If you are buying a leasehold property then it is the responsibility of the seller to provide you or your Conveyancing Solicitor with a Managing Agents pack (the “Pack”). The Pack contains crucial information about the property and can influence your decision as to whether or not to go ahead with the purchase.
A Management Company is usually created to deal with the management aspects of the leasehold property/block of flats.
It is important that the documents contained in the Pack are read in conjunction with the lease.
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The Pack will contain information about the level of service charge attributed to the property and copies of the service charge accounts for last 3 years. Your conveyancer should inspect the accounts carefully to ensure there are no unusual expenses and that if service charges have risen over the years, then it is a gradual, reasonable increase.
You should also ensure there are no service charge arrears on the account and if there are, your conveyancer should obtain an undertaking from the seller’s solicitor for all arrears to be settled on completion.
Ground rent and the amount due are usually referred to in the lease although you may find that the amount of ground rent actually collected by the landlord/freeholder is different. As with service charges, it is important to ensure there are no arrears on the ground rent account.
The Pack should provide information about whether or not any major works are anticipated to be carried out which the owner is expected to contribute towards. Major works could include roof repairs, for example, which could be quite costly. If buying a property you would need to know when the works are anticipated to be carried out, what the likely contribution is and whether the reserve fund (if there is one) will cover any part of the repair costs.
Deed of Covenant
If the lease stipulates that a Deed of Covenant must be entered into by the new owner then a draft should be provided by the managing agents together with a note of their fees. By entering into a Deed of Covenant the new owner is making a promise to the Landlord to observe all the provisions in the lease.
The managing agents pack contains other information such as:
- whether or not there has been a breach of covenant by any of the other leaseholders,
- copies of the Memorandum and Articles of Association of the Management Company,
- contact details for the freeholder/landlord,
- information on fees for receipting the various Notices that must be served on the Management Company/Freeholder when the property is bought
- whether the leaseholders have applied to purchase the freehold.
- whether or not the new owner is to become a member of the Management Company
Your conveyancer should scrutinise the documents in the Pack carefully and raise enquiries where appropriate.Get in touch with the Fridaysmove team on 0800 038 6446 should you wish to discuss any part of your purchase.