Debt Collection Charges allocated to Service Charge account

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    If there is no debt, there is no need to appoint a DCA and a leaseholder would be able to recover any charges from the RMC. The contract with the DCA is probably in the name of the RMC, which may be entitled to recover monies from the MA or the directors. There is a danger of going round in circles because the MA is likely to say that it acted on behalf of the RMC and the directors will probably say that they followed advice from the MA. You probably need to change the MA and educate the directors.


      The RMC is the entity you would have to sue. I imagine the court would treat this as a reasonableness of service charges case and follow their standing rules which are to redirect to the FTT.

      The RMC could then sue the MA. Under exceptional circumstances, it could also sue its directors, but that would normally require first replacing the board, as well as that they had acted beyond the powers of the company.

      It is much more common for charges to be split into smaller instalments, than consolidated, but if consolidated!

      Although one talks about debt collection, this is really collection for failing to make contractual payments. Whilst those often are real debts, in the case of service charges, the service charge normally actually owes the leaseholder, even though there is no way of the leaseholder actually getting back that money, as such. Typical demands are pro-forma invoices, and typical payments are payments on account.

      The contract is broken when the amount becomes payable, and, if they consolidate two demands, one probably becomes payable in about 21 days and one six months after that.

      Incidentally, I find consolidation strange. The normal pressure is in the other direction.


        The RCA presumably charged the individual leaseholders administration charges and it is because those leaseholders refused to pay those charges that you are now being charged the total amount as service charges.

        It should be a simple matter to go to the FTT to disallow the amount as a service charge.

        I am not sure that the RMC can sue the MA or the directors, it would depend on the management agreement and service agreements and the Articles. It also depends on the circumstances, who made the decision and whether they were acting as agent or principal and according to advice or instructions received.


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