During the conveyancing process of selling a leasehold flat a purchaser’s conveyancer will almost always contact the seller’s conveyancing solicitor with their managing agents enquiries ( an example of such enquiries is set below ) which require answers and photocopied documents concerning service charges and building insurance. A managing agent cannot give information direct to the buyer because to do so may breach data protection law. The number of queries that an agent is expected to answer can vary from a few to over 100. Like ARMA, Fridaysmove are keen to see conveyancing solicitors use a standardised form of enquiries.
Managing Agents will charge fees for work arising out of flat sales. Leases do not allow for such tasks to be part of the management fee charged as part of the service charge and it would be wrong for an agent to do this. Not all fees go to the agent. Sometimes the landlord carries out the work. Typically there will be fees for:‐
- Answering pre-contract enquiries ( sample below )
- Where consent is required before sale
- Deeds of covenant upon sale
- Registration of the assignment of the change of lessee after a sale
- Registration of a mortgage after a sale
Fees are often referred to as ‘administration charges’ by managing agents, because most of them are defined as such in Landlord and Tenant legislation. Lessees who believe that the fees are unreasonable or not payable according to the terms of their leases have the right to challenge them at a Leasehold Valuation Tribunal. In conveyancing transaction it is customary for the seller to pay for these costs.
As many managing agents charge exorbitant fee for providing answers If you are thinking of selling your flat it is in your interest to keep documents relating to the management of the block so that they are available to answer enquiries. If you do this it will save you time and money later on in the conveyancing process . The information you should keep is:‐
- Annual statements of account and budgets for service charges.
- Recent demands for service charges and ground rent.
- Letters about proposed major works. ( managing agents call Section 20 notices. )
- Share or membership certificates if your ownership of the flat also requires you to be a shareholder or member of a residents’ management company.
- Minutes of meetings if there is a residents’ management company.
- Any regulations about the management of your block additional to the lease.
TYPICAL ENQUIRIES OF MANAGING AGENTS
Nature of Development
1. Please state:
(a) the number of flats in the block
(b) the number of storeys
(c) age of building
(d) Is any part of the block used for business purposes?
(e) If the flat is a conversion, what was the date of conversion?
(f) Was planning permission and building regulation approval obtained?
(g) Was the flat converted with the aid of an improvement grant? If so has the property been certified as habitable by the local authority? Have all the requirements of the local authority in respect of the grant been complied with?
2. Please state:
(a) Name and address of immediate landlord and its solicitors
(b) Name and address of any superior landlord
(c) To whom the rent is actually payable
3. Please confirm that all the flats in the Block are let upon essentially identical leases.
4. If the block is partly tenanted, please state the number of tenanted flats and the number of flats let on long leases.
5. If the lease stipulates that the insurance must be placed through a particular agency or with particular insurers, please give details.
6. If the lease provides for the landlord or a management company to insure the block:
(a) Please confirm that such party covenants to reinstate the building
(b) Please state the name and address of any agent
(c) Please supply full details (preferably a copy) of the current insurance policy
(d) Please advise to what address formal notice of lessees and mortgage interest should be given if required by the terms of the policy
7. Please give details of the service charge statements, account or annual certificates as appropriate for the last 3 years.
8. Is an estimate of the current year’s service charge liability available?
9. Up to what date has any advance payment on account of service charge been paid and what is the current amount of any such charge?
10. Is there any contemplated or expected large scale expenditure which will materially affect service charge levels? If so, please give details.
11. Is there going to be an excess when the accounts are completed the proposed buyer wishes to ensure that there is a retention made from the proceeds of sale to cover any balance of service charges attributable to the period of the tenants occupation up to completion. On the assumption that completion of the sale of this flat takes place within the next 8 weeks, would you care to suggest the amount of retention which we should make to cover this potential liability?
12. Have any notices under Section 41 of the Housing Act 1987 been served or are in course of preparation or contemplated? If so, please supply details.
13. Is any work contemplated which will require the landlords or their contractors having access to this flat or which will require the erection of scaffolding?
14. If it is not apparent from the accounts please let us have details of any sinking fund and whether such fund or any part of it has been earmarked for expenditure.
Management Company/Residents’ Association
15. Please supply a copy of the Memorandum and Articles of Association (or any evidence of the constitution) of any management company or residents’ association that affects the block.
16. Please state the name and address of:
(a) the Secretary
(b) the Treasurer
(c) the Chairman
London Building Acts Area only
17. What is the position regarding approval of the means of escape in case of fire for the purposes of Section 34 and 35 of the London Buildings (Amendment) Acts 1939?
Landlord & Tenant Act 1987
18. Have any notices been served by the landlord on the tenant at the building? If so, please supply full details.
19. Have any proceedings been threatened or instituted against the landlord under Part II of the Act? If so, please supply details.