Freeholder applying to the FTT for unpaid service charges

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    Freeholder applying to the FTT for unpaid service charges

    I am freeholder and leaseholder and need to take the other leaseholder to the FTT for unpaid service charges. With the help of people on this forum it has been established previously that my lease does make provisions for ‘fair and reasonable’ service charges. The leaseholders refuse to pay for replacing the roof, damage caused by a leak from their property and last years buildings insurance (this year’s insurance will be due next week). There are also small items on the service charge that they were informed about in advance and they gave the contractors permission to enter their property to complete the work. A Section 20 was served for the roof replacement. All of these items I have been paid for. Their ground rent account has just been brought up to date.

    Applying to the FTT
    1. Can I complete form 6 (Application for an order that a breach of covenant or a condition in the lease has occurred) based on the information above? Or is a determination of liability to pay and reasonableness of service charges more relevant?
    2. Am I completing this form under the Freehold company name (I am the director)?
    3. How likely is it that this matter will require a hearing?
    4. Do I need to list out all of the covenants in the lease which I feel have been breached?
    5. What grounds can I use to support my claim?

    In addition to the above I am also seeking a lost deposit from a contractor who the leaseholders refused access to on multiple occasions (another breach of their lease). If I add these costs in when applying can I take them out if I am successful recouping some/all of the costs from the contractor? Can I add add my legal fees in dealing with this matter. Alternatively, is it advisable to complete a separate money claim online for the unreturned deposit?

    Thanks in advance.

    #2
    Firstly, you have not explained what steps you have taken to discuss these matters with the other leaseholder and you will be expected to try to reach agreement and to narrow down the issues. What reasons have been given for non payment of the charges? Subject to that
    1 Both - you would apply for the reasonableness of the charges and a determination that the leaseholder has not paid those charges
    2 Assuming that the charges are payable to the freeholder, you would complete the form as a director on behalf of the company.
    3 It is almost certain that it will require a hearing
    4 Yes
    5 You would need to set out your case and produce evidence to support it so all items of expenditure should be listed and supported by invoices, proof of payment etc
    The lost deposit may be able to be claimed as service charge expenditure or reimbursement of costs depending on the wording of the lease.
    Legal fees also depend on the wording of the lease. They may be service charge expenditure, costs which may be recovered as administration charges. There is also limited scope to apply for costs to be awarded by the FTT.

    Comment


      #3
      Many thanks eagle2.

      I have been in constant communication with leaseholders for the duration and have documentation to prove what has been said by both sides. The leaseholders have never been asked to pay for repairs and had a contentious relationship with my late father. I have tried talking, writing and 2 different neutral people mediating with no success. They are just unreasonable. They dispute that they should have to pay for the leaking roof because I now rent out the ground floor flat so that should pay for the costs. They have acknowledged that the roof work needed to be done but then refuse access to building control and the contractor, even when the roof was left covered only with plastic sheets in November. They also claim I am responsible for structural damage to there property from 15 years of having the roof leak. I inherited the property 2 years ago and have said I will happily address anything I may be responsible for if they show me.

      Does non payment of buildings insurance give me grounds for breach of lease. They are elderly and I have been told a court will not make them forfeit but I do need them to know I am not going to continue to battle with them to maintain the building where they live and take on the burden of the costs.

      Comment


        #4
        Whilst you should be able to claim that buildings insurance is payable by the leaseholder and the FTT will rule in your favour, that does not mean that you will be entitled to enforce payment through the court because it appears that the leaseholder is making a counterclaim for damage to their property, It looks like there has been a breakdown in the relationship between freeholder and leaseholder and it takes time to mend that relationship. You will not succeed with a claim for forfeiture and the sympathy will be with the elderly couple. I suggest that you jointly instruct an independent surveyor, appointed by the RICS, to consider all aspects of the dispute so that you can start afresh. The alternative would be for you to sell, your family connection is viewed with suspicion.

        Comment


          #5
          The normal approach of non-payment would be through the small claims process. If the leaseholder claims the payments are unreasonable, the case will be redirected to the FTT, as one to determine reasonableness of the charges. The procedure for validating breaches is for non-financial ones, and only when you are going through the motions of forfeiting the lease.

          It is possible to forfeit the lease in these circumstances, but the courts will probably make forfeiture conditional on the leaseholder neither paying up, nor selling up, within a reasonable time.

          Forfeiture for non-payment is only possible if the total debt exceeds £350, or there has been a continuous debt for four years.

          Leases often classify insurance as a rent, in which case forfeiture is definitely an allowed remedy, subject to the above minimums.

          Comment


            #6
            Thanks for your response leaseholder64.

            The total amount for service charges is just under £13k. The wasted costs I incurred were just over £5k. I thought small claims court was for amounts up to £10K? In this instance what is the next best option keeping legal fees to a minimum?

            The lease says the following about expenses. Is this helpful to me in anyway?
            ”To pay all expenses (including solicitors costs and Surveyor fees) incurred by the Lessors incidental to the preparation and service of a notice under section 146 of the Law of Property Act 1925 or any enactment replacing or re-enacting the same notwithstanding that the forfeiture is avoided otherwise then by relief granted by the court”

            Eagle2- As suspicious as my family history may be viewed I welcome any counter claim they bring and will not be selling. If I thought it would be helpful to start again I would.

            Comment


              #7
              This case cannot be considered normal by any standard, I recall that the freeholder made no charges under the terms of the lease for many years, that is likely to be interpreted as the leaseholder having a valid argument for non payment and some sort of agreement existing between the parties even if they do not acknowledge it themselves. It is extremely difficult now for the freeholder to suddenly start charging.

              There is no chance at all of forfeiture in this case and it is not worth wasting energy considering it.

              Neither the court nor the FTT is the best place to attempt to settle a long running dispute. If the lease provides for resolving disputes, it should be followed, otherwise the parties should try to agree how to resolve their differences. Suggesting a surveyor appointed by an independent body was intended as a constructive suggestion which may be acceptable to both parties.

              Comment


                #8
                have just read that the small claims court fee will rise the higher the amount of the claim.

                Once I file through money claim online and the case is referred to the FTT will I then have to pay the FTT fees too? At that point will I then have the ability to say I wish to apply for forfeiture?

                Comment


                  #9
                  The clause mentioning section 146 is fairly standard and why people go through the motions of forfeiting, even when they don't expect that to happen.

                  If you are going after £13k, you probably need a solicitor, who will know how to bring the case as a non-small claims one.

                  You can always go to the FTT to rule on reasonableness, yourself. A ruling in your favour, should make the County Court action a walkover.

                  Comment


                    #10
                    Going for forfeiture is a tactic to ensure the leaseholder pays the costs. It is not usually done with the expectation of actually achieving forfeiture.

                    Comment


                      #11
                      You say that the ground rent has been brought up to date so some progress has been made and the leaseholder acknowledges that something is payable. You say that you have tried 2 different neutral people mediating, were these people suggested by you or by the leaseholder? Have you invited the leaseholder to suggest an independent person to mediate?

                      Comment


                        #12
                        County court action will not be a walkover when there appears to be a valid counterclaim. Claiming forfeiture does not mean that the freeholder will automatically recover costs.

                        The freeholder needs to be seen to be acting reasonably and acting in a heavy handed manner against an elderly leaseholder will be seen as unreasonable,

                        Comment


                          #13
                          Thanks leaseholder64.

                          So I think I will go to the FTT first. I have no expectations (or desire) of them forfeiting the lease but if they have the power to make the leaseholders pay I think I will complete the breach of lease form.

                          They have provided no evidence of a valid counterclaim other then damage caused to their ceiling by the leaking roof (which they delayed being fixed and are surely 50% responsible for)?They also claimed their swollen bathroom door was the result of something I had done (rather then the change in temperature)!

                          Would you advise leaving the wasted costs out for now and taking this issue to county court at a later date if I have no joy with the contractor?

                          Can I do anything to get them to pay into some kind of sinking fund to avoid battles like this in the future?





                          Comment


                            #14
                            You can only call for a sinking fund if the lease provides for it, any monies held would need to be kept in a separate client bank account and money could only be withdrawn for specific purposes set out in the lease

                            Comment


                              #15
                              Dear Seaes56

                              I strongly suggest at this juncture you consult a solicitor before taking next steps without professional advice.

                              Comment

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