County Court claim interest claimed on unpaid service charge/dispute

[Macromia]

Macromia the lease requires the Insurance Rent to be paid on the 21st June without deduction whatsoever and a demand for the full proportion paid within 21 days on the landlord expending same...
...
so I have no liability for any insurance service charge monies until the landlord has expended the monies in June and not on some made up date in October.

Again, you are confusing the obligations that leaseholders have under the terms of the lease with the obligations that the freeholder has.

Your lease requires leaseholders to pay the cost of the buildings insurance, without any deductions, by 21st June (and the bit you have now added about "the full proportion" sounds like an obligation for leaseholders to pay any additional amounts that are required within 21 days of a demand being sent for payment of any other expenditure that the landlord has paid out.

However, current legislation means that no demands for service charges (or ground rent) are payable for residential properties until they have been properly demanded with specific information included on/with the demands.

I sincerely doubt that there is anything at all in your lease that would mean that you have no liability for the cost of insurance if it is demanded after 21st June.

You really should tread carefully here, as it sounds likely that you are going to end up paying not only the amounts demanded, but potentially also court fees and court awarded interest.

[Stacker]

Macromia the lease requires the Insurance Rent to be paid on the 21st June without deduction whatsoever and a demand for the full proportion paid within 21 days on the landlord expending same.....the service charge has been demanded 35 days later and they are asking for the service charge insurance rent to be paid in quarterly payments so that they can pay insurance in October 30th, they should be following the lease so I have no liability for any insurance service charge monies until the landlord has expended the monies in June and not on some made up date in October.

[Macromia]

Stacker: This is yet another thread where you have failed to provide important details and instead keep bringing up different issues with each reply that you post (most of which have already been discussed in previous threads).
It again seems like you have already made up your mind and don't want to be listen to anything that disagrees with your opinion.

From what I have seen, I think that you would be wise to provide the details that people ask for - and then seriously consider what is said.

The claimant landlord has made a service charge demand dated 31st August 2020, the demand is very brief without any details of those charges and quarterly payment of service charges are not expressly provided for.

Service charge demands don't have to provide anything more than brief details of the charges. In fact, I don't think that they need to contain any details about what the charges are specifically for at all (although they do need to include some other details, such as the freeholders name and address).
Quarterly charges don't have to be "expressly provided for". Freeholders cannot legally demand service charges earlier than is stated in the lease, but they can send out demands later than the date(s) stated because this will almost certainly be considered to be more advantageous to the leaseholder (unless, or course, the wording in the lease is extremely restrictive and obligates the freeholder to make demands on a specific date, or dates).

The claimant landlord is obligated under the lease to insure the building in accordance with the provisions in the lease, by paragraph 3 the lease makes clear provision paying yearly during the said term First the Annual Rent in advance on the twenty first day of June in every year free of all deductions whatsoever after the expenditure has been incurred by the landlord.

As I said previously, the clause that you are quoting/paraphrasing here appears to be an obligation on the leaseholder. It does not seem to be a clause that the freeholder is required to stick to. In fact, what you have quoted here is something that the freeholder cannot do - it is impossible to demand payment the annual service charges in advance and after it has been incurred by the landlord.

There is no requirement for me to pay any third party or insurance broker.

So don't pay anything to third parties, send all payments direct to the freeholder.
This has been said in other threads you have started, and is an extremely simple solution.

That the claimant landlord is obligated to insure the communal parts of the building and indeed the building as a whole

I don't remember you posting anything at all that suggest that they haven't done this.

The claim for interest has not been adjudicated as these proceedings are in process and no award of interest under the County Court Act has been made.
Recovery of interest on service charges. There is no mechanism in the lease for charging interest on unpaid service charges or for there to be a profit on a service charge, the service charge clauses only refer to the recovery of costs relating to monies actually expended on the maintenance repair and general upkeep of the building.

If there is nothing at all mentioned in the lease about interest being payable on late payments, don't pay any unless you are ordered to by a court. It really is that simple.
If there are any service charge demands that you haven't paid though, and you continue to not pay them, it is likely that you will end up facing a county court claim, and you may then be ordered to pay interest (potentially at 8% APR).
Based on what you have posted so far, I suspect that you may well lose the bulk of your arguments if you do have unpaid demands and end up in court. You seem to be arguing from a misguided sense of principle.

[Gordon999]

Under the Small Claims Court ( which operates under the County Court), there is provision for claiming interest on the debt or the arrears owing, calculated from the due date. This interest is a provision under the Court rules and may not be mentioned under the lease.

[Stacker]

Thank you for your help guys...firstly

1. The claimant landlord has made a service charge demand dated 31st August 2020, the demand is very brief without any details of those charges and quarterly payment of service charges are not expressly provided for.
2. The claimant landlord is obligated under the lease to insure the building in accordance with the provisions in the lease, by paragraph 3 the lease makes clear provision paying yearly during the said term First the Annual Rent in advance on the twenty first day of June in every year free of all deductions whatsoever after the expenditure has been incurred by the landlord.
3. There is no requirement for me to pay any third party or insurance broker.
4. That the claimant landlord is obligated to insure the communal parts of the building and indeed the building as a whole
5. The claim for interest has not been adjudicated as these proceedings are in process and no award of interest under the County Court Act has been made.

Recovery of interest on service charges. There is no mechanism in the lease for charging interest on unpaid service charges or for there to be a profit on a service charge, the service charge clauses only refer to the recovery of costs relating to monies actually expended on the maintenance repair and general upkeep of the building.

[Section20z]

Indeed, but the new Lessee can still contest any amounts not lawfully charged or rent demanded without s166

[Gordon999]

The service charge arrears follow the leasehold flat.

If the previous leaseholder has left the service charge in arrears, the next leaseholder will take on the arrears and be required to pay the outstanding sum.

Usually the buyer's solicitor will make enquiries to ascertain the arrears for ground rent and service charge and make provision for arrears to be withheld in the completion statement .

[Stacker]

Macromia,

There is provision in the lease for "a sinking fund", they are calling it the reserve however they have not being paying into this so now there are no funds, Tribunal cases and RICS state the funding must be transparent, landlord in breach of covenant and major expense coming up whilst the buggers who did not pay have gone now.

[Stacker]

Our year end in the lease states December 31st so the start of the year would be 01st Jan they have now changed the service charge year to start July 2020 when the annual insurance rent premium was due on the 21st June

[Stacker]

No. They can ask for the rent whenever they like as long as valid s166 notice served. Without that nothing is payable.

What is this s166 notice....I am taking about the insurance rent NOT the ground rent?

[Gordon999]

In many leases , the service charge payment is due at the start of the service charge year ( often on 25th Mar or 21st June for you ) .

But many leaseholders have difficulty making one large lump payment and require to make several smaller payments. For our block, the management company allows some leaseholders to pay by 10 monthly payments by bank standing order.

Separate payment for buildings insurance can be required "in advance" which is normal for insurance premiums which is paid at the start of cover.

[Macromia]

...the annual rent means the insurance rent to be paid in advance on the 21st June, it is to be paid without any deductions whatsoever on this date on the basis the landlord insures the building ..

You are clearly quoting from, or more likely paraphrasing, lease clauses that refer to the obligations of leaseholders.
Current legislation means that leaseholders do not need to pay anything for service charges or 'rent' until this has been properly demanded - regardless of what the lease says. Legislation also allows freeholders to demand service charge payments at any point up to 18 months after the date that the costs were incurred (or even later if they notify the leaseholder properly within 18 months) - as long as something in the lease allows payments to be collected, and the lease doesn't say that payments can only be collected on a specific date, or dates.

Also there is no wording in lease for any reserve - there is for a sinking fund however they need to state what the expenditure is for and be transparent ( RICS ) and it needs to be reasonable sections 18/19 L&T Act 1985

The RICS service charge guide mostly describes recommended best practice, not legal requirements.
The landlord and tenant act sections that you quote only really come into play if demands are legally challenged - and I suspect that you might be surprised at how easy it is for freeholders to argue that costs are "reasonable".

Leaseholders should tell you why they are collecting money for a reserve/sinking fund at the time that they demand payment, or before, but there isn't a great deal that you can do about it if they don't (other than ask them to explain, and/or take them to a tribunal and argue that the costs are unreasonable).

[Stacker]

Thank you Macromia ...the annual rent means the insurance rent to be paid in advance on the 21st June, it is to be paid without any deductions whatsoever on this date on the basis the landlord insures the building ..they have issued a partial demand in July for service charges for part of the insurance, an accountancy fee and the rest of the service charge demand for the reserve with no explanation or item of expenditure stated whatsoever for what the reserve monies are for. Also there is no wording in lease for any reserve - there is for a sinking fund however they need to state what the expenditure is for and be transparent ( RICS ) and it needs to be reasonable sections 18/19 L&T Act 1985

[Macromia]

Hey my lease says to pay the annual rent on the 21st June in advance with no deductions...

But what does the lease say about service charges?

Does the lease say that service charges are "reserved as rent"?
Is it clear that the reference to the 21st June includes service charges and not just found rent?
Are there any specific mentions of when service charges should be paid, rather than rent?
Does the lease contain any clauses that would allow additional service charge payments to be demanded if the amount initially demanded was insufficient for the year?

Regardless, I doubt that you will get anywhere with this, as long as the dates that payment is being demanded is after 21st June.
21st June will be seen as the earliest date that service charges for the year can be demanded. If payment is not demanded until later dates, this will likely be considered advantageous to leaseholders (especially if the budget for the year is provided before 21st June).
There is nothing to stop leaseholders paying whatever they expect the yearly charges will be on 21st June, even if this is more than has been demanded. If the freeholder refuses this payment (and the leaseholder can prove this) they will have virtually no chance of later claiming interest on any payment up to the amount that was sent.



Regarding the comment from Section 20z, a S166 notice applies to ground rent, not service charges.

[Section20z]

No. They can ask for the rent whenever they like as long as valid s166 notice served. Without that nothing is payable.