Freeholder was not sent Notice of Assignment upon sale of leasehold property

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  • Freeholder was not sent Notice of Assignment upon sale of leasehold property

    A little background to my problem. I am joint freeholder, with my son, of a number of leasehold houses built by my late husband in the north of England in the 60's. I collected the ground rents from that time until I gave my son responsibility for collection 20 years ago. He has recently handed them back to me to collect - I think I am finding out why ! I am afraid I am having to learn all the new legal requirements of me, as a freeholder, which have changed dramatically since I last made collections and I would appreciate any advice you can give.

    I have found out, through HMLR that, although rent demands have been sent out regularly, 4 of the properties have changed hands over the last 10 years without us being informed, as required by lease covenant, therefore the demands have been sent to the wrong people and have subsequently been ignored. At this point I would say that as the g/r is only £10 per annum we have never taken any action against l/h's for arrears - especially as some of them are elderly, having bought their properties from my husband as new build - except by sending strongly worded reminders to persistent debtors. My questions relating to g/r owed for over 6 years are:-

    Do I invoice for the whole amount owed and wait for 'new' owners to challenge the amount ?

    Or can I only demand 6 years ? If this is the case, do the amount of arrears still left unpaid remain such 'on record' and can I, in the event of the present leaseholder selling on in the future, demand payment of this amount before signing and returning any future N/A ?

    In the event no money is forthcoming, I understand from previous postings that I can approach the relevant mortgage company, what steps do I have to complete before I consider this course of action ?

    Do I have any redress against the present owners for breach of lease covenant by their solicitors not informing us of lease transfer ? Should I now insist upon us receiving, officially, a N/A from them to put our records straight (we have never charged for receiving and returning these Notices, by the way) or do I just refer to the information I paid for from HMLR regarding the present owners ?

    I would add, that in all cases, although the properties are in the North and we are based in the South (therefore not in the same locality) all previous owners, and their neighbours, had our address for serving Notices, paying g/r etc. and we have never been 'absent landlords' in the true sense of the word.

  • #2
    You cannot collect rent that is more than six years in arrears - see section 19 of the Limitation Act 1980.

    Theoretically you may have redress for failure to give notice of assignment. I think you should just do as you suggest and ask for a notice to put the record straight.

    Comment


    • #3
      Invoicing rent waives the breach of failing to notify you of the assignment.

      What I suggest that you write " without prejudice" to the new owner proving your identity as freeholder ( HMLR office copies) and explaining that

      1 When they purchased they were aware of ground rent being due
      2 That their solicitor would have asked the seller about any outstanding rent and should have seen confirmation of payment.
      3 That if rent was outstanding when they purchased they took on that liability.

      While the 6 year limit is in place, the loss of rent before that could be the measure of damages from the failure to serve the notice. Explaining that, offer that if all arrears are to be paid up to date you will waive any further action, and send demands* for them to pay.

      In practice the legal costs would wipe out any rent due, so this is an attempt to get rent in, and if they refuse then yes prior to forfeiture proceedings you can ask the mortgagee to protect their interest.

      * Demands must contain the name of the landlord and address in England & Wales for service inculding proceedings of tehlandlord and contain a notice re section 166-http://www.lease-advice.org/documents/Form_of_Rent_Demand_Notice.pdf
      Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

      Comment


      • #4
        Thank you so much for that information. I am about to send off the March quarter day demands to some of our other leaseholders, but I shall do as you suggest re: letter first, before sending demand to the couple of 'new' lease holders. Unfortunately, our solicitor has not advised me wisely, and I did send a demand to the other couple of 'problems' whose g/r fell due on the December quarter day, asking for 6 yrs payment, as per my solicitors advice, but I have had no response, even though I did send them proof of my entitlement to collect from them. (We have some leases with Dec/June and some with March/September quarter day payment dates - two 'problems' falling within each due period)

        Comment


        • #5
          As the f/r ownership has not changed for many years, the problem might simply be that it remains unregistered at HMLR- so a leaseholder (or intending leasehold purchaser) cannot verify your ownership. Consider a voluntary registration application.
          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


          • #6
            No, the freehold ownership is registered in our names, this having been done shortly after my husbands death 38 years ago. The previous leaseholders also had our correct address for serving N/A. I would be very grateful is someone could answer my question about any ground rents arrears owing, over the 6 yr limit, and whether or not they remain on record as a debt, recoverable at the time of the next transfer ? I ask this as I have a situation where one of our original old leaseholders, to whom we continued sending demands after the death of her husband in 1999, did continue to pay, but stopped doing so in 2003 despite demands being sent twice yearly. We were aware she was still alive and in residence, via a neighbour, but didn't pursue her for the arrears, kindly/stupidly. We have just received a letter from her family, in response to our December demand, telling us that, sadly, she died last year, the house is for sale and we can only claim the six years anyway, which they are only prepared to pay when the house has been sold! I am about to reply to the letter, but would like to know my position before doing so - thanks to all for your good advice so far.

            Comment


            • #7
              There are two answers!
              1. If you sue, T has a Limitation Act 1980 defence: max. six years.
              2. BUT if T is to sell, the debt >6yrs. is still owing- the Act does not remove it, only the right to sue for it- so you can still lawfully demand all of it AND refuse to issue a ground rent receipt until all of it is paid.
              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


              • #8
                Thank you Jeffrey. We have certainly always avoided the court route for any problems we have encountered over the years and, in the main, resolved most issues successfully. I shall therefore opt for the advice in your second answer, but will have to ensure I keep an eye on the situation as to when, or if, the family manage to sell the property. I wouldn't want another situation whereby there is a possibility they could deny knowledge of our whereabouts for serving the N/A, on the pretext of us being 'absent' landlords who have never collected any rents. Thank you again.

                Comment


                • #9
                  Sorry Jeffrey, but I have given your 2nd answer a lot of thought and would ask the following hypothetical questions:-
                  1. Surely, in the case of a 'bad payer' of g/r a F/h would be well advised not to pursue for debt, if over 6 yrs, but to just wait until the leaseholder sells on
                  and then claim ALL monies due at that point ?
                  2. If a l/h owes more than 6 yrs g/r, what I gather from other posts is that 6yrs is the max F/h can demand payment of. Why? If the 6 yrs only applies in the case
                  of debt being recovered through the courts, why can't the F/h request payment of the total amount due, explaining the limitations of the 1980 Act to the l/h, but also
                  explaining that should they choose to use the Act as a means of reducing payment now to 6 yrs, any outstanding debts over the 6yr limit will still be recoverable in the
                  event of a sale of their l/h.
                  Sorry, but I am trying to find a logical conclusion to this Limitation Act 1980 where it applies to ground rents. The fact that any debts over the 6 yrs are still on record and recoverable, seems to me to make a nonsense of a F/h trying to seek recovery through the courts, particularly if the annual g/r is a pittance.

                  Comment


                  • #10
                    L cannot sue for 'older' debt; but the Act does not release T from them (hence it's still possible for L to refuse to accept Notices of Transfer etc. until they're cleared). L should not try being clever- that way lie major risks!- by:

                    explaining the limitations of the 1980 Act to the l/h, but also explaining that should they choose to use the Act as a means of reducing payment now to 6 yrs, any outstanding debts over the 6yr limit will still be recoverable in the event of a sale of their l/h.
                    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


                    • #11
                      Thank you again Jeffrey. I am glad to say I am not involved in either of the hypothetical scenarios I queried - especially the second one for which I find your answer most intriguing, if not a little frightening !! I am sure there are those who would be most interested to learn what 'major risks' could possibly befall an 'honest Freeholder' whose only motivation is to get all monies owed him, at some point, paid.

                      Comment


                      • #12
                        Easy: saying something innocent can bind one to unexpected consequences.
                        A good example is the need to mark correspondence 'Subject to contract'.
                        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


                        • #13
                          Surely it is misleading to the l/h who is, say, 10yrs 'in debt', to receive a demand for 6 yrs, leading them to believe that, by paying the demand for 6yrs, they have 'got away' with 4 years of payments, which would be the case if the f/h does not point out, when sending the demand, that the older 'debt' is still recoverable at some point in the future ? I would have thought it possible, if the l/h was aware of this fact, then they may be sensible, knowing that they do owe 10 yrs, to pay it all, not wishing to have the problem crop up again, for instance, when they want to sell their home in the future, which may delay their sale.

                          Comment


                          • #14
                            If L demands six years' rent and T pays it, everything depends on the wording of the demand and T's reply.
                            Let's assume for this purpose that the rent is ten years in arrears.
                            1. If L demands six years' (without expressly stating which six), T pays (expressly stating that the payment is for only the last six, and L accepts/banks the payment: L cannot re-demand the earlier arrears.
                            2. If L demands six years' (expressly stating that the six are the earliest six), T pays (without expressly stating that the payment is for only the last six): L can still re-demand the last four years' arrears.
                            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


                            • #15
                              Got it at last Jeffrey - I can put that conundrum, circulating in my brain, to bed now after your masterly interpretation. Thank you, AGAIN !!

                              Comment

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