Leasehold Deed of Variation for Service Charge

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    Leasehold Deed of Variation for Service Charge

    Hi,

    I’m the freeholder of a block of flats, and we’ve just agreed (myself and the leaseholders) a change to the service charge percentages. I understand that a Deed of Variation is the best way to enact this given that nothing else is changing. I also understand that a simple amendment where all parties are in agreement can be drawn up by ourselves then signed and witnessed. (https://www.thelawhouse.com/what-we-...ion-leasehold/ is one source - “no legal requirement to instruct a solicitor to help you with a deed of variation for property” is how it phrases it, though it strongly recommends legal involvement in cases of more complex amendments).

    For something like this though, simply changing percentages, are we able to enact the change via our own DoV? And does a change like this, where the extent of the property and the length of lease are unchanged, still need to be registered with the Land Registry?

    Thanks

    #2
    You can certainly do this without a lawyer. However, like many things, it is easy when you know how and there is always scope for getting it round your neck. Have a go at drawing up something and post it here. At the same time post the exact wording, including numbering, of the clause which sets out the percentage, confirming that it is the same in all leases. Remember to specify a date when the change is to take effect - ideally the first day of a new accounting period. Finally, please let us know what has motivated the change. Is it simply that everyone has agreed the percentages are wrong or is there some other reason e.g. physical changes to one or more flats?

    Comment


      #3
      The percentages were set ages ago (late 1990s) and there are no records of what led to that choice (the flats are roughly equal sizes (in sq ft) though the service charge split isn’t). The only clue is that the one currently paying more occupies two floors including the roof space, so maybe someone back in the day thought that flat should cover more of the building maintenance. Either way it’s been like that for years, and has led to discussions by the current owners as to whether a more even split would be fairer (everyone benefits from having a roof after all...). Right now the flat owners who would stand to pay more are making plans to move, so any increase in their share shouldn’t disadvantage them, hence their agreement to the change. So it’s a case of convenient timing (though it won’t coincide with the accounting period unfortunately, which I hadn’t considered).

      But it thanks for the advice, and I’ll get a form of words together to see how it looks.

      Comment


        #4
        So here's what we're proposing; I've included the full text (which I hope isn't overkill) but with some details redacted. The actual change occurs in 2 places in this template, once just after the contents, then again near the end.

        We'd like to set a date for this in the near future, though as I posted above, that won't coincide with the accounting period.



        The leases (identical in this respect) currently say:

        THE FIFTH SCHEDULE
        The Service Charge
        (i) ...
        (ii) ...
        (iii) “the Service Charge” means [OLD VALUE] per cent of the total expenditure incurred by the Lessor in carrying out his obligations under Clauses 6.2 and 6.3.

        (Clauses 6.2 and 6.3 refer to repairs / repainting / insurance)




        The Deed of Variation we're proposing is:

        DATED: DD/MMM/YYYY
        DEED OF VARIATION
        RELATING TO
        [FULL ADDRESS OF PROPERTY INCLUDING FLAT NUMBER]
        BETWEEN
        [FREEHOLDER FULL NAME] (LANDLORD)
        AND
        [LEASEHOLDER FULL NAME] (TENANT)

        CONTENTS

        CLAUSE
        1. Interpretation ........................ [Pg number]
        2. Variations of the Lease.................[Pg number]
        3. Tenant's covenant ..................... [Pg number]
        4. Registration of this deed ............. [Pg number]
        5. Endorsement ........................... [Pg number]
        6. Governing law ......................... [Pg number]
        7. Contractual rights of third parties ... [Pg number]

        SCHEDULE

        VARIATION SCHEDULE .......................................... VARIATIONS TO THE LEASE [Pg number]

        The Lease shall be varied as follows:-

        i. In Paragraph (iii) of The Fifth Schedule the words “[OLD VALUE] per cent of the total expenditure” shall be replaced by the words “[NEW VALUE] per cent of the total expenditure” ........................... [Pg number]

        This deed is dated

        HM Land Registry

        Landlord's title number: [TITLE NUMBER]
        Administrative area: [AREA]
        Tenant's title number: [BLANK FOR NOW?]

        PARTIES

        (1) [FREEHOLDER FULL NAME] of [FREEHOLDER ADDRESS] (Landlord).
        (2) [LEASEHOLDER FULL NAME] of [PROPERTY ADDRESS] (Tenant).

        BACKGROUND
        (A) This deed is supplemental and collateral to the Lease.
        (B) The Landlord and the Tenant have agreed to vary the Lease on the terms set out in this deed.
        (C) The Landlord is entitled to the immediate reversion to the Lease.
        (D) The residue of the term granted by the Lease is vested in the Tenant.

        AGREED TERMS

        1. INTERPRETATION

        1.1 The definitions in this clause apply in this deed.

        Lease: a lease of the Demised Premises dated [DATE LEASE ORIGINALLY CREATED] and made between (1) The Landlord (2) The Tenant.

        Demised Premises: [PROPERTY ADDRESS], as more particularly described in and demised by the Lease.

        Rent Obligations: all obligations in the Lease relating to the yearly rent including, without limitation, the obligation to pay the yearly rent, the provision for re-entry on the non-payment of the yearly rent and the obligation to pay interest on any arrears of the yearly rent.
        1.2 References to the Landlord include a reference to the person entitled for the time being to the immediate reversion to the Lease. References to the Tenant include a reference to its respective successors in title and assigns.
        1.3 A reference to the Lease includes any deed, licence, consent, approval or other instrument supplemental to it.
        1.4 A reference to laws in general is to all local, national and directly applicable supra- national laws in force for the time being, taking account of any amendment, extension, application or re-enactment and includes any subordinate laws for the time being in force made under them and all orders, notices, codes of practice and guidance made under them.
        1.5 A person includes a corporate or unincorporated body.
        1.6 Each of the expressions landlord covenant and tenant covenant have the meaning given to them by the Landlord and Tenant (Covenants) Act 1995.
        1.7 Unless the context otherwise requires, a reference to the Demised Premises is to the whole and any part of it.
        1.8 Except where a contrary intention appears, a reference to a clause or Schedule, is a reference to a clause of, or Schedule to, this deed and a reference in a Schedule to a paragraph is to a paragraph of that Schedule.
        1.9 Clause, Schedule and paragraph headings do not affect the interpretation of this deed.

        2. VARIATIONS OF THE LEASE

        2.1 Variations made

        The Lease shall be read and construed as varied by the provisions set out in the Schedule.

        2.2 Lease remains in force

        The Lease shall remain fully effective as varied by this deed and the terms of the Lease shall have effect as though the provisions contained in this deed had been contained in the Lease with effect from [DATE LEASE ORIGINALLY CREATED].

        3. TENANT'S COVENANT

        The Tenant covenants to observe and perform the tenant's covenants in the Lease as varied by this deed.

        4. REGISTRATION OF THIS DEED

        4.1 Application for registration

        Promptly following the completion of this deed, the Tenant and shall apply to register this deed at HM Land Registry against the Tenant's registered title number.

        Requisitions

        The Tenant shall ensure that any requisitions raised by HM Land Registry in connection with an application for registration are dealt with promptly and properly.

        5 ENDORSEMENT

        Promptly following completion of this deed and the Tenant shall endorse a memorandum of variation upon the Lease and its counterpart in the following terms:
        "This Lease has been varied by a Deed of Variation dated [DATE OF DEED OF VARIATION] and made between the Parties".

        6 GOVERNING LAW

        This deed and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales.

        7 CONTRACTUAL RIGHTS OF THIRD PARTIES

        No term of this deed shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by a third party but this does not affect any right or remedy of a third party which exists or is available apart from under that Act
        This document has been executed as a deed and is delivered and takes effect on the date stated at the beginning of it.

        Schedule

        Variations to the Lease

        THE LEASE SHALL BE VARIED AS FOLLOWS:-

        i: In Paragraph (iii) of The Fifth Schedule the words “[OLD VALUE] per cent of the total expenditure” shall be replaced by the words “[NEW VALUE] per cent of the total expenditure”.

        In witness whereof the parties hereto have set their hands the Day and Year first before written.

        Signed as a Deed by
        [FREEHOLDER NAME]
        In the presence of:
        Witness signature
        Witness name
        Address
        Witness occupation

        Signed as a Deed by
        [LEASEHOLDER NAME]
        In the presence of:
        Witness signature
        Witness name
        Address
        Witness occupation




        (And thanks very much for taking the time to look at this.)


        Comment


          #5
          I'll have a look at this later. If I forget jog my memory.

          Comment


            #6
            Sorry for the delay in responding.

            The draft:

            ·hangs together well
            ·achieves the desired object
            ·is written in clear English
            ·cannot be faulted on the grounds that there is anything in to which a lawyer approving it would feel he must object
            ·is not one I would be surprised to see come out of a solicitor's office

            However, it is rather longer than it needs to be. I can shorten it for you if you wish.

            Comment


              #7
              If there's room for improvement (or in this case brevity) then by all means - I'd be very grateful for any suggestions.

              Thanks again!

              Comment

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