Should I buy a flat in a block where the management company is in liquidation?

Should I buy a flat in a block where the management company is in liquidation?

0:01 AM, 7th October 2024, About 14 hours ago 6

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Hi, I am interested in buying a flat to rent out but the management company of the block has gone into liquidation.

The estate agent has sold one of the two flats which were already on the market but has suggested that the buyer “took a chance” doing this. I’m struggling to find out what the worst case scenario might be if I went ahead with an offer?

What does the Property118 forum think I should do? Should I go ahead with an offer or best to leave it?

Any advice would be greatly appreciated.

Thanks,

Cathryn


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Tim Peters

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10:15 AM, 7th October 2024, About 4 hours ago

I don't really understand how the MC can be insolvent because if they spend more than they take in, the leaseholders would just pay a balancing charge.

You might he able to check their accounts at companies house...
Are you sure it isn't just being wound up because something else has replaced it... Eg a RTM company?

TheMaluka

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11:49 AM, 7th October 2024, About 3 hours ago

Who owns the freehold? If it is the management company, then walk away or better run away.

Tim Peters

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11:57 AM, 7th October 2024, About 2 hours ago

That would be unlikely because unless there are fire/cladding issues the freeholder owns the land and building so the value of that would prevent them from being insolvent.
Being liquidated is not the same. It's what happens when a company is wound up. I agree be careful, but there may be nothing wrong

Kizzie

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12:45 PM, 7th October 2024, About 2 hours ago

It depends if it’s a 2 party lease or 3 party lease ( freeholder, man co, leaseholder) and the freehold transferred to the man co.so leaseholders each hold a £1 paid up share in the man co registered at Companies House and are co-freeholders.

It depends on why the man co is dissolved.

The MA still collecting service charge etc raises issues about what they are doing with the money and whether that is why the man co is being dissolved because service charge not paid into the man co. The MA not bothering with the lease which is what you are buying is unlawful.

If it’s 3 party the lease may state the man co cannot be dissolved because it is a nominee trust company which holds no assets and only the name can be changed BUt NOT ITS NUMBER REGISTERED AT COMPANIES HOUSE.

You need legal advice from solicitors competent in leasehold

Crossed_Swords

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13:51 PM, 7th October 2024, About 28 minutes ago

It could just be that they haven't kept up with the filing, you need to check urgently. Your lender if you have one will also need to know. Best ask your solicitor as the seller will have to provide this information

@Tim, there are situations where a service charge is not recoverable which could leave the company insolvent unless someone is prepared to cover those costs. Sounds like poor self management

max Gardiner

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15:05 PM, 7th October 2024, Less than a minute ago

If it is only the management company and not the freeholder that is going into liquidation then surely the simple answer would be to replace them. The Service Charge monies should be held in a separate client account under trust and there could be further legal consequences if this has not been done.

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