UK Landlord Forum / Life

I am the Lessor for a block with 12 Flats. One of the Flat owners owes several thousand pounds in service charges. I have just seen the property is listed on rightmove for sale. Has anyone had a  similar situation and were they protected through the conveyancing process showing up arrears, hence no sale until arrears cleared.

Thanks

Why would anyone owed money stop sales of properties which would bring in money to pay off said money owed? (Obviously assuming mortgage isn't more than value of property.)

I assume you have tried and failed with the Small   Claims court? You should see a solicitor very promptly. As I understand it,a lien can be placed against the property,so that the debt will be deducted from the proceeds of the sale before completion. 

Thanks for your replies. The mortgage, I believe is higher than valuation, hence my concern. Solicitor now engaged. Having done some catching up on conveyancing, think Leaseholder Information Form will be revealing as specific question in Service Charge arrears. Seller will need to answer honestly.

It sounds like they will be declared bankrupt.With no equity,and the bank/lender having first dibs,I doubt if this debt will be cleared. 

Fingers crossed. I have been given two possible outcomes. Debt must  be cleared before sale can transact, or lender will call loan in knowing debt cannot be cleared, hence bankruptcy. Happy days 

Quote from: NeilW on December 13, 2020, 09:53:30 PM
lender will call loan in knowing debt cannot be cleared, hence bankruptcy.

Well, the freeholder can try and apply for forfeiture before that.

I've never sold a property, but I've bought some and in the various documents my Conveyancer has sent me over the years, I have often seen something like... if the property is Leasehold then validate, via a statement or suchlike, that there are no outstanding Service Charge or Ground Rent amounts. I figured this was standard belt-and-braces to ensure someone doesn't somehow take on a debt for someone else. I realise this is only stuff transparent to the two parties... Vendor and Purchaser... but, nevertheless, the person or organisation owed those charges should be automatically benefiting as a consequence of those conveyancing checks, no? Unless the Purchaser doesn't care... but who wouldn't?

Again, thanks for input. I intend to sit tight, assuming I do not receive any proactive communications and then get involved when Sold STC appears. If this is unsuccessful then forfeiture on lease is plan B.

Err, why would you wait???