When selling a flat or house where you pay Service Charge to a Management Company (and possibly Ground Rent to either a Freeholder or Management Company) in return for the Company maintaining the communal areas of the development in which your property is situated, your solicitors will need to provide additional information and documents to the buyer’s solicitors. It is therefore important to make sure you let your solicitor know at the earliest opportunity that you are a member/shareholder of a Management Company and pay a Service Charge towards the maintenance of the development, as the membership/shareholding and responsibility will transfer to your buyer on completion.
Once you have instructed a solicitor you will be sent a number of questionnaires to complete and if you are selling a flat, you will also be asked to complete a Leasehold Information Form providing various information and documents. It is therefore a good idea early on to check you have to hand documents relating to the Management Company, such as a copy of the current year’s Service Charge Budget (sent to you each year with the Service Charge Invoice), your original Share Certificate (if applicable) and any other documents and provide your solicitor with everything that you feel may be relevant.
Often the buyer’s solicitor will ask the seller (via their solicitor) to provide a Sales Enquiry Pack from the Management Company which provides all the information and documents in one concise package. If this is the case, we are able to provide this to your solicitor and will be able to advise the cost of the same, if required.
It will also be necessary for the Service Charge to be discharged in full by the time your sale completes, if it has not already been settled. Your solicitor will calculate how much of the current period’s charge is due from you based on the completion date (sometimes referred to as ‘apportionments’) and how much from the buyer and factor this in to the amount of purchase monies paid by the buyer on completion. Even if you have paid the full period’s charge in advance, your solicitor will ensure they collect any amount due back to you, from the buyer on completion.