Forfeiture Application and outrageous legal fees

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    Forfeiture Application and outrageous legal fees

    Hello, I'm looking for a bit of advice.

    The situation: arrears of £500 of ground rent accrued for longer than six months. This was due to the letters going to the wrong address. I understand this was my responsibility under the lease to make sure it was paid so no quibbles there. The first I became aware of the situation is when they emailed me with a legal pack advising of a court date for a forfeiture hearing. yes, they had my email all along but chose not to use it. Again, I know there's nothing I can do about that.

    Anyway, the arrears were immediately paid as soon as I became aware. I responded to the claim and advised them of this. However, they are claiming 5k (yes, 5k!) in legal fees to bring the claim and say that the only way they will stop the case is if I pay the fees. They claim that under the lease, I agree to pay any and all legal costs.

    Now, these are my thoughts.

    Firstly, the ground rent is now paid thus, does that mean that the basis of claim is no longer in existence? The forfeiture of claim is based on unpaid ground rent, which is now paid.

    Secondly, do the legal fees then come under the remit of an 'administration' charge and if they want to pursue them that should be a different claim?

    Thirdly, the lease is very specific that I agree to 'pay all costs, charges and expenses including solicitors costs incurred by the landlord and/or management company for the purpose of incidental to the preparation and service of a notice under s146 of the law of property act 1925'. There is no provision for any other legal costs. So, as that hasn't happened in this case, they can't rely on that as being an obligation under the lease, can they?

    I'd truly appreciate your help and guidance!

    Thank you!

    #2
    From the situation you described you will be liable for the legal fees and MORE fees if you allow the case to continue.

    As you clearly recognise from your comments it was your responsibility to ensure the new address was notified. With regard to the email address they may have obtained this after the ground rent demand was issued. Typically demands for ground rent are posted. There may be legal reasons for this.

    The lease is a contract and as leaseholders we know ground rent is due. Therefore, even if you did not receive a demand there will be no excuse –legally- for not paying it. The section 146 clause ensures the landlord will be entitled to legal costs.

    As legal costs are administration charges you might be able to pay ‘in dispute’ and challenge the reasonableness at the First Tier Tribunal. Of interest, was the ‘Administration Charges – tenants’ rights and obligations’ attached to the demand for legal costs? However, they will defend the action and claim costs so you are in a ‘no win’ situation.

    If I were you I would take legal advice (you may be able to obtain advice from LEASE) to explore your options and fast. But don’t bury your head in the sand or delay. Make the case go away to save more costs. I’ve read frightening stories re legal costs so it may be best to pay up and put it down to a very bad experience.

    As they have accepted ground rent they have acknowledged you as a leaseholder so will not be able to pursue forfeiture. You’ve paid now anyway. But, this will not prevent them pursuing you for the £5K plus more legal fees to pursue you for payment.

    You might try to negotiate fees to a lower level OR ask a solicitor to do this for you. In fact in these circumstances I would definitely use a solicitor to settle and ensure documents are received confirming it is the end of the matter.

    Good luck and sorry my post was not good news.


    Comment


      #3
      Before, I think, 2002, ground rent was due even without being demanded.

      However, £5k sounds excessive. Did they issue the Administration Charges Summary of Rights Notice. Failing to to do this only delays the process, including delaying the start of additional fees for the collection of the administration charge debt.

      Comment


        #4
        It is strange that they were aware of your email address and served you a legal pack to that email address. Legal papers are usually served by post. It suggests that they were aware that you were not receiving correspondence and they could have contacted you by email before commencing legal action.

        Was the ground rent demanded correctly? Did you receive s166 notices? Was payment made after the claim was issued?

        The legal fees are administration charges, have you received demands with a notice of tenants’ rights and obligations relating to administration charges?

        The sum of £5,000 appears to be unreasonably high and you should be able to reduce that to a reasonable level.

        If the landlord has accepted the ground rent, I do not see how he can continue to claim forfeiture. It is important that your payment clearly stated that it was for ground rent only and that it should not be accepted for any other purpose.

        I would apply to the court for the case to be transferred to the First Tier Tribunal.

        I agree with the suggestion of trying to negotiate a settlement. The correspondence should be marked “without prejudice save as to costs” so that you may refer to it when the question of costs is being considered.

        Comment


          #5
          Some good points raised above.

          Ground Rent has to be demanded in accordance with S166 of CALRA, this means a demand in the correct format must be posted to you at the property address or another address if you have given them one, where were the demands sent ?, if to the property and you didnt check then Im afraid that is your fault.

          There are various pre-action protocols in place but Im not sure of any specific ones regarding ground rent, basically a pre action protocol is meant to ensure that the parties communicate and try and resolve the issue before starting court action, did they send a Letter Before Action to you ? (of course maybe they did but you didnt see it anyway), it could be argued that they rushed into forfeiture and therefore all or some of their costs should be reduced.

          As mentioned above, in thios scenario nearly every lease allows a FH to recover legal costs when taking forfeiture legal action AND (an important bit) when contemplating it (i.e he doesnt actually have to go to court), now one of your arguments is how could a few hours with a solicitor cost £5000 ?!, this would seem to be an exaggeration, there are 2 routs to attack this, the standard route is to ask a county court Judge to deem whether the costs are reasonable, as a leaseholder you also have another weapon and that is to ask the FTT to disallow the costs in their entirety (unlikely) or at least to deem whether they are reasonable in amount..(The FTT has the right to judicature on administration charges, as this is what they are).

          As mentioned above, take a close look at any demand for these costs, hey must comply with > https://www.lease-advice.org/advice-...arges-england/




          Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

          I do not accept any liability to you in relation to the advice given.

          It is always recommended you seek further advice from a solicitor or legal expert.

          Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

          Comment


            #6
            £5000 worth of fess is not outrageous, it is scandalous.

            As suggested, you need to check that the demands were in order and the protocols followed.

            It is not clear if proceedings have been started or threatened. Please confirm the position. If proceedings have been started, who is doing the suing? Landlord, management company or solicitors? Is the management company a party to the lease?

            As I think you have spotted, legal costs for forfeiture is not the same thing as legal costs for preparing a section 146 notice which is not required when forfeiting for non-payment of rent.

            I have given a brief account of the position in another forum and a solicitor there says that it looks like a case which should be reported to the SRA. I have given him the URL of this thread and you can go here: http://swarblaw.co.uk/viewtopic.php?...10850&start=10 to see if he has any further observations.

            Comment


              #7
              Thinking about it..there is some good case law on this...I cant recall them at the moment..but one case did say that the FH has to seriously be contemplating forfeiture and have genuinely discussed it with a solicitor and followed that route..if hes kind of just mentioned it in a letter but not shown any real serious actions to follow that route then he cant claim costs....most leases dont allow a FH to recover legal costs but nearly all leases allow recovery of S146 costs..so many FH like to pretend or Imply they are going down forfeiture/s146 route..but in reality they are not.

              Have a look here > https://nearlylegal.co.uk/2017/12/premature-forfeiture/

              There are some more cases on Nearly Legal too.
              Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

              I do not accept any liability to you in relation to the advice given.

              It is always recommended you seek further advice from a solicitor or legal expert.

              Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

              Comment


                #8
                A good discussion evolving. As they cannot use the 146 clause, find out the basis they are claiming legal costs. I would not suggest you do this yourself and would see if prompt assistance from LEASE might be available. Otherwise you may need to incur some legal costs for a solicitor to find this out for you and write to the Court if proceedings are in hand.


                Comment


                  #9
                  Also contact Lease Knowledge Partnership - definitely an organization to speak with that will be on YOUR side.

                  Comment


                    #10
                    Originally posted by vmart View Post
                    A good discussion evolving. As they cannot use the 146 clause, find out the basis they are claiming legal costs. I would not suggest you do this yourself and would see if prompt assistance from LEASE might be available. Otherwise you may need to incur some legal costs for a solicitor to find this out for you and write to the Court if proceedings are in hand.

                    I disagree with this..I think the S146 cause maybe valid.

                    Whilst they cant serve it yet, case law has shown that any incidental or preparatory work maybe recoverable, this can include discussing with a solicitor, writing leters, making an FTT application to see if there is a beach..but as its still he very early stages I would of thought any costs would be in the hundreds and not thousands.if at all.
                    Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                    I do not accept any liability to you in relation to the advice given.

                    It is always recommended you seek further advice from a solicitor or legal expert.

                    Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                    Comment


                      #11
                      Andydd may well be right. That was my original view too (post #2) but after reading Lawcruncher's post and re-reading the clause I changed my mind. I am aware 146 can be used in a wide range of ways re costs that are not always apparent.

                      See 'Freeholders of 69 Marina...' case for example.

                      Comment

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