Service charge arrears admin fees and legal fees added

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    Service charge arrears admin fees and legal fees added

    No longer a leasehold owner myself but posting on behalf of a family member who is. Service charge of £438 for 1st Dec to 31st May due in advance requested by email which he forgot to pay due to family issues (new baby in hospital) he has paid his service charge on time for over 10 years prior. Reminder sent by management company mid Dec again by email, emails not received due to being in the hospital all the time. Reminder email says final notice of arrears will be sent by post, this was never received and I know as I was checking the property and dealing with his post for him.

    Fast forward to yesterday and a demand for £870 arrived in the post from {Mod - solicitors name removed} for the unpaid service charge, £258 admin fee the management agent has added for referral to debt collection agency and £174 fees to {Mod - solicitors name removed}. The £258 admin fee was on a letter from the management company attached to {Mod - solicitors name removed} letter dated 22nd Jan with details on how to pay (no copy every received via email or post) yet {Mod - solicitors name removed} letter dated 25th Jan issued requesting the extra £174 for them on top it also quite clearly says not to contact the managing agent and to only deal with them.

    I don't have a copy of his lease but was hoping to try and get some useful advice for him as to what to do, I fully appreciate he should have remembered service charge was due and paid it but personally I don't see how the £258 admin fee in particular is reasonable or handing it over to {Mod - solicitors name removed} 3 days after adding this fee without giving him chance to speak to them about it or pay first

    Thanks in advance

    #2
    Are the demands for service charge payments usually sent by email? If not, and this is the first time, did the 'family member' agree to receiving the demands this way?
    Were the demands correct, containing all of the required information (including freeholders details and correct form of tenants rights and obligations)?

    ​​The fact that you say that the posted demand was not received might not help you - it may depend whether or not the managing agent has proof of posting.
    If they do have proof of posting, and the letter genuinely was lost in the post, they can claim that all required documentation was included with that letter.

    I would be inclined to write to the management company stating that no 'final notice of arrears' was received in the post and requesting a copy of the notice and all documentation that accompanied it.

    £258 as an admin fee for passing the arrears to a debt collection agency is likely to be unreasonable and will not be payable anyway if the correct statement of rights relating to service charges was not included.

    I would personally be inclined to pay the service charge demand (to the management company) but not pay anything else (at this point anyway).

    Comment


      #3
      You should refer to the lease to see if there is any mention of service of documents and also to check whether or not administration charges are permitted.

      As a general rule, emails would not be permissible unless the leaseholder has agreed to accept them. Posting to the last known address or delivering a letter to the property is usually considered to be an acceptable means of serving notice regardless of whether or not it is actually received.

      If administration charges are payable according to the lease, the amount should be reasonable and the demand should be accompanied by a proper notice. The charge quoted appears to be unreasonable, it is probably for no more than sending a standard letter.

      The service charge should also be reasonable and accompanied by a notice of tenants rights and the landlord’s contact details.

      I would pay the management company (not the solicitor) a reasonable sum for the service charge, make it payable by cheque and write what it is for on the reverse. I would send a covering letter stating that the cheque is for service charges for the period 1 December 2018 to 31 May 2019 only and the cheque may not be accepted for any other purpose.

      Comment


        #4
        How do you ensure that the print is at least 10 point, when there is no physical letter?

        If they have passed it to a debt collection agency, I doubt the agency is going to charge a small amount on the off chance that the payment will be quick. Solicitors are also not noted for low prices for sending letters. In any case, they seem to be claiming that they have already sent the free warning letter.

        I am in two minds as to whether they have escalated too quickly. Assuming that email was valid, there has been plenty of time to pay and we are now around a month later than typical grace periods for payment. I'd certainly argue that there is no excuse for not paying; even without any demand, the leaseholder should have been actively chasing the demand, back in December; it is not as though they didn't know to expect it.

        From what I've seen, if you don't get quite aggressive in chasing, many payments will arrive months late.

        Comment


          #5
          Originally posted by leaseholder64 View Post
          From what I've seen, if you don't get quite aggressive in chasing, many payments will arrive months late.
          Leaseholde64 Exactly what I would expect from you, not really advice but continued support of what we know is a corrupt sector.

          shellonabeach I would ignore this post and concentrate more on whether the lease allows for administration charges. Also check the lease for reference to Section 196 of The Law of Property Act 1925 which deals with how any notice, demand or other shall be served.

          We can all at busy times forget payments if not set up as direct debits or standing orders and as Service Charge payments are possibly only one off payments per year it can happen.

          Aggressive chasing is one thing, how many emails/letters were sent?, debt collection agencies and/or solicitors fees are another thing and if not allowed for in the lease should not be allowed and are certainly not reasonable.

          Comment


            #6
            Probably because there is a tendency by all tenants to assume their landlords are on the fiddle (even if those tenants are someone else's landlord). Even with the true problem freeholders. they rely on mechanism that are there because of real problems for good freeholders.

            Although the solicitor's name has been, correctly redacted, they appear to be a specialist firm with experience of FTT cases and upper tier appeals. I really cannot see them as being in league with the freeholder. I suppose they could have been sloppy about whether the administration charge was payable but I doubt they really want to end up having FTT rulings against them.

            That only leaves the debt collection agency to be in cahoots with the managing agent. Possible, but seems unlikely to me.

            It is difficult to find debt collection agency fees. The nearest I can get is that, in Australia, they would be charging 20-25% of the debt, so it looks as though that may be a bit excessive. Judging by the solicitor fees, I think they are talking about having gone past the LBA stage, so I assume that the missing letter was the LBA. One firm seem to quote £10 + VAT if the debt is cleared at the LBA stage.

            On timing, I did say that they might be acting a little quickly, but a proportion of leaseholders will take months to pay if there is no credible threat of enforcement, and once the LBA is issued, things are likely to escalate quickly. Although there is a question about the LBA, there were two (email) reminders before it.

            I can't see many of the landlords here taking it as a trivial issue, if their tenant is over a month late and appears to be ignoring them. At least one regular would say issue S8g10 immediately.

            Incidentally. we don't even know that the freeholder is a big one, it may be an RMC. We don't seem to be dealing with someone with huge service charges.

            Comment


              #7
              I agree that LH64 is once again demonstrating his natural bias and making generalisations which do not assist anyone.

              It is up to the managing agent to get to know the leaseholders and to act reasonably according to the circumstances. Here we are told that the leaseholder has always paid service charges promptly over the last 10 years and I think that it would be reasonable in the circumstances for the agent to make contact with the leaseholder and politely enquire if he has overlooked the payment.

              Service charges are not payable until a demand has been made in the proper manner and there is no valid reason for a leaseholder to be chasing the managing agent and asking him to do his job, for which he is no doubt being charged. The leaseholder here has more important matters on his mind.

              Without knowing the terms of the lease, no-one here can say for sure whether or not the management company is entitled to make an administration charge. It may or may not be permissible but if it is, it must be reasonable and £258 plus £174 appear to be unreasonable. I cannot see that what may or may not happen in Australia is remotely relevant to the question.

              The one valid point which LH64 makes is that the management company and its agents would not want an adverse decision made by a Tribunal. So if an administration charge is permitted by the lease, I would invite the management company to apply to a Tribunal to determine whether or not it is payable in this case and if so to determine a reasonable sum.

              If it went to a Tribunal, the questions to ask would be 1 Has the management company and its agents acted reasonably 2 If so, what have they actually done and what is a reasonable charge? If they have simply printed and posted a standard letter, how can they possibly charge the sums demanded? 3 Is there any connection between the agents and the management company? 4 What does the contract between the agent and the management company say? Does the management company receive a proportion of the agent’s charges or receive free services or benefits? What happens if the agent fails to collect monies, is there a charge to the management company?

              Comment

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