Precedent Pre-Contract Enquiries, as outlined under the MUD Act 2011, are a set of standard questions raised by the purchaser’s solicitor to gain additional insights into the property’s title. The selling solicitor, in collaboration with the Management Company or its Managing Agent, is tasked with addressing these enquiries. Given the complexity and time-consuming nature of these questions, managing agents often charge a fee for their services. It’s crucial for selling solicitors to notify the managing agent upon the conclusion of the sale, ensuring that the Management Company’s records are accurately updated with the new owner’s details.
The management of common areas within developments, encompassing everything from flats and apartments to houses and commercial properties, is governed by requisitions formerly known as requisitions 36 and 37. These requisitions aim to ascertain the operational status of the management scheme, including arrangements, company, contracts, and the overall maintenance of the common area.
A vital concern for buyers is the assurance that there is an effective management scheme in place, obligating all relevant parties to contribute towards management costs. Often, a management company, comprising shareholders from the development, oversees this process, although deviations from the intended scheme can occur.
The Multi-Unit Developments (MUD) Act of 2011 plays a critical role in this landscape, mandating the transfer of common areas to the owner’s management company, ensuring all owners have participatory rights from the outset. This legislation aims to address issues prevalent in older developments and establish a more structured approach to managing common areas.
When acting on behalf of a vendor in a managed development, solicitors often find themselves at the nexus of complex negotiations, particularly concerning the discharge of outstanding service charges. The management company, responsible for the upkeep and maintenance of common areas, plays a pivotal role in facilitating property transactions. It’s a common practice for management companies or their managing agents to request solicitor undertakings as a precondition for providing essential information required to respond to requisitions on title.
The rationale behind this practice stems from the fact that the provision of services within the development is often contingent upon the payment of service charges. Consequently, the sale of a property presents a unique opportunity for management companies to recover arrears. Solicitors are advised to initially encourage their clients to settle any outstanding charges. However, if the arrears cannot be discharged before the sale closes, solicitors may consider providing an undertaking, provided there are sufficient funds from the sale to cover these debts.
It’s imperative for any undertaking to specify a precise amount, be contingent on the successful closure of the sale within a designated timeframe, and ensure that the proceeds are directed to the solicitor. Furthermore, these undertakings are binding and must include provisions for their fulfillment within a reasonable period, alongside obtaining written authority and indemnity from the client.