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How can I help my sellers to avoid potential lengthy delays?
According to Land Registry data, the number of leasehold transactions annually is approximately 260,000. This equates to around 20% of all transactions in England and Wales (according to the Conveyancing Association).
Clients involved in selling and buying leasehold properties, particularly flats, often become frustrated by the delays involved. Potentially 20% of our clients will have issues in moving their transactions forwards.
You will have encountered issues in practice, when dealing with sales of leasehold properties and will also be aware of which local leasehold developments you already deal with, where you know there may be delays.
What can be the reason for the delays?
The delays involved in dealing with the sale of leasehold properties usually hinge on obtaining replies to the Leasehold Property Enquiries form. The landlord or management company/agent will be required to complete this standard form. The form is fairly detailed and asks specific questions regarding the following:
- Who collects the ground rent, service charge and insurance premiums
- Details of ground rent and service charge payments, including any information concerning arrears
- Information concerning any reserve funds
- Anticipated future works to be undertaken to the property over the next 2 years
- Proposed increases in service charges
- Any disputes
This is by no means an exhaustive list, and there are further more detailed questions included on the form.
The potential delays generally revolve around obtaining the following:
- Who or which company is responsible for completing the Leasehold Property Enquiries form?
- What is the fee payable in respect of obtaining this information?
- Obtaining payment from the seller in relation to these fees
- Obtaining the completed Leasehold Property Enquiries form from the landlord/management company
However, what can you do to help?
As lawyers, we try to obtain payment from the seller directly, when acting on a sale, and send the enquiries to the management company at the outset.
However, in order to help the process move more quickly, as agents, you could potentially discuss the situation with the sellers as the property is marketed.
- Who the landlord is?
- Whether there is a management company?
- Asking the client to contact their management company about the level of fee payable and to whom – in relation to the leasehold information mentioned above
If the seller contacts the management company in advance of the sale, they will be able to ascertain the level of the management company fees, who to direct their enquiries to and the approximate time frame for obtaining the information once the fee is paid.
The seller may not wish to pay for or obtain the information in advance of a sale (just in case the property does not sell or they change their minds concerning a sale), but at least if both the seller and you as agent has this information to hand, the purchasers expectations can be managed and also, the information can be applied for much more quickly once a sale has been agreed.
According to the Conveyancing Association’s recent White Paper and the feed back from one of their members, data indicates that over 37% of leasehold information arrives more than 30 days after payment is made. Therefore, any progress made prior to a sale being agreed, will be worthwhile, if it reduces this delay. Transactions are also more likely to fall down, if information is outstanding for long periods of time.
As lawyers, we are also happy to make these enquiries on behalf of the sellers and open a file in advance, take instructions and get the sale prepared as far in advance as possible, before an actual sale is agreed.
Up to date information
We are often asked by both sellers and agents, as to whether previous replies to the Leasehold Property Enquiries form will suffice. A seller may be selling a property within the space of 1 to 2 years and would like to use the information provided when they first bought the property. Although recent service charge and ground rent statements are useful, unfortunately up to date replies are necessary, as the management of the property may have changed, future works to the property may now be expected and other information may now be out of date. A buyer’s lawyer will more than often insist on up to date replies being provided.
Any concerns? Just ask!
If as agents, you need any guidance or further information on this process, please do not hesitate to speak to a member of our Conveyancing team.
All of us at Napthens wish you and your staff a Merry Christmas and a prosperous New Year!
Please note, that our offices will be closed from 5pm on 23rd December, re-opening on Tuesday 3rd January. However, our online quotes, instructions and case tracker systems will be fully operational.