Landlord is threatening with legal action for £600 of service charge arrears

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    #31
    You should not take legal action, you should wait for the freeholder to take legal action, that way the burden of proof lies with him.

    The freeholder and the MA may be associated, you should ask to see the management agreement and consider who has signed it. The question of the reasonableness of the management charge should be considered.

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      #32
      Originally posted by johnwilkes View Post
      I have noticed (just now) that MA are registered at the same address as the Freeholder. Reason for concern?
      They are agents, so act for the freeholder (or manager), not you, even if they are an unrelated company.

      They may simply have created a managing agent because that is the only way of recovering administration costs. There is generally no requirement to have a managing agent at all. The freeholder/manager can manage directly.

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        #33
        Thanks! I see...I do not want to take any legal action and I pointed it out to them many times. I am meeting with another leaseholder later tonight who also had a similar dispute with them.

        The reason I asked about Freeholder is that I wanted to write to them (as was recommended here) but taking into the account it will most probably end up on the desk of the same person...

        I have prepared the draft letter which I will post next week and see what happens. Another option will be to pay everything without prejudice simply to avoid costs building up but i am not willing to set up a precedent for them. There is definitely a mismanagement and I am not the only person having problems with them.

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          #34
          I am also looking for solicitors for a legal advice and also to consider an application to Property Chamber to vary the lease. A few provisions are contradictory.

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            #35
            " 'the certification of the accountant referred to in Paragraph 5 of Part 9 shall (subject as hereinafter mentioned) be binding on the Landlord and the Tenant' "

            "There is also an arbitration clause under which, if there is a dispute, it can be referred to RICS and it will be binding."


            I would be surprised if either of the above clauses could be considered binding on the tenant.

            Leaseholders always have the right to challenge service charges via tribunal, if they haven't waved that right by agreeing to the charges, etc.
            A lease term like the above would not be considered to be agreement.

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              #36
              It is worth contacting the other leaseholders, sharing information and trying to act together, you will be in a stronger position.

              I would definitely not pay anything which is not supported by a service charge certificate or anything which is clearly unreasonable. Payment would be regarded as acceptance of the charges and then the onus would turn to you to take action to recover monies and the burden of proof switches to you. The freeholder’s comment 'we do not know where it came from but you have to pay it' will not stand up in court. I would request that he either explains the charge or removes it from your account.

              If you wish to explain which clauses in your lease you consider to be contradictory, there are some solicitors on here who will be willing to assist you.

              Comment


                #37
                Thanks everyone and Merry Christmas!

                Well, it seems like it will be highly unlikely for me to succeed. I have received all the accounts from the landlord, all are certified by the accountant, so figures presumably are fine. Now, it does not mean they are reasonable but in order to establish this I will need to visit their office and inspect invoices, which I intend to do when I finish with this dispute.

                Also, MA treated wood on balconies but did not do my balcony since I was away. Their position now is - we do not care that you were away, you must have gave us access, now we can treat the wood but you have to pay 50% of costs from your pocket. I have asked for the quote but believe this is not correct. Any thoughts on this? Under the lease, I must give them access but the lease is silent in relation to what happens if I don't.

                Now, clauses. I quoted them already on the previous page I think. What I do not understand is that one clause explicitly excludes expenses related to arrears and another clause (catch all) says that all the expenses have to be paid. Now, MA are playing with this: they put admin charge, then removed it, then said they put it again but in my recent statement (came after they put the charge again) there is no charge. I just want to understand my position now for the future.

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                  #38
                  Originally posted by Macromia View Post
                  " 'the certification of the accountant referred to in Paragraph 5 of Part 9 shall (subject as hereinafter mentioned) be binding on the Landlord and the Tenant' "

                  "There is also an arbitration clause under which, if there is a dispute, it can be referred to RICS and it will be binding."


                  I would be surprised if either of the above clauses could be considered binding on the tenant.

                  Leaseholders always have the right to challenge service charges via tribunal, if they haven't waved that right by agreeing to the charges, etc.
                  A lease term like the above would not be considered to be agreement.
                  I think they are binding. It is a strict contract, which I signed, so cannot see any reason why these terms are not binding.

                  Yes, leaseholder can challenge service charges but only reasonableness, which must be supported by, for example, alternative quotes for services. Otherwise, my application will be lost and I will have to bear costs.

                  Comment


                    #39
                    I believe that FTT trumps any arbitration clause in the lease. There is case law for this for mixed use developments.

                    Did they give reasonable notice of the need to access the balcony? If they did and you failed to give access, you are presumably in breach of a covenant, so the excess charge should be seen as compensation for that breach. It should reflect their real excess cost..

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                      #40
                      Well, arbitration is only recommended and not compulsory. Of course, if FTT rules then it trumps ADR.

                      Found the covenant...so, MA is actually doing more then they should offering me some money, this question is solved now.

                      Comment


                        #41
                        In reality, you would have had no option but to accept the terms of the lease proposed by the freeholder; if you had challenged any of the terms, you would have probably been informed that there is a standard lease which cannot be changed.

                        The reasonableness of the service charges and s19 LTA 1985 is the overriding factor and the FTT will always look beyond the sums stated within the accounts.

                        The limitations of the accountant’s involvement need to be understood. The accountant does not perform an audit and he does not consider the reasonableness of the charges. He is required to look at only a small sample of the transactions and check that they are supported by receipts or other evidence. He will look at whether or not the accounts are extracted correctly from the accounting records but often he will be the person who prepares the accounts. He will also look at the bank reconciliation at the year end only ie one day out of 365. The accountant usually reports to the RMC or its directors and not to the leaseholders; he will usually state within his report that he does not accept or assume responsibility to anyone other than the landlord.

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                          #42
                          Originally posted by johnwilkes View Post

                          Yes, leaseholder can challenge service charges but only reasonableness, which must be supported by, for example, alternative quotes for services. Otherwise, my application will be lost and I will have to bear costs.
                          You are right that a leaseholder can challenge the reasonableness of the charges and it will certainly assist if you have an alternative quote for the same work but there is nothing to stop you from asking the FTT to look at an invoice and determine whether or not the cost is reasonable.

                          There are other issues which you can raise with the FTT eg whether or not a demand was properly issued, whether or not expenditure is permitted within the terms of the lease, the standard of a service, whether or not the freeholder followed the consultation procedure, whether or not a demand is being made more than 18 months after the expenditure was incurred.

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