The following Property guidance note provides comprehensive and up to date legal information covering:
When a property is being sold the parties need to agree in the contract how income and outgoings are to be dealt with at completion. The contract should deal with the apportionment of occupational lease yearly rents and (if the property is leasehold) the headlease rents. In this note, we assume that the rents are paid in advance and not in arrears (as is usual). If rents are paid in arrears, all that is needed is for the buyer to make a payment to the seller following receipt on the quarter day immediately following the completion date (and a specific contract provision should be included).
The following do not generally form part of the apportionment exercise:
insurance sums (these are usually dealt with separately—the seller cancels the policy and pays over any refund to the buyer to hold on trust for the occupational tenants. See Practice Note: Buyer’s contract negotiation guide—insurance and risk
service charge (again this is usually dealt with separately, not least as a reconciliation is usually required)
sums of a capital nature (eg one-off payments under title or planning documents)
VAT due on apportioned sums (as such sums are outside the scope of VAT)
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