# What happens to service charge arrears when a leasehold flat is sold? Who is liable, and the six-month notice

> Who owes service charge arrears after a flat is sold: the 1 January 1996 dividing line, what the buyer takes on, and the six-month section 17 notice.

- Page to cite: https://aeolookup.com/block-management/service-charge-arrears-when-flat-is-sold-who-is-liable/
- Publisher: AEO Lookup (https://aeolookup.com/)
- Section: Block and property managers, Service charges and arrears
- Published 1 October 2026
- Key fact: Under the Landlord and Tenant (Covenants) Act 1995, for a lease granted on or after 1 January 1996 the seller is released from the tenant covenants from the assignment but stays liable for sums that fell due before it, and the buyer has no liability for any time before it. A former leaseholder who is still bound can be made to pay a later service charge only if the landlord serves a section 17 notice within six months beginning with the date the charge became due.
- Sources: Landlord and Tenant (Covenants) Act 1995 ss 1, 3, 5, 11, 17, 23, 24 and 27; Landlord and Tenant (Covenants) Act 1995 (Commencement) Order 1995, SI 1995/2963; Landlord and Tenant (Covenants) Act 1995 (Notices) Regulations 1995, SI 1995/2964, regulation 2; all on legislation.gov.uk, read 2026-10-01.

When a leasehold flat is sold, service charges that fell due before completion stay the seller's debt, and charges that fall due afterwards are the buyer's. Under a lease granted on or after 1 January 1996 the seller drops out of everything later. Where a former leaseholder is still bound, the landlord has six months from each due date to serve a notice or lose the claim against them.

The rules are in the Landlord and Tenant (Covenants) Act 1995, which came into force on 1 January 1996 and applies in England and Wales.

## Old lease or new lease

| | Lease granted on or after 1 January 1996 | Lease granted before 1 January 1996 |
|---|---|---|
| Seller, for sums that fell due before completion | Still liable. Release does not affect a breach that happened before it (section 24) | Still liable |
| Seller, for sums falling due after completion | Released from the tenant covenants as from the assignment (section 5) | The release in section 5 does not apply (section 1). A former leaseholder who remains bound can be pursued, but only with a section 17 notice |
| Buyer, for sums that fell due before completion | No liability in relation to any time before the assignment (section 23) | The Act's rule in section 23 does not apply; take advice before claiming old arrears from a buyer |
| Buyer, for sums falling due after completion | Bound by the tenant covenants as from the assignment (section 3) | Outside the 1995 Act; the demand goes to the current leaseholder |

A lease granted after 1995 under an agreement or option made before 1996 counts as an old one. A deed of variation that amounts to a surrender and regrant makes a new one.

If the sale was made in breach of a covenant in the lease, or the lease passed by operation of law, section 11 holds back the seller's release until the next proper assignment.

## One sale, by date

Flat 9 has a 4.5% share and pays £1,215 on account on 1 April and 1 October. The lease was granted in 2004. The October 2026 demand is unpaid. The sale completes on 13 November 2026.

1. The £1,215 due on 1 October 2026 fell due before completion. It is the seller's debt and stays so after the sale. The buyer does not owe it.
2. The £1,215 due on 1 April 2027 falls due after completion. It is the buyer's.
3. The balancing charge for the year to 31 March 2027 is demanded with the accounts in September 2027. It falls due after completion, so the demand goes to the buyer, although more than seven months of that year were the seller's. That is our reading of sections 3 and 23, on the usual lease wording that a balancing charge is payable once demanded; a buyer's solicitor may argue otherwise. Conveyancers usually avoid the argument by holding back part of the price as a retention, which is between buyer and seller and does not bind the landlord.

Where a lease makes the charge payable on the usual quarter days (25 March, 24 June, 29 September and 25 December), the same test applies to each. A sale completing on 18 December 2026 leaves the quarter due on 25 December 2026 with the buyer.

## The six-month notice

Suppose the same lease had been granted in 1988 and the seller was still bound by its covenants. The buyer then fails to pay the £1,215 due on 1 April 2027.

- Section 17 treats a service charge as a fixed charge. The former leaseholder is not liable for it unless, within six months beginning with the date it became due, the landlord serves a notice saying the charge is due and how much the landlord intends to recover.
- Six months beginning with 1 April 2027 ends on 30 September 2027. A notice served on 1 October 2027 is too late for that charge.
- The notice must be on Form 1 in the 1995 Notices Regulations, or substantially to the same effect. A notice in any other form is not effective (section 27).
- The sum claimed is capped at the figure in the notice, unless the notice warned that it might be found to be more and a second notice follows within three months of that finding.

Each charge has its own six months. Diarise the notice at four months, not six.

## When the sale enquiry arrives

1. Find the date the lease was granted. It decides which column of the table applies.
2. Before stating a figure as arrears, test the demand behind it with the [demand checker](https://aeolookup.com/block-management/service-charge-demand-validity-checker/). A sum on a defective demand may not yet be due.
3. State the arrears to the proposed completion date, and list separately what has not been demanded yet: the year-end balance, any works under Section 20 consultation, and costs covered by a section 20B notification.
4. Ask for notice of the assignment as the lease requires, with the buyer's address for demands.
5. After completion, send the next demand to the buyer. If the seller's arrears were not cleared, write to the seller at the new address using the [arrears letters](https://aeolookup.com/block-management/service-charge-arrears-letter-template-managing-agents/).
6. On an old lease, diarise the section 17 notice for every charge the buyer misses.

Wording for the reply to the conveyancers:

> As at [date], £[sum] is outstanding on Flat [number], demanded on [date] and due on [date]. The following have not yet been demanded and will fall due after the proposed completion date: the balancing charge for the year ending [date], which is not yet known; [any Section 20 works and estimated share]. Sums falling due after completion will be demanded from the leaseholder at that time.

## Forfeiture

The 1995 Act deals with who owes the debt. Whether a lease can be forfeited for unpaid service charges is a separate question with its own limits, which the arrears letters guide sets out. We have not covered whether a landlord can forfeit against a buyer for a seller's arrears; that needs advice on the lease.

Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) can set up an AI Arrears Chaser that checks each demand carried the statutory information before any letter goes out and logs every letter and reply against the account.

This is general information for England, not legal advice.

## Short answers from this page

**Who is liable for service charge arrears when a leasehold flat is sold?** Sums that fell due before completion stay the seller's debt; sums that fall due afterwards are the buyer's. Under a lease granted on or after 1 January 1996, the Landlord and Tenant (Covenants) Act 1995 releases the seller from the tenant covenants from the assignment, and the buyer has no liability for any time before it.

**How long does a landlord have to serve a section 17 notice on a former leaseholder for unpaid service charges?** Six months beginning with the date the charge became due. A charge due on 1 April 2027 needs a notice served by 30 September 2027. The notice must be on Form 1 of the 1995 Notices Regulations or substantially to the same effect, and the claim is capped at the sum it states unless it warned that the figure might be found to be higher.

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General information for UK small firms, not legal, tax or financial advice.