Selling a leasehold flat

[Jennylinda79]

A friend is on the verge of exchanging contracts on her leasehold flat and her freeholder has sent a consultation letter to say that exterior work will be undertaken at some time in the future with no indication of the cost. What is her position with regard to her buyer. Is she responsible for any of these unknown costs or should she advise her buyer/solicitor that they may be unknown costs at a later date? She is worried her buyer will now pull out because this is so uncertain. Any advice on what she should do please.

The lease will already set out whether the cost of the exterior work is down to the freeholders or whether the leaseholders have to contribute so ot could have happened at anytime anyway. Obviously the consultation letter does need to be disclosed.

From my experience of a similar but different thing, I'd pop the letter in the bin and forget I ever received it. This can only end badly for your friend.

Not sure what the legal requirement is, but assuming she wad telling the truth when she signed whatever paperwork she did, no need to volunteer something which will in no way benefit her and will likely cost her thousands in the purchase price

This happened to me just before I sold my leasehold. I passed the letter on to my solicitor and I assume she sent it to the buyer's solicitor.

I did think there was a possibility the buyer would pull out. The letter made it clear leaseholders were responsible for the cost and rather ominously advised us to put money aside each month to ensure we could make payment. There was no indication at all of what the final costs might be.

This was only a week or two before Exchange and the sale went through without any issues.

Legally and morally she should pass the letter on to her solicitor who will pass it on to the purchasers solicitor. In reality depending on what the work is it may well cause the buyer to drop out. If its just a redecoration it may not be expensive, if its a new roof or major works it could be very expensive.

There will have been a maintenance/service charge that she paid alongside her ground rent. Her lease will set out the time periods for redecorating outside and so on (I used to work for a UK freeholder who owned tens of thousands of properties). Saying that, a friend of mine was in the process of purchasing a flat earlier this year and was told he'd need to pay £10k in the next year for external redecorating. I told him to pull out because there should have been sufficient maintenance/service charges to cover it. The lease didn't have the correct clauses.

They may try and renegotiate, but without hard figures very difficult.
My sister sold her place and already knew there was a big bill coming. This was disclosed during the selling process and the EA advised her to pay half.
I'd ask the managing agents how much they think the bill will be.

Thanks everyone. She has passed it on to her solicitor and hoping it won't be too much as it is just external work at the back of the flats. Very tricky situation if you are buying/selling a flat.

This happened to us. We got the letter the day after we'd accepted an offer on the flat. Our management company had also not established a sinking fund to help contribute to these works. We ended up having to accept £18000 less than we'd agreed.

I work as a conveyancer, when I am acting for a buyer of a leasehold property I ask for 3 years accounts and ask the Management Company specifically whether there are any works due to be undertaken and one of the major factors I am looking out for is to see if their is a sufficient sinking fund in place (monies put aside each year against future large expenses such as roof repairs or re-rendering etc). If the Management Company is functioning well and is well managed there should already be some funds put aside for future works.

Should add that my awful Management Company did not have a sinking fund and the previous years’ Service Charge statements I had to provide showed random increases for certain things. They couldn’t provide satisfactory answers to enquiries raised about those charges either. The sale still went ahead.

I think it may have been because we were so far into the process and the buyer didn’t want to delay and miss the stamp duty holiday. I also think the buyers solicitor was incompetent though and may not have advised them to look into the issue in any more detail.

@Jennylinda79

Thanks everyone. She has passed it on to her solicitor and hoping it won't be too much as it is just external work at the back of the flats. Very tricky situation if you are buying/selling a flat.

Surely the cost just comes out of the service charge?