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Jul, 2014

Wednesday

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  1. #1
    Join Date
    Jun 2011
    Location
    Lancashire
    Posts
    25

    Default Mistakes made in rent reconciliation during conveyncing. What can we do to correct it

    Hi All, I do not think there is much I can do at this stage but any help is gratefully received.

    On 30th Sept 2012 we were due to complete on the purchase of a HMO. The vendors faxed a sheet of calculations through his solicitor to our solicitor, which showed how much we owed the vendor and how much the vendor owed us to reconcile the rents/deposit monies. Everyone agreed at the time the figures were correct.

    I now know we made a mistake and did not read this thoroughly enough. To cut a long story short, we misinterpreted the figures and assumed two of the tenants were paying in arrears. Now one of these tenants is wishing to leave, we have agreed to allow him to give two weeks notice but he is wanting assurances we will give him the last two of the four weeks rent he feels he had paid up front.

    When we have read this fax showing the figures again, it turns out the previous owner has worked the figures out totally wrong and instead of giving us the rent/deposit money he owed us (due to the tenants paying in advance) he actually took the amounts from us, and we paid it.

    It was a very stressful time for us, other things were going on as well as completing on a HMO. I know this is not an excuse but it has happened and we have to deal with it.

    My question is this - is there any way we can recoup the money owed to us from the previous owner. He is adamant he does not owe anything, so it is obvious he will not be giving this shortfall up willingly.

    Can I go back to the solicitor (ours has actually retired now, under strange and speedy circumstances, so we would have to talk to another solicitor within the firm about it if this is the case) and would this be covered by the indemnity insurance we took out?

    I feel very sorry for the tenant who simply wants what is rightfully his, but should I pay it out and hope we manage to be reimbursed? Is it right to take this to the small claims court or should we simply chalk this down to naivety on our behalf and learn from the experience.

    All constructive help will be very much appreciated.

    Thanks.

  2. #2
    Join Date
    Jun 2010
    Location
    Foundation trench for New Shed@ Ham on Rye
    Posts
    14,447

    Default

    Taking the student first you absolutely must pay out what he is entitled to under his tenancy; he has a landlord, not Mr X and now PollyW, so for all intents and purposes the change of name has no relevance to him. You may want to see their payment records as confirmation.

    For the rent reconciliation much depends on the wording of the contract so I am afraid it is back to the lawyer. Similarly any indemnity policy if covering such matters will want to see the information to see if there is civil remedy first or if they take the benefit of that.

    Start with the lawyer but keep a wary eye for a misreading of the reconciliation compared to the tenancy obligations to see if a mistake, when comparing them, was made.
    Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers. More ramblings atleaseholdpropertymanager.blogspot.com

  3. #3
    Join Date
    Jun 2011
    Location
    Lancashire
    Posts
    25

    Default

    Thanks both of you for your thoughts.
    LHA - you are correct, I have to honour the agreement and refund his deposit. I honestly had not looked upon the situation that way. I want to do the correct thing, and it is not the tenants fault this error has been made. Thank you for making me see this point in a clear way. I have spoken to the tenant now and told him of my intentions to refund in full.
    Bandontherun - thank you to you also, I have to keep this in perspective. It IS trivial compared with the value in the grand scheme of things. I hate being taken for a mug though, and have started steps to contact the vendor through a familiar third party initially. It is never nice to receive an unexpected letter from a strange solicitor so hopefully a softly softly approach will be enough to make the original owners see their mistake. Maybe they will have enough honesty and compassion to correct their mistake before I have to take the issue further.

  4. #4
    Join Date
    Apr 2006
    Location
    Hampshire
    Posts
    1,047

    Default

    if you are buying a flat your solicitor will normally insist on seeing up to date receipts from the freeholder/landlord to show if anything is owing and apportionments can be made on completion on the basis of what the landlord says he has had. if the seller dispute sit then the buyer tells the seller to argue with the landlord he will only pay a proportion of what appears due as far as the landlord is concerned.

    When you are buying a property where the buyer is gong to get the benefit of rental income, following the same logic, the buyer or his solicitors should be asking the tenants how much they have paid and for what period, because it is always possible that the tenant might say that he had made a substantial advance payment and then the buyer would want to pay less on completion to allow for the advance payment some of which would be rightfully his.

    Trouble is that nobody is used to approaching tenants for this kind of information so it will probably fall through the gaps. When this is possible I always point out to my buyer clients that they need to be happy that there aren't any such advance payments involved.
    RICHARD WEBSTER

    As a conveyancing solicitor I believe the information given in the post to be useful (provided it relates to property in England & Wales) but I accept no liability except to fee-paying clients.

  5. #5
    Join Date
    Jun 2011
    Location
    Lancashire
    Posts
    25

    Default

    Hi Richard, thanks for your input.

    We had offers accepted and ultimately purchased two fully tenanted HMO properties around the same time, using the same solicitor (who came highly recommended)for the conveyancing on both. In neither case did the solicitor approach the tenants about anything.

    The rent details were left up to us as purchasers to discuss with the sellers. In one case the seller was incredibly helpful about all aspects and details of the sale. Full records of everything we ever could need and more were passed to us. He remains to this day true to his word with everything we discussed. I wish the purchase of the second property had been so straightforward.

    During the conveyancing we had many issues, it probably is not right or fair to detail them here but suffice to say I will never ever be sure all the work which was meant to be carried out (and that we paid to be carried out) during conveyancing, actually was. It seems with this rent issue coming to light, at least this point was not checked as it should have been, or how we requested. I suppose time will tell......

    Is it acceptable to go back to the solicitors and ask for their help in correcting this matter? Should we expect to pay for this, or is it part of the cost of the original conveyancing? It is a pity that only the most stressful times of life do people require the help of solicitors. It would be nice to know you are getting the full and complete service that is being paid for without having the stress of going back with issues after the event.

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