If I’m Selling/Buying A Property Or Have Sold/Bought Subject To Contract, When Do I Stop/Start Paying The Service Charge?
The leaseholder or homeowner of the property on the first day of the service charge financial year is legally responsible for paying the service charge for that year in full. However if ownership changes part way through the financial year, this should be discussed with the conveyancers involved as it is usual practice for the buyer to pay a fair and proportionate amount of the service charge for remainder of the given year, so if your buying or selling discuss the service charge with your legal representatives.
In practice, if you are selling and paying your service charge by monthly instalments, then these can continue as usual and be ceased after payment of the last month of ownership is complete. As an example if the service charge year runs 1st January to 31st December and a sale completes on the 15th June, it would be usual for the seller to pay the service charge from 1st of January to until the end of June, and for the buyer to pay from 1st July to 31st December.
Any arrears of ground rent or service charges are likely to delay the sale until the arrears have been paid in full. It is also worth noting that a minority of leases and title documentation include clauses that require additional payments to be made when a sale completes. This is most commonly seen as a percentage of the sale price being paid into the development contingency fund. Whether buying or selling, if you think you have such a clause in the demise to your property then you should take legal advice as soon as possible to clarify any unforeseen payments that may be required.
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