I own freehold house but am asked to pay service charge

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  • I own freehold house but am asked to pay service charge

    Wastn't sure where to put this post - it seemed the best fit here...

    I have a freehold house in a private road that has blocks of flats in it. There is a management agent for the flats. I have lived there for 10 years and have never been asked to pay any form of service charge - in fact all the house were all individually told that there was no service charge to pay - due to some loop hole... for this post, let's presume that service charge should be payable...

    I have received a letter from the flats managing agent stating:

    1) They have just realised that they should have been charging me a service charge. They have said that they can only back date it for the last 6 years.

    2) They have produced (without any supporting evidence, and not on any headed paper) annual grounds maintenance costs since 2003. They have added it up, divided it by the total number of flats + houses on the road and said that I owe them £1000

    3) They are willing to discount this figure to £500 if all the houses pay by the end of March 2009.

    4) If it's not paid they will put it with their debt collection agency.

    My questions:
    a) How do I ascertain whether I actually need to pay a service charge ?
    b) Presuming that I do have to...can they demand payment so quickly and so menacingly?
    c) How many years can they actually go back?
    d) What evidence of expenditure should they have produced ?
    e) In this situation, i.e. a freeholder, what are the legitimate charges for service charge. How can one ensure that other bits are not just added in ?


    All comments very welcome.

  • #2
    a. As you have no lease, service charge is payable only if reserved in first sale-off deed (probably Conveyance or Transfer) of your house.

    b. See Deed.

    c. The time limit is usually six years for a contract debt, even if reserved by Deed.

    d/e. See Deed.
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


    • #3
      Your solicitor should have explained the position to you when you bought.

      There are two ways of documenting these charges:

      1. There can be a variable rent charge which will be binding on successors of the first house buyer just because they own the house.

      2. There can simply be a covenant in the original transfer from the builder to the first buyer whereby he agreed to pay this charge. There should then also have been a provision requiring any buyer of the house in the future to enter into a deed of covenant directly with the management company etc that is charging for the work. This is because positive covenants (e.g. to pay money) are not binding on successors in title just because they own the property in question, unless they have signed a deed to agree to make the payments.

      So if OP wasn't the first purchaser of the new house
      AND
      there is no variable rent charge (need to ask solicitor who acted on purchase or get a copy of the original transfer from the Land Registry at cost of £5 to check if the words "rent charge" are mentioned)
      AND
      he didn't sign a direct deed of covenant when he purchased, he can't be made to pay.
      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.

      Comment


      • #4
        Unless it is an 'estate rentcharge' [see Rentcharges Act 1977] and the properties are on a building scheme- one of the few ways in which a freehold positive covenant can be enforceable.
        sgbc: you need specialist advice from a solicitor expert in dealing with the recondite rules re rentcharges.
        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
        4. *- Contact info: click on my name (blue-highlight link).

        Comment


        • #5
          Sorry, Jeffrey, should have said "estate rentcharge..."
          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.

          Comment

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