out.
red_slr said:
I have just sold a property and the property is subject to management fees. We pay these once a year in advance.
The solicitor asked me what I wanted to do about this, either ask the management company for the money back or the buyer. I told them just do whatever they would normally do as not my area of expertise. Well turns out they did nothing.
So, I call the management company and they tell me they do not refund and solicitor should have sorted it.
I call the solicitor and they say they completed the transaction now so cant go back to the management company or the buyer (the last part I understand).
Any advice?!
Maybe do nothing is what they normally do? The solicitor asked me what I wanted to do about this, either ask the management company for the money back or the buyer. I told them just do whatever they would normally do as not my area of expertise. Well turns out they did nothing.
So, I call the management company and they tell me they do not refund and solicitor should have sorted it.
I call the solicitor and they say they completed the transaction now so cant go back to the management company or the buyer (the last part I understand).
Any advice?!
Sorry OP - i think you should have been clearer. There would have been a fair bit of to'ing anf fro'ing involved to get this sorted and the only beneficiary of this was yourself, so it was in your interests to make sure it got done. Arguably the solicitors could have been more proactive and you could have a chat with them. If you're not happy then you could try the SRA but I doubt you'd get very far.
Ahh well. Just thought I would ask.
Its not a lot of money, <£50. They did send a completion statement, but it was to my email whilst I was driving to the estate agents to hand over the key.
The solicitor dealing with the sale had to move to another office at short notice and I think that's how it was missed as everything was done in a rush on the day of completion.
My "do what you normally do" was in email (weeks earlier) and their question was do you want us to get the money from the buyer or the management company - so they knew it was coming from one or the other, IYSWIM.
I own another property on the same estate.... I may just make myself a PITA at the next management meeting or two...
Its not a lot of money, <£50. They did send a completion statement, but it was to my email whilst I was driving to the estate agents to hand over the key.
The solicitor dealing with the sale had to move to another office at short notice and I think that's how it was missed as everything was done in a rush on the day of completion.
My "do what you normally do" was in email (weeks earlier) and their question was do you want us to get the money from the buyer or the management company - so they knew it was coming from one or the other, IYSWIM.
I own another property on the same estate.... I may just make myself a PITA at the next management meeting or two...
What they should normally do, and what they should have done for you, was seek an apportionment from the buyer at completion. This is covered under the standard property conditions that were almost certainly incorporated into the contract if it was a fairly typical residential conveyance.
But my advice is that given the sum involved, it won't be worth the time and effort you'll spend chasing the point by a long way!
But my advice is that given the sum involved, it won't be worth the time and effort you'll spend chasing the point by a long way!
red_slr said:
I have just sold a property and the property is subject to management fees. We pay these once a year in advance.
The solicitor asked me what I wanted to do about this, either ask the management company for the money back or the buyer. I told them just do whatever they would normally do as not my area of expertise. Well turns out they did nothing.
So, I call the management company and they tell me they do not refund and solicitor should have sorted it.
I call the solicitor and they say they completed the transaction now so cant go back to the management company or the buyer (the last part I understand).
Any advice?!
I never cease to despair at the appalling standard of conveyancing these days. It really is a race to the bottom, driven by price competition and referral fees.The solicitor asked me what I wanted to do about this, either ask the management company for the money back or the buyer. I told them just do whatever they would normally do as not my area of expertise. Well turns out they did nothing.
So, I call the management company and they tell me they do not refund and solicitor should have sorted it.
I call the solicitor and they say they completed the transaction now so cant go back to the management company or the buyer (the last part I understand).
Any advice?!
Firstly, were you even using a solicitor at all? Most conveyancing nowadays is carried out by `paralegals', which is a fancy term meaning someone who’s unqualified. In theory they're supervised by solicitors, but in practice many aren't, and are allowed to do their own thing.
If the conveyancing was actually dealt with by a solicitor then they should be ashamed of themselves, as this is very basic conveyancing.
The short answer is that it is 100% the solicitor’s responsibility to deal with this.
The sale will have been made incorporating what are called the Standard Conditions of Sale, which apply to virtually all residential sales. If you want to read them just Google Standard Conditions of Sale (Fifth Edition).
Standard Condition 6.3 deals with apportionments as follows:
6.3.1 On evidence of proper payment being made, income and outgoings of the property are to be apportioned between the parties so far as the change of ownership on completion will affect entitlement to receive or liability to pay them.
6.3.5 When a sum to be apportioned is not known or easily ascertainable at completion, a provisional apportionment is to be made according to the best estimate available. As soon as the amount is known, a final apportionment is to be made and notified to the other party. Any resulting balance is to be paid no more than ten working days later.
So what should have happened is that your solicitor should have calculated the service charge that you'd `overpaid'. For example, assume the service charge was £365 a year and payable in advance on 1 January each year. If you complete your sale on 31 January then you've `overpaid. by 334 days (365 - 31). Consequently, your solicitor should have prepared a completion statement for the buyer including the additional payment and the buyer should then have added £334 to the purchase price, which would have been paid to you on completion.
If the exact amount of the service charge wasn't known (for example if the manco adds / subtracts a balancing charge at the end of each year) then the solicitor should have estimated the final yearly charge on the basis of what had been paid in the past.
For example, if the balancing charge last year had been £100, making a final service charge for the year of £465 then the solicitor should have calculated and agreed a suitable retention with the buyer's solicitor - in this example £100 - and retained that sum from the sale proceeds. Then when the final figure is notified by the manco in a few months’ time the seller's solicitor will send any balance due to the buyer's solicitor and any surplus would be returned to you.
Incidentally, if you also pay ground rent in advance, which most leaseholders do, the same applies to that.
Not to have dealt with this essential aspect of the sale is negligent and/or in breach of contract by the solicitor.
As I said at the outset this is 100% their responsibility, and assuming you had paid the ground rent / service charge in advance you have clearly lost out. You're therefore entitled to be compensated, and if the solicitor can't get the money from the buyer (which they legally owe you) then they'll have to pay it themselves. Either way, you should not have to pay a penny to get what you're owed.
In practical terms you need to email the solicitor saying you’ve taken independent advice, and that they should have apportioned the ground rent / service charge in accordance with Standard Condition 6.3, and also saying that you therefore want them to recover the sum you’ve overpaid at their own expense.
They may agree to do so, but if not you should instigate their formal complaints procedure, and if that also fails you can refer the matter to the Legal Ombudsman (https://www.legalombudsman.org.uk/) free of charge. They have the power to order the solicitors to compensate you.
Let us know how you get on.
Pro Bono said:
I never cease to despair at the appalling standard of conveyancing these days. It really is a race to the bottom, driven by price competition and referral fees.
Firstly, were you even using a solicitor at all? Most conveyancing nowadays is carried out by `paralegals', which is a fancy term meaning someone who’s unqualified. In theory they're supervised by solicitors, but in practice many aren't, and are allowed to do their own thing.
If the conveyancing was actually dealt with by a solicitor then they should be ashamed of themselves, as this is very basic conveyancing.
The short answer is that it is 100% the solicitor’s responsibility to deal with this.
The sale will have been made incorporating what are called the Standard Conditions of Sale, which apply to virtually all residential sales. If you want to read them just Google Standard Conditions of Sale (Fifth Edition).
Standard Condition 6.3 deals with apportionments as follows:
6.3.1 On evidence of proper payment being made, income and outgoings of the property are to be apportioned between the parties so far as the change of ownership on completion will affect entitlement to receive or liability to pay them.
6.3.5 When a sum to be apportioned is not known or easily ascertainable at completion, a provisional apportionment is to be made according to the best estimate available. As soon as the amount is known, a final apportionment is to be made and notified to the other party. Any resulting balance is to be paid no more than ten working days later.
So what should have happened is that your solicitor should have calculated the service charge that you'd `overpaid'. For example, assume the service charge was £365 a year and payable in advance on 1 January each year. If you complete your sale on 31 January then you've `overpaid. by 334 days (365 - 31). Consequently, your solicitor should have prepared a completion statement for the buyer including the additional payment and the buyer should then have added £334 to the purchase price, which would have been paid to you on completion.
If the exact amount of the service charge wasn't known (for example if the manco adds / subtracts a balancing charge at the end of each year) then the solicitor should have estimated the final yearly charge on the basis of what had been paid in the past.
For example, if the balancing charge last year had been £100, making a final service charge for the year of £465 then the solicitor should have calculated and agreed a suitable retention with the buyer's solicitor - in this example £100 - and retained that sum from the sale proceeds. Then when the final figure is notified by the manco in a few months’ time the seller's solicitor will send any balance due to the buyer's solicitor and any surplus would be returned to you.
Incidentally, if you also pay ground rent in advance, which most leaseholders do, the same applies to that.
Not to have dealt with this essential aspect of the sale is negligent and/or in breach of contract by the solicitor.
As I said at the outset this is 100% their responsibility, and assuming you had paid the ground rent / service charge in advance you have clearly lost out. You're therefore entitled to be compensated, and if the solicitor can't get the money from the buyer (which they legally owe you) then they'll have to pay it themselves. Either way, you should not have to pay a penny to get what you're owed.
In practical terms you need to email the solicitor saying you’ve taken independent advice, and that they should have apportioned the ground rent / service charge in accordance with Standard Condition 6.3, and also saying that you therefore want them to recover the sum you’ve overpaid at their own expense.
They may agree to do so, but if not you should instigate their formal complaints procedure, and if that also fails you can refer the matter to the Legal Ombudsman (https://www.legalombudsman.org.uk/) free of charge. They have the power to order the solicitors to compensate you.
Let us know how you get on.
I'll wager writing that cost far in excess of the 50 quid the OP is owed!Firstly, were you even using a solicitor at all? Most conveyancing nowadays is carried out by `paralegals', which is a fancy term meaning someone who’s unqualified. In theory they're supervised by solicitors, but in practice many aren't, and are allowed to do their own thing.
If the conveyancing was actually dealt with by a solicitor then they should be ashamed of themselves, as this is very basic conveyancing.
The short answer is that it is 100% the solicitor’s responsibility to deal with this.
The sale will have been made incorporating what are called the Standard Conditions of Sale, which apply to virtually all residential sales. If you want to read them just Google Standard Conditions of Sale (Fifth Edition).
Standard Condition 6.3 deals with apportionments as follows:
6.3.1 On evidence of proper payment being made, income and outgoings of the property are to be apportioned between the parties so far as the change of ownership on completion will affect entitlement to receive or liability to pay them.
6.3.5 When a sum to be apportioned is not known or easily ascertainable at completion, a provisional apportionment is to be made according to the best estimate available. As soon as the amount is known, a final apportionment is to be made and notified to the other party. Any resulting balance is to be paid no more than ten working days later.
So what should have happened is that your solicitor should have calculated the service charge that you'd `overpaid'. For example, assume the service charge was £365 a year and payable in advance on 1 January each year. If you complete your sale on 31 January then you've `overpaid. by 334 days (365 - 31). Consequently, your solicitor should have prepared a completion statement for the buyer including the additional payment and the buyer should then have added £334 to the purchase price, which would have been paid to you on completion.
If the exact amount of the service charge wasn't known (for example if the manco adds / subtracts a balancing charge at the end of each year) then the solicitor should have estimated the final yearly charge on the basis of what had been paid in the past.
For example, if the balancing charge last year had been £100, making a final service charge for the year of £465 then the solicitor should have calculated and agreed a suitable retention with the buyer's solicitor - in this example £100 - and retained that sum from the sale proceeds. Then when the final figure is notified by the manco in a few months’ time the seller's solicitor will send any balance due to the buyer's solicitor and any surplus would be returned to you.
Incidentally, if you also pay ground rent in advance, which most leaseholders do, the same applies to that.
Not to have dealt with this essential aspect of the sale is negligent and/or in breach of contract by the solicitor.
As I said at the outset this is 100% their responsibility, and assuming you had paid the ground rent / service charge in advance you have clearly lost out. You're therefore entitled to be compensated, and if the solicitor can't get the money from the buyer (which they legally owe you) then they'll have to pay it themselves. Either way, you should not have to pay a penny to get what you're owed.
In practical terms you need to email the solicitor saying you’ve taken independent advice, and that they should have apportioned the ground rent / service charge in accordance with Standard Condition 6.3, and also saying that you therefore want them to recover the sum you’ve overpaid at their own expense.
They may agree to do so, but if not you should instigate their formal complaints procedure, and if that also fails you can refer the matter to the Legal Ombudsman (https://www.legalombudsman.org.uk/) free of charge. They have the power to order the solicitors to compensate you.
Let us know how you get on.
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