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Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10181
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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I sold a leasehold property back in October 2013, and as

Customer Question

Hi, I sold a leasehold property back in October 2013, and as part of the deal agreed with my buyer, I negotiated a deal with my landlord to extend the lease by x number of year. Fairly standard process I am led to believe. After negotiating a deal with the landlord my solicitor took over proceedings and completed the sale of the property (along with the lease extension). Just before we completed the sale, I was informed by my solicitor that I needed to place the sum of £500 in a holding account in case of any arrears or shortfalls in the annual service charges (due June 2014). I believe this is called a retention, and again, I believe this is a fairly standard process with selling a leasehold property. We agreed that the retention would be released by Oct 2014, giving the buyers solicitors 3 – 4 months to sort out any issues with the service charges (not that we were expecting any shortfalls). October 2014 came and went and I hadn’t heard anything so I decided to contact my solicitor to find out what happened to the money. Unbeknown to me, he informed me that there was an outstanding issue with the deed of variation (extending the term of the lease). Something about it being unsuitable for registration. He stated that whilst this was ongoing, it would be unlikely that the buyers’ solicitors would agree to release the retention. I wrote back stating that I thought the retention was held subject to confirmation that no arrears in the annual service charges were put forward. He agreed, also stating that it was subject to terms of the contract and that authority to release the retention was that of both the buyers and sellers solicitors. I dug out my copy of the contract from the sale and fail to see any mention of a retention (not sure if that was missed or there was an amendment I am missing). To cut the rest of the story short, there have been several email exchanges between myself and the solicitor I used for the sale of the property and I am less than impressed with the service they have provided. He completely ignored 2 of my emails! It has almost been a year since the retention was due for release and still nothing!
The last email I received stated the following:
“Further to your recent email we confirm the buyers solicitors have approved the deed of surrender and regrant however the freeholders solicitors have now stated they will not allow this to be back dated to the original date of completion. This means the deed is ineffective and cannot be registered at the Land Registry.”
I fail to see how the issue with the deed of variation has anything to do with the retention and want to know if there is any way of getting the retention back. As far as I am aware, my solicitor has already received confirmation that there were no shortfalls in the annual service charges.
Kind Regards, ***** *****
Submitted: 1 year ago.
Category: Law
Expert:  Aston Lawyer replied 1 year ago.
Hello and thanks for using Just Answer.
My name is ***** ***** am happy to assist you with your enquiry.
As regards ***** ***** service charge, it would be normal for a clause to be added to the Contract (this is often written in pen by the Solicitors at the time Contracts are exchanged, and hence you may not have a copy of the completed Contract). Alternatively, the Solicitors can agree to the retention via correspondence, and if so, it would not appear in the Contract.
Either way, the standard agreement/wording is that "the Sellers Solicitors will agree to retain the sum of £500 from the proceeds of Sale, pending the service charge accounts ending x day of x month XXXX..."
IE The retention is for the balancing service charge and for nothing else. Only if the Buyers Solicitors added to the wording,by saying the retention is also to be held pending the successful registration at the Land Registry of the Lease extension, should your Solicitor still be retaining the retention.
You therefore need to do a strongly worded letter to your Solicitor asking for a copy of the final version of the Contract and if the retention relates purely to the service charge, demand that he returns it to you.
On a side point, there may be a separate clause in the Contract confirming that you will make sure that a suitable Lease extension is entered into on the day of completion. By the sounds of it, this has not happened, and until the Lease extension is resolved, you are in theory "in breach of Contract" to the Buyer and you will need to do all that is necessary to rectify the current problem and for the Lease extension to proceed. However, any fees involved with this are independent of the service charge retention, unless the retention was specifically for both issues.
I hope this assists and sets out the legal position.
Kind Regards
Al
Expert:  Aston Lawyer replied 1 year ago.
Hi,
Can I assist you any further?
If not, I would be grateful if you could rate my answer.
Kind Regards
Al
Expert:  Aston Lawyer replied 1 year ago.
Hi,
Can I assist you any further?
If not, I would be grateful if you could rate my answer.
Kind Regards
Al

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