Property clinic
Our experts advise readers on their property problems
Waiting to get a charge settled
Q I am trying to buy a townhouse in a development but there seems to be a delay due to the management company signing off on the previous owner. Seemingly they didn’t pay the fees and there is some sort of charge against the property. What can we do to speed it up?
A When a charge has been registered against a property, it should be discharged in full by the vendor prior to title being transferred. As with a mortgage, when a property is being sold where there is a charge registered against it, the solicitor for the vendor will, in ordinary circumstances, undertake to the purchaser that the charge will be satisfied in full from the proceeds of the sale and the property title will pass unencumbered. The solicitors’ undertaking should be accepted by your solicitor as confirmation that such charges will be settled as part of the transaction.
It is not a simple process to register a charge on a property, it is time consuming and costly and it should not be necessary for an owners’ management company to have to pursue one of its members for service charges that benefit the entire community of owners.
Many directors of owners’ management companies are reluctant to initiate legal proceedings against their co-members and neighbours and will offer a range of payment options to people encountering difficulty in paying service charges. The obligations to pay service charges, contained in the title for each property, will normally require payment in advance either annually, bi-annually or quarterly. Payment must be in advance as the owners’ management company requires funding to procure all the services it is obliged to provide such as insurance, waste management, fire safety system maintenance, and electricity.
Owners’ management companies are not in the business of risk and are entirely dependant on 100 per cent of service charges being collectable. To discount any amount of the service charges due on the property would have the inequitable and unfair impact of increasing the cost to those owners who have paid and continue to pay service charges.
It is worth noting that service charge debts due by owners in a multi-unit development are fully accounted for in the annual accounts and balance sheet of the owners’ management company. Writing off any service charge debts has the effect of distorting the accounts and may reduce the ability of the company to meet its liabilities and financial obligations.
One hopes that, in this circumstance, the owners’ management company will receive the full service charges outstanding together with any legal costs incurred and that when you become a member of the company it is in a better financial position as a result of the debt having been discharged.
Paul Mooney is a member of the property and facilities management professional group of the Society of Chartered Surveyors
As a tenant, am I responsible for property taxes?
Q I have just put a deposit on an apartment to rent and there is a clause in the lease which states that I am responsible for any taxes relating to the property. Is it likely that I could be liable for the property tax even though I dont own the property?
A The lease has probably been drafted by someone acting for the landlord and may therefore seek to protect their interests over yours. The lease is a contract between you and your landlord and should clearly set out each party’s obligations for the duration of the tenancy.
