2009&2010 Mgmt Fee owed- can the apt still be sold?

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fizzelina

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536
Hi,
If the Management fee for 2009 and 2010 is still owed on an apartment, can that apt still be sold? What is the situation with new owner, would they take over from 2011 paying mgmt fee, would they be liable for the unpaid amount? Would they include in sale contract that fees had to be paid?
 
The apartment cannot be sold without all fees being settled first.

Also the buyers solicitor will contact the management company to find out if fees are owing.
 
The fees are payable by the owner up to the closing date. Any overpayment can be apportioned between the parties. It is a fairly standard query raised and is one that the vendor should anticipate and deal with in advance of selling the apartment.

If it slipped through the loop though then a new owner could find themselves with the responsibility for outstanding fees.

mf
 
A situation relating to this has developed in my building. Owner wanted to sell and had unpaid fees. Our agent has been instructed to "freeze" accounts of those unpaid debtors and not assist with things like requisition 37s (replies to queries asked of the management company when a sale is going through, which the agent answers) and meter readings. This particular owner took matters into their own hands, their solicitor completed the requisition 37s and the sale went through. The new owner now owes the balance of unpaid management fees which he/she did not incur. The buyer's solicitor should have been more thorough here but the end result is the same....we're going to have major trouble getting those fees.
 
Purpeller, I would suggest sending a letter to the new owner telling them how much is outstanding and that they are now the ones who owe it. Suggest they contact their solicitor if they did not agree to be responsible for the arrears. Either their solicitor closed the sale without getting the req 37 or the vendor/vendor's solicitor provided false req 37 details.
Sybil
 
purpeller said:
This particular owner took matters into their own hands, their solicitor completed the requisition 37s and the sale went through.
Click to expand...

How did that happen? I thought the purchasers solicitor requested the R37 form?
 
mf1 said:
...
If it slipped through the loop though then a new owner could find themselves with the responsibility for outstanding fees.
Click to expand...

And have grounds for a complaint against his or her solicitor.
 
Mrs Vimes said:
Purpeller, I would suggest sending a letter to the new owner telling them how much is outstanding and that they are now the ones who owe it. Suggest they contact their solicitor if they did not agree to be responsible for the arrears. Either their solicitor closed the sale without getting the req 37 or the vendor/vendor's solicitor provided false req 37 details.
Sybil
Click to expand...

Thanks, we're well on top of it. I wanted to just illustrate that things can go wrong even though the OP was correct in presuming an apartment can't be sold without clearing the fees.

Markpb, yes sorry, must be the purchaser's solicitor. It's not the first time it's happened either. We have one other person whose sale closed the week we were changing from the old (crap) management agent to our new one and the debt slipped through. We're pursuing this owner too but have made it clear we know the debt it older. It's up to the current owner to go back to their solicitor.
 
Padraigb said:
And have grounds for a complaint against his or her solicitor.
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Not if the solicitor pointed out the problem and the purchaser wanted to go ahead anyway!

It is not a title problem so does not affect the ability of the solicitor to negotiate the loan cheque but it could be something like a purchaser trying to close a sale and a purchase on the same day, needing everything to go like clockwork and just not having any "wriggle" room when an issue like this crops up.

Or, yes, it could be the solicitor! Or the management agent! There is nothing like a receipt for payment to put the matter beyond debate.

mf
 
Sellers solicitor requested req. 37.
Wrote back requesting sdmin fee plus service charge
Arrears.
Admin fee received. Solicitor to seller advising that it standard
Practice monies fir arrears to come out of sale proceeds.

Wrote again advising lease agreement states monies should have
Been paid a year ago and must be paid before doc. Can be released
As this the best interest of the company.
Also asked for satelite dish to be removed.

This morning i receive an e mail from sellers solicitor
Asking me to contact owner/seller/member by phone.
Dont want to hold uo sale. Should we accept monies after sale goes through
And forwsrd req. 37 now.

Any advice helpful. Dont wish to delay buyer or seller which i dont think is appropriate.
 
Insist they settle arrears first, once they have sold you will be left with chasing the new occupier. They haven't paid up to this, what makes you think if you give them leeway now that they will afterwards?
 
I know. I guess i am trying to put myself in their position.
But am taking a chsnce as how can i be sure there will
Be proceeds from the sale.
 
You could try to come to an agreement with the seller's solicitor that they will pay any outstanding management fees from the sale price once they receive payment for the property. That would negate the possibility of the seller doing a runner and leaving the arrears for the new owner to deal with. This assumes that the property is not a forced sale in negative equity.

You would possibly need to inform the buyer that this is what is happening.
 
The Vendor's solicitor should undertake to discharge the arrears from the sale proceeds. That is a binding agreement and can be enforced. It is important that the wording of the undertaking is unambiguous i.e. says " from nett proceeds, if any. " . This would not be acceptable.

Req. 37 will show that there are arrears of service charge so the purchaser's solicitor will be on notice and will similarly be seeking an undertaking that the arrears will be discharged.

mf
 
purpeller said:
A situation relating to this has developed in my building. Owner wanted to sell and had unpaid fees. Our agent has been instructed to "freeze" accounts of those unpaid debtors and not assist with things like requisition 37s (replies to queries asked of the management company when a sale is going through, which the agent answers) and meter readings. This particular owner took matters into their own hands, their solicitor completed the requisition 37s and the sale went through. The new owner now owes the balance of unpaid management fees which he/she did not incur. The buyer's solicitor should have been more thorough here but the end result is the same....we're going to have major trouble getting those fees.
Click to expand...

If the solicitor completed a legal document for a company without their authorisation and made it look like it was completed by them and then passed this onto a purchaser then this could be at worse fraud. edit: especially if there were fees and they did not declare them. Can you get a copy from the other party? This would be killer evidence of wrongdoing.

Its a worrying sign that the bad old days of property being sold and solicitors acting as they please seem to be returning.

If a solicitor outlines that fees will be paid from proceeds in writing then this should be more than sufficient and we have never had any issue in this regard.

We do seem to have an issue with solicitors coming to private arrangements with each other as to the split of the current years service fee and then letting us know that they will pay x amount and the new owner will pay the rest. This is despite them having no legal authority to do so and it being in direct contravention of our articles.

Its neither as easy or as clear cut as it should be. As per my other thread we have just become aware that a seller (a bank) paid all the fees to a private company just because they effectively held out their hand and asked for it. Despite the agent being contractually terminated for years and years and no director ever being contacted to confirm. The agent also confirmed that they have had no dealings for 3+ years, yet still took easy money when it was offered, again, tantamount to fraud but its so easy to do and there is so little recourse without hyper expensive legal fees to correct.
 
lantus said:
If the solicitor completed a legal document for a company without their authorisation and made it look like it was completed by them and then passed this onto a purchaser then this could be at worse fraud. edit: especially if there were fees and they did not declare them. Can you get a copy from the other party? This would be killer evidence of wrongdoing.

Its a worrying sign that the bad old days of property being sold and solicitors acting as they please seem to be returning.

If a solicitor outlines that fees will be paid from proceeds in writing then this should be more than sufficient and we have never had any issue in this regard.

We do seem to have an issue with solicitors coming to private arrangements with each other as to the split of the current years service fee and then letting us know that they will pay x amount and the new owner will pay the rest. This is despite them having no legal authority to do so and it being in direct contravention of our articles.

Its neither as easy or as clear cut as it should be. As per my other thread we have just become aware that a seller (a bank) paid all the fees to a private company just because they effectively held out their hand and asked for it. Despite the agent being contractually terminated for years and years and no director ever being contacted to confirm. The agent also confirmed that they have had no dealings for 3+ years, yet still took easy money when it was offered, again, tantamount to fraud but its so easy to do and there is so little recourse without hyper expensive legal fees to correct.
Click to expand...

There's a lot going on there!

Can I start by saying that Requisition 37 is in the Requisitions on Title that the solicitors exchange. It has become the practice that Vendors' solicitors ask the Managing Agent /Management Company to provide pre Contract replies but it is not obligatory. It is however very foolish of a vendor's solicitor not to make the correct enquiries so that they answer correctly. It is equally foolish of a purchaser's solicitor not to make basic enquiries.

My understanding is that the service charges attach to the property so, if a purchaser's solicitor, does not make absolutely certain that all outstanding service charges have been paid, that the purchaser becomes responsible for all outstanding charges. And they would have a very good case to recover those charges from their own solicitor.

However...............

Solicitors are having a real problem though with Bank/Receiver/Mortgagee in Possession sales where the vendor excludes all liability for pretty much everything! I can see how the above situation might arise. I'd rather not deal with these cases where all responsibility is excluded but clients are tempted by cheap property and take certain risks.

mf
 
Guys, check the date! This happened over 4 years ago and when I posted it, we already had it resolved.
 
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