Declaring dispute when selling?

[Goostacean]

We’re considering taking our freeholder to tribunal as he is attempting to bill us for works to his own (leasehold) part of he property (ie it’s two flats, he has leasehold of one and total freehold, we have leasehold of the other). However, we’re a few months away from selling our own flat and moving.

Would we need to declare the dispute during the sale process? Any links to official info welcome, have struggled to find guidance. Thanks

When we begun our sales process we had to confirm to our solicitors that we had no legal disputes with our neighbours. Not sure if that’s standard practice. We’re in Scotland.

We are in England and had to declare disputes with neighbours on the PIF and there's a further form for leasehold - I think these are the forms in England, with a house we did TA6 and TA10. I think you do have to declare.

www.samconveyancing.co.uk/news/conveyancing/ta7-leasehold-information-form-explained-2532

Do you think it would put someone off the property? The works are finished.

Yes, I believe so - we’re selling now and have been told what @silkies has said, it’ll need to be declared on the PIF and leasehold forms.

It seems to have asked have you ever complained about your management agent. I answered that honestly with my flat sale and it caused first sale to FTB to fall through, second sale went through to a BTL buyer who knew that was normal.

Yes it would definitely have to be declared as it's a dispute affecting the property. If you fail to declare, your buyers can sue you. I don't really understand on what basis the freeholder wants you to pay? Has your flat benefitted from the works? I certainly wouldn't buy with an ongoing dispute, resolve it first, then sell.

It caused our first sale to fall through 2.5 months in so if you do need to declare maybe worth getting EA to mention at outset to avoid wasting everyone's time and money. FTBs are probably higher risk for getting jittery with this. All the other flats sold fine so I suspect the other sellers didn't mention it and took the risk of being sued.

If you're in England or Wales the relevant forms are on the Law Society website and you should get advice from your solicitor too.

Yes, you do have to declare it. We were in a legal dispute with our neighbour over some boundary issues. It was satisfactorily resolved before we put our house on the market, but we obviously declared it, as required by law. Fortunately our purchasers were fine with it. I would be wary of starting something that could drag on and derail your sale, but I suppose it also depends on the sum of money involved.

Ours was just over the management agent not doing annual accounts and never doing any work on property but before we went on market both had been resolved but first buyers solicitor advised her to pull out because of it. Our solicitor said that was very unusual advice but her solicitor phoned me directly as mine was on holiday and told me that is what he had done. He hadn't known the accounts were resolved but said that wouldn't have affected his advice. Next solicitor was fine with the same information.

Interesting. Yes, quite, @PurplePansy05 - clearly there’s no reason for us to pay for the CF’s works, as I’ve been telling him for literally months- but he’s issued the invoice so now we have to respond. It’s £5k, we’ve already paid £800 (for legitimate communal works) and apparently there will be another invoice to follow.

We’ll certainly declare it, the question is whether it’s worth pursuing the tribunal and potentially causing issues with a sale, or having to postpone putting it on the market... or just paying up, and contributing to someone else’s redecorating.

Your buyers solicitor will ask that all outstanding service charge is paid on or before completion. So you need to work out a solution.

Also check your lease- there might well be be a clause in it saying you have to pay all outstanding service charge when you sell.

It’s not technically a service charge, as far as I’m aware. We’ve not been charged any service charge for 18 months and instead now have this random bill for a bunch of works.

But yes, agreed that we need to reach a resolution one way or another. I think I will call the estate agent we’d like to use to sell, and discuss, on Monday.

Is it beneficial to your property? I dont get it you said decorating?

The people that sold me my house did not declare a dispute. I wanted to sue them but was told not to bother by a lawyer because of the expense involved and that even if I won I could end up pursuing them for years before getting any money.

No, we don’t think it is beneficial to the property - or at least not within the terms of the lease. Hence potentially disputing it now. The freeholder is a real piece of work, local reputation for being a CF of the highest order... But sadly we didn’t know that! And in fairness we were left in relative peace until he decided to redo the other property.

Yes, you will have to declare it and it would certainly put me off buying your property.

Best thing we did was to see a solicitor who we would be hiring for conveyancing and spoke to her about how to word the dispute so it didn't scare anyone off.

This was a couple of months before we put the house up for sale but it was great advice. I can't remember what is cost but it didn't cause me to draw in breath

That’s helpful- thank you!

Just to point out re one of the comments above in relation to pursuing the seller for money if they lied, clearly it depends on how much it is and on the seller's assets. These days, a money claim can be made pretty easily and if you get a judgment in your favour, you can put a charge over your former house, attachment of earnings order, threaten to bankrupt the seller which could have v serious consequences to them and they might pay then. There really are ways and means worth considering if you want to go after them, so lying in a property form is a very bad idea.

No no, not considering whether to declare it- now that I know we would have to, we would do so if the dispute arose. I don’t lie.

Now the debate is whether to bother raising the dispute and how it may affect the sale of the flat...

Not what you want to hear but you have big problems. You need to get the service charge dispute resolved before putting your house on the market. A Solicitor will advise any potential buyer not to buy.

The thing is, your freeholder will be asked to answer questions about what he charges, is it all paid up to date etc. So his behaviour and the potential for a dispute will quickly become clear. At which point I’d be advising my client not to exchange until it’s sorted.

There is an annual service charge, with which there have never been any issues from either side.

This is a separate bill for works that are arguably not communal and were certainly not agreed (in fact we actively stated we had no intention of paying several as we think they break the terms of the lease) ahead of time.

A Solicitor will advise any potential buyer not to buy.
Really? Other pp disagree, so looks like there’s scope for compromise. We’re not going to leave an unpaid bill for someone else to pick up, clearly. The question is whether we should risk escalating this to an official dispute (perhaps freeholder also doesn’t want a dispute and therefore will back down) or whether it’s enough of an issue - even if resolved before we market it - to not bother, pay the ransom, and sell ASAP.

Sorry OP I didn't mean it in your context at all, it was in the context of one of the comments on here which suggested claims from buyers aren't likely as they're too expensive etc. It's not always the case - in case someone else reads this and decides to give up on a good case.