FH says I'm in breach for not paying service charge demands not properly formatted

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • FH says I'm in breach for not paying service charge demands not properly formatted

    For the 15 years before our top-floor neighbour in this three-flat long-leasehold house acquired the one-man-band freehold company that owns the freehold of the whole house, we got on fine. She then demanded Ground Rent without using the necessary format so I asked her to use the correct one and when she did, paid it promptly.

    She then sent me service charges without the summaries of rights and obligations the law demands so I told her that they too must be in the right format or I can 'safely ignore' them. She added a large annual fee for managing the service charge (only one item, insurance) and ground rent (£50 twice yearly).

    I told her I felt the fee she added was too high, and that, if she sends me a legal service charge demand correctly formatted I will pay it immediately, pointing out that as soon as she did this with the Ground Rent, I paid that immediately in full. She just ignored me and started to send regular hand-written letters listing the outstanding service charges plus the high interest rate the lease allows for, with no statutory statements accompanying. I gently reminded her that, to be payable, the service charge demand needed to be in the correct format, as she had eventually done with the Ground Rent demand.

    She then undertook an S20 process (correctly as far as I can see) to have a huge repainting and driveway job done, and added 20% 'contingency' for various parts of it. She must have guessed, based on my lifestyle, that I would find it very difficult to pay my share - more than ten thousand pounds. She refuted most of my detailed comments and refused to even reply to my request to have the works verified by a qualified person in advance, or to have 'before' and 'after' photos taken. She refused a phone call, a meeting or mediation. She didn't reply when I asked her if her company had a redress scheme.

    She has now sent me an 'INTERIM SERVICE CHARGE' (payment due 21 days after she issued it) for my share of the S20 works and added a year's service charges (even though the service charges are not due till January of next year). It is a single page list of charges, not accompanied by the summaries of rights and obligations I understand are needed to make it legal.

    I pointed this out again and she then wrote to say that if the money is not paid within seven days she will issue legal proceedings to forfeit my lease, which still has 97 years to run.

    I'm feel harassed by these illegal demands and have told her so, repeatedly. She maybe doesn't realise that I live on the bare minimum state pension and all my cash is in equity less the interest-only mortgage. Being forced to sell to pay back the S20 loan I've taken out means having to leave to move to a rented place - not easy with no income.

    As far as I can tell reading these forums, if I apply to the FTT so as to get her to send legal demands to me so I can pay them it will cost £200 (that I might be able to get back as I'm poor if I win) but if I lose I will have to pay her legal costs too. I cannot afford any legal advice.
    It also seems that even if I win she can add her legal costs to the service charge. The FTT might tell her not to, but they might not.

    I am facing having to sell my home for works which could have been done far less expensively, but as I'll be being sued, the FH will prevent the sale and anyway I'll have to accept a price many thousands less - help!

  • tenant1952
    replied
    Thanks eagle2, will do.

    Leave a comment:


  • eagle2
    replied
    It depends on the wording of the lease but the freeholder is required to account to the leaseholder whoever he happens to be at the time. The freeholder must carry forward a credit even if it is not actually paid. Your agreement would be with the purchaser, not with the freeholder, and it would say that you would be entitled to any credit arising from the contingency fund for the works. Your solicitor would need to word it carefully so that the purchaser would pay you and he would receive the benefit of the credit against future charges.
    I suggest that you try again to talk to your freeholder. Let her think that she has won and you are going to move out and pay her reasonable charges. It is unlikely that she will want any hassle.

    Leave a comment:


  • tenant1952
    replied
    Thanks eagle2 - I thought the FH could hold service charge overpayments (20% contingency for works done that doesn't get used) in credit against future LH service charges? The FH can anyway refuse to return them, again because it would be too trivial for the FTT to process the case so knowing that, the FH knows that the LH has no real recourse?

    Leave a comment:


  • eagle2
    replied
    It is not uncommon for arrears to be paid out of the sale proceeds, the purchaser simply needs to know that there are no arrears being handed over to him. There would be no ongoing dispute as long as you deal with it ie either pay or agree to pay the amount determined by a Tribunal. The freeholder will have to account for the 20% contingency added on when the works are completed. You can ask your solicitor to include a clause in the sale contract so that any refund would be paid to you at that time. The purchaser may or may not agree to such a clause in which case you would have to decide whether or not it is worth losing the sale. Your selling price should include the benefit of the works because you have paid for the cost and the purchaser should pay nothing.
    It is unfortunately, an unfair world and although you have "rights", it can be a long and expensive process pursuing them. A freeholder can push to the outer limits the amounts which can be claimed as being "reasonable".
    It is sad but for all the statements made by politicians about reforming the system, introducing commonholds and addressing the exploitation of leaseholders, limited progress appears to have been made.
    I suppose that we are lucky that leases are no longer hand written as they used to be in the old days.

    Leave a comment:


  • tenant1952
    replied
    Thanks so much eagle2 - it's incredibly valuable to me to receive your advice. I don't otherwise have access to experienced voices so am in the dark, as you can probably tell. For someone to take the time to freely contribute reflects the world of 'experts helping people in times of need' as I'd like it to be and I thank you for it.

    I didn't realise I could effectively delay payment until I was about to exchange. I can see the great benefit of letting both sides' solicitors become proxies - it eliminates any 'vexatious-ness' and allows conduct to be normalised. Don't see how it'd work for me in practice though as I've read here that new leaseholders 'step into the shoes' of departed ones.

    At the moment, me paying 20% contingency means that any new potential buyer will be in credit for a good few years if the job does not wildly overrun (which it might but let's assume not). So any 'deal' I can strike with the FH benefits the new buyer alone, not me, doesn't it?

    So although I'd not be risking my home, I cannot 'win' anything can I and still risk costs going against me? More important (to me) is the pressure that I assume every solicitor will put on any potential buyer to steer clear of transactions with ongoing disputes if possible. That's why I have to give in, pay up, let the FH carry on abusing me and future LHers and start to try and make things less bad between us - they couldn't be much worse with one threatening to forfeit the other's lease.

    It seems to be a buyers market at the moment with prices falling so my potential buyer will have a wider choice than normal and my place, although I think it's marvellous, is not very distinct from those currently for sale nearby. The fact that my place will be being put up for sale before the works complete is a shame too - hope the estate agent will decide to price in the improvements.

    What I continue to find surprising is that, given that the FH has broken the law and technically I am simply using my right to withhold, in fact the FHer has already won because they experienced people in this field will know they can all ignore the trivial rules they don't like and LHers can't do anything about it. That's wrong.

    I can see lots of contentious areas caused by existing laws and lots of flouting because the law simply doesn't cover the changed circumstances that modern developments bring about. That's down to the politicians who make the law and the lawyers that advise them. It seems a broken system to me, terribly old-fashioned and backward-looking. That's not because I was defeated, it's because I can see how many others are.

    The language leases are written in is an obvious symptom of a domain stuck in a world that is the very definition of 'old-fashioned'. Tradition is good for those codes that people don't want to change, but surely the law ought not to thwart the majority in whose interests it must act? Not bind us to a Dickensian past, There is so much continual progress in writing, interpreting, implementing and maintaining complex sets of rules made in other domains that I'm disappointed that the property industry seems to a lay observer to be hopelessly detached from modern practice and driven by exploitation.

    Leave a comment:


  • eagle2
    replied
    I agree that I am not legally qualified to answer all your questions, I have simply given my opinion based on years of practical experience. I am assuming that you do not want all the waffle and disclaimers and large bills, which you will not recover in full even if you "win". Unfortunately, leasehold property is full of contentious areas where you can spend your life arguing points with your freeholder or management company. Even "winning" can be expensive and time consuming. No legal expert can give you full and proper advice without seeing the argument on behalf of the freeholder and in my experience, there are risks with all legal action no matter how strong your claim. For what it is worth, in my unqualified opinion, there is a negligible chance of your home being forfeited and you do not need to worry on that score. You seem to have a good chance of success of avoiding interest and administration charges and delaying payment of service charges but as you say, there can be no guarantee. I think that regardless of what is said elsewhere on here, the ongoing relationship with your freeholder is the most important issue for you to consider and you seem to agree. Your freeholder cannot prevent the sale of your property, she can ask for the arrears to be settled before the sale is completed but you can ask your solicitor to negotiate a reasonable figure with her solicitor or you can offer to set money aside from the sale until the actual amount is determined by a Tribunal. Your peace of mind is more important than arguing over whether or not notices are valid.

    Leave a comment:


  • tenant1952
    replied
    Thanks fos333 - I had contacted the LKP before posting and recognise them as heroes, if only be reading their website (http://www.leaseholdknowledge.com), which is full of forthright comment.

    I got an immediate, helpful, sympathetic and constructive response from a senior member - Mr Sebastian Kelly. He gave me the name of a solicitor known to be good at this but I didn't have the heart to tell him I couldn't afford to approach her. I see solicitors as the best refuge for those needing accurate advice but I am denied that due to my poverty.

    I have looked at applying for the pro-bono scheme (need to be referred by an agency and there is a wait of several months) but will they take on such a trivial case? I doubt I get to pick the pro-bono person so how can I know that the pro-bono person I'll have assigned to me has any experience whatsoever of lease forfeiture? Or did I get that wrong too and practically all pro-bono people are likely to win the case for me and at a minimum, shield me from the risk of having to pay out costs?


    Thanks so much andydd- I recognise such valuable input from someone immersed in the reality of this process, whereas I've only ever been in court once, many decades ago on jury service, so only know what I can pick up by googling. As you write, the FTT, being human, can be inconsistent and so are unpredictable. That adds significantly to my risk.

    --------------------------------
    Forgive me for going on about this, but, apart from my children, there's nothing more important that my home.

    As is stated in this thread and in other places generally in this forum:
    1) the FTT are able to back up my claim - but sometimes they don't.
    2) They are able to prevent the FH from passing on one third of the resulting costs to me - but sometimes they don't.
    3) The FH has technically broken the law - but sometimes the FTT decides that is too trivial to matter as they might very well see my claim as vexatious, given it's such a tiny point of law.

    In other words, it's risky but I might win.

    If I lose I lose my lease, which is worth hundreds of thousands of pounds and will make me homeless. I realise it's very, very unlikely I'll forfeit my lease but how much of a risk with my home can I afford to take? If I became the first case in history of someone forfeiting their lease it would offer me no shelter.

    The biggest issue for me here is that I cannot trust the advice of any one solicitor, for the reasons given. None will ever say 'you will lose' (otherwise I would withdraw) and none can say 'you will win' (as they cannot be sure) so I can't afford to litigate if I want to guarantee not to lose my home.

    Not only must I pay up, but I must submit to years of future abuse, exorbitant charges and illegal demands. I can't stand that and can't afford to repay what I've been forced to borrow by the FH's demands so must sell up and move out. I wouldn't be surprised to receive demands for a lot more money in the near future as the work starts and the FH is held hostage by her one-man-band builder who will doubtless purse the 20% contingency and more.

    The need for a huge amount of extra work may be discovered. It seems it often is where older people are concerned. Ours is a three story very tall one in what has become a very expensive part of the country. I will have to pay that too without redress. That's because, if I raise issues it'll have to be through the FTT as the FH simply ignores my letters. I expect she'll pay a solicitor to pursue her demands and I will have to pay those costs too.

    If I withhold, the FH can prevent the sale of my flat. It's vital I sell as I cannot continue for much longer making loan repayments that consume such a large proportion of my only income and I doubt I can obtain any more loans as I've maxed them out. My state pension is £159/week (it's actually less because I get pension credit, which doesn't make up the full amount as I am a one year short of the 30 years of National Insurance payments needed. Of Cornish stock, I went to live abroad after Uni for a while).

    Leave a comment:


  • andydd
    replied
    Some rather worrying waffling posts on here..firstly..the OP asks for advice..its odd to then refer them to other sites.

    Secondly surely we should deal with the legal position not opinion on the relationship between LH & FH.

    As correctly stated a LH has a right to withhold payment of SC if incorrectly demanded, although bear in mind it prob would eventually be payable.

    BUT until that time..any admin/penalty/interest charges are not payable, strictly speaking any legal action should fail..you are within your rights to ask a court to sim,ply strike out the claim, oddly though many FTT dont follow this and instead they o on to argue that the sums WILL be payable eventually..this is wrong IMO but as many of us know FTTs are often not Judges and sometimes have a bizarre view of the law..its worth noting that thje FT rules do mirror the court CPR rules in allowing all or parts of a claim to be struck out.

    Leave a comment:


  • fos333
    replied
    Originally posted by tenant1952 View Post
    it's pretty clear to me that I cannot obtain a way forward with LEASE. The forum replies I've gotten here show clearly the truth, which is that I don't have a leg to stand on - I should have realised that before I started to try and get the FH to follow what are after all trivial aspects of the rules.
    Hi tenant1952,

    I am not legally qualified neither are those who have also responded to your enquiries.

    What I am sure of is that the 12% added on interest, even if allowed in the lease, is not payable if the Service Charge demand has not been accompanied by the correct Summary of Rights and Obligations. Any further demand in line with the lease for late payment would be an administration charge and again would have to be accompanied by the correct Summary of Rights and Obligations. The two are different from each other and the correct one has to accompany the demand, if and until it does the demand does not have to be paid.

    The link I initially posted and posted last is not for Lease Advisory Service but for Leasehold Knowledge Partnership, as stated they are a registered charity and will be in a position as such to offer you experienced free advice.

    If you are worried or concerned that you are being forced to give up your home I strongly recommend again ringing or contacting the persons on the following link;

    https://www.leaseholdknowledge.com/

    I would not in your position accept the advice given here, however good the intentions have been. I am not in a position to offer any other advice than to speak with one of those listed above.

    Leave a comment:


  • tenant1952
    replied
    Thanks eagle2 - really appreciate your sound advice. I've realised from the wonderful help I've gotten here that I cannot win anything, I should never have assumed I could. What I considered unreasonable and illegal are not grounds for getting the FHer to change - I am powerless to do that, the law isn't on my side. I misunderstood the way things work and misjudged the strength of my case. I thought the FH would understand that she had broken the law and would change so as to conform to it - didn't realise she can get away with not doing so and worse, can force me to pay over the odds because the case is so trivial that the courts couldn't be bothered.

    I have suggested face to face meetings (and mediation by phone call) but she just ignores me. The other LH is older and just wants a quiet life, doesn't want to get involved and will go along with whatever the FH says.

    Thanks paulamis - really helpful to know - never occurred to me that of course my mortgage company would step in and shovel costs onto me. After all, it's my fault all this has even happened. I am going to sell the place, use some of the proceeds to pay back the loan I've taken out to cover these costs and move on to some where much cheaper with the proceeds. I've never made a mess of a property transaction before (having bought and sold a few houses over the years the family grew up) and hope this is the last time I misunderstand how the FTT system works in practice.

    Thanks fos333, appreciate the input and thanks again for helping me. it's pretty clear to me that I cannot obtain a way forward with LEASE. The forum replies I've gotten here show clearly the truth, which is that I don't have a leg to stand on - I should have realised that before I started to try and get the FH to follow what are after all trivial aspects of the rules. A danger with the LEASE advice is that they won't be open (due to legal people having to be incredibly cautious and never say clearly 'you'll lose', unlike this forum, where I can see people with decades of experience distilling it down in a really helpful way, so I am learning from that.

    Leave a comment:


  • fos333
    replied
    Hi tenant1952,

    As I stated in my first post contact those listed in the following link;

    https://www.leaseholdknowledge.com/

    There are two email addresses, two telephone numbers and a help form listed.

    They are a registered charity and can provide you experienced free advice.

    Hopefully they can provide you with the help you require.

    Leave a comment:


  • paulamis
    replied
    Without knowing the circumstances fully it is hard to be definite, and I am not qualified to give advice, however actual forfeiture hardly ever happens.

    I have heard of a couple of people fighting a point of principal to the point of bankruptcy in the high courts forcing them to sell, but you will not do that if you heed the suggestions of the others here.

    In general, the mortgage company (you mentioned negative equity) would step in and pay the bill [to preserve their security], the extra going onto your mortgage or as an extra secured loan, depending on the terms of your mortgage. Some freeholders will even send you a form so that you can admit the debt in such a way that they can pass straight to mortgage company to pay skipping the court proceedings.

    If you own outright it is harder.

    Leave a comment:


  • eagle2
    replied
    The FTT would consider what is reasonable and that does not mean accepting the lowest quote. You may have grounds for complaint if the contractor is connected with the freeholder and she has not obtained an independent quote and you may have grounds for complaint if the freeholder has added a management fee and cannot justify the time. Your difficulty seems to be that you can perhaps win a battle, I cannot say because it is impossible to know what arguments the freeholder would put forward, but if the other leaseholder is not going to back you up, it is going to be difficult for you to win the war..If you "win", the freeholder simply has to go away and serve proper notices or obtain a different quote and you are still in the same position, so I can only repeat that the best option seems to be to suggest a meeting of all 3 leaseholders to discuss the matter sensibly and try to reach an amicable solution or move and leave the freeholder to learn the hard way how to manage properly.

    Leave a comment:


  • tenant1952
    replied
    leaseholder64 thanks once again for your professional insight.

    I headlined this post 'breach' I'm facing lease forfeiture because of a breach (not paying illegal demands) and can lose my home. The unreasonable S20 loss pales beside that. Although I'm older than the FH, I feel sure, having had experience, that I could have the work done more safely for half the cost but I fully understand that an obligation on FHers to get so closely involved as to scrape around for every penny of best value is not feasible. She probably simply values her time at a much higher daily rate than I do, even though we're both past retirement age. She probably just wanted to hand the entire thing over to the nicest contractors she encountered and not worry about the costs as she only pays one third of them and can probably add an extra 15% "management" fee to them.

    It never occurred to me to consider that I am not "suffering any loss as the result of not having the statement of rights, as you already know what is in it." - would that mean that a second parking ticket on my car could be less formal? It really is helpful to get this insight because it underlines the mistake I made. I was treating the law as if I had made it, as if it was something I would consider fair and reasonable but who am I to judge? I should have realised that it must be based on far more inclusive considerations than I could ever encompass, over a far longer period. I'ts really hard to make judgements - I guess I have to blindly follow what the legal profession advise, in effect 'trust them'. As I can't afford legal advice, I really appreciate this forum even more.

    I hope it's true that lease forfeiture is incredibly rare and the chances of me doing so would have been practically zero had I not paid up. I want to tell her that in case it happens to her again. She could end up losing lots of money.

    paulamis thanks for your kindness in responding but if I don't pay the interest, she will still pursue me for a breach, won't she? She will be able to refuse to let any future buyer complete unless it's paid, won't she? What I thought I could do is add 'Liability not admitted' to the payment - then maybe a future LH can revisit this?

    Leave a comment:

Latest Activity

Collapse

Working...
X