freeholder snuggling to recover arrears

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    freeholder snuggling to recover arrears

    Hi All,

    I have a leaseholder that constantly refuses to pay service charges and ground rent. I’ve had endless court cases but they are slow and I’ve then struggled to get court fees back which have been added to everyone’s service charges including mine!

    I’ve decided to write to his mortgage company explaining the situation this time round.

    Has anyone here written to mortgage company before and did they pay arrears especially for service charges? I am however concerned that they may withdraw his mortgage offer (his ground rent is very high) which would make an already hostile situation much worse!

    Is this likely to happen? How do you guys deal with tricky leaseholders who don’t pay up?

    Thanks in advance!

    #2
    Do you think the mortgage lender will pay the arrears from their own funds or illegally add the amount to the leaseholder's mortgage balance?
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Illegally? Not sure why this would be illegal but yes I would assume they would add this to his mortgage.

      Unless you have ideas of how to force him to pay without another drawn out court case?

      Comment


        #4
        We (RMC) have a leaseholder with long-standing service charge arrears even after a CCJ for an unpaid money claim agreement.

        The only option left is to go down the Section 146 (Law of Property Act 1925) forfeiture route. Our lease states the leaseholder is liable to pay legal costs arising from this action which I guess will considerably add to the debt. The leaseholder has been made aware of this but still not paid.

        I did write to the leaseholder's mortgage lender stating we were planning to do this, hoping the mere threat of S146 action would nudge them to step in and pay. Unfortunately not. They wrote back to say they need a copy of the S146 notice before considering to pay. They did write to the leaseholder telling them to resolve the debt directly but that has had no effect.

        I'm waiting for our solicitor to get back to kick off the process of serving the S146 notice.

        Comment


          #5
          You could send a letter to the leaseholders mortgage provider, they may or may not add the debt to the existing mortgage with or without their consent, it is always better to tackle a leaseholder from a number of avenues including debt collection agency.

          You would need to follow the procedure and ensure you have sent all the statements/demands as per the process.

          Comment


            #6
            You should use the Small claims court run by the County Court to recover arrears of service charge . You can include the court fee in the claim + 8%Interest . But do read the instructions for small claims.

            Comment


              #7
              Originally posted by Gordon999 View Post
              You should use the Small claims court run by the County Court to recover arrears of service charge . You can include the court fee in the claim + 8%Interest . But do read the instructions for small claims.
              Gordon - are you sure you can add interest to a money claim if the lease does not allow for this? The claim may end up before the FTT_PC if contested who would surely check the lease? If the lease does stipulate a specific interest rate (e.g. base + X%) then this should be used instead.

              The money claim fee is automatically added to the amount claimed if the claim is successful.

              Any court action needs to be preceded by a letter before claim of course complying with pre-action protocol for debt claims.

              Comment


                #8
                Yes, just write to the mortgagor , these days they normally ask for a court ruling on the arrears before they step in, but sounds like you have that. You can add your fees and charges.
                Don't worry - they will ( perfectly legally ) add it on his mortgage and won't foreclose just for arrears.
                If they want a S146 notice they are pretty easy to issue yourself or get a solicitor to do it and add the cost.
                simples.

                Comment


                  #9
                  Here is the website giving rules on claiming interest at the small claims court.


                  https://www.gov.uk/make-court-claim-...k-out-interest

                  Comment


                    #10
                    Originally posted by Gordon999 View Post
                    Here is the website giving rules on claiming interest at the small claims court.


                    https://www.gov.uk/make-court-claim-...k-out-interest
                    Thanks Gordon - I am aware that technically it is possible to add interest onto a money claim however this conflicts with other advice on this forum and elsewhere which has stated that the lease solely determines if interest can be charged on late payment and if so by how much:

                    https://forums.landlordzone.co.uk/fo...-an-rtm-charge

                    https://www.fpra.org.uk/qa/non-payment-service-charge

                    One could take the approach of "trying it on" regardless I suppose but if someone has practical experience of what happens at FTT_PC level in this case, that is preferable.

                    Comment


                      #11
                      Bit of a departure here but are you sure that there isn't some kind of insurance policy that would pay out in a situation such as this? E.g. when a freeholder wins a court case against an errant leaseholder but is still not awarded all its costs of bringing/defending the case. There are some cases that make it all the way to the Upper Tribunal or Court of Appeal where I imagine the costs must be eye-watering. How do other freeholders manage to take/defend these cases if there were not some kind of insurance policy to cover these costs?

                      Comment


                        #12
                        Originally posted by Tim_woods View Post
                        Illegally? Not sure why this would be illegal but yes I would assume they would add this to his mortgage.
                        Yes. This is lawfully done by mortgage lenders all the time. A simple letter from the managing agent or freeholder or even a copy of a CCJ is not enough these days to make a mortgage lender pay up. These days mortgage lenders insist on you having already issued a Section 146 notice first. It is only then that the mortgage lender's security is under threat. Under these circumstances, the mortgage lender would pay the arrears and add it to the leaseholder's mortgage (assuming that there is sufficient equity in the leaseholder's flat). If there isn't sufficient equity in the leaseholder's flat, then that's another story ...

                        Comment

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