It may seem unfair to have to pay service charges for a period before you owned a property, but there are instances where this could arise, such as for any outstanding service charges (arrears) or for a new demand. If there are any outstanding service charges which have been demanded but not paid, you may end up having to pay them if they are not cleared before you buy the property.
If service charges are owed, your landlord could take action against you to forfeit your lease. You would then have to pay the arrears or lose the flat.
That is why it is crucial to get information about any outstanding issues before you buy. Your solicitor should ask for this information from the seller’s solicitor before the sale completes.
The seller’s solicitor is not obliged to provide this information unless this has been requested.
Your solicitor can then make sure the seller deals with any outstanding debts before you complete on the purchase.
New demands for a previous period
When service charges are estimated in advance, the landlord may issue a demand for the balance based on the actual costs many months later.
If you buy a property part way through an accounting year, you may get a demand for charges relating to a period before your purchase date.
If this is a possibility, your solicitor should arrange for the seller to set aside some money to cover their part of the period, called a retention. The size of the retention is open for negotiation.
More information you might find useful:
- Service Charges and other issues: advice guide
- The process of buying the leasehold: flowchart
- Do landlords have to provide a management pack?
- More Frequently Asked Questions on buying and selling
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