Excessive Debt Collection charges after service charge arrears

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    Excessive Debt Collection charges after service charge arrears

    Hi All

    I have recently have the following issue with my Management Company for my property.

    Our service charge was half year payment in advance. The first invoice was send to me in May (with summary of right) then subsequently, a reminder was send in late July for a total service charge of £1673.69. Within the reminder letter, they simply stated that if I don't pay, the matter will be escalated with further costs being added. No other information was attached on how they will escalate this issue or if I have any rights for those.
    I was a bit busy in August and totally forgot this matter.

    In beginning of October, I received a letter from my mortgage bank remind me of the service charge arrears and the amount was due for £2739.29. I noticed this and paid the original service charge of £1673.69 immediately.

    No other communication come to me until last week 23 October, I received a letter from the Debt Collection Agency stating this is their 2nd reminder of the payment and they have already notified my mortgage bank for this arrears issue. However, this letter was dated on the 21 September. Within the letter, there was only a list stating that I'm due to pay my management company debt recovery fee and initial fee of total £447.6 and debt collection agency service fee of £618. Hence an overall of £1000 additional charges.

    So currently I have the following questions:

    1. In my understanding, before the Management company passed my case to the Debt Collection company, they should have informed me on this matter. There was only a reminder in July from them. However, no information regarding any further action they will take apart from a sentence stating that "the matter will be escalated with further costs being added". Could I argue that the further actions were not specified and I was not informed of any rights and obligations regarding this?


    2. I have enquired with the management company saying that I didn't receive any notice that they are going to take this arrears to the debt collection company. The Management company claims that the Debt company sent 1st letter in early Sep, but I never received such. Then then claim that whether or not I received such a letter was not their responsibility.

    I'm wondering if this could stand or not. Given the 2nd letter from the Debt collection company was almost one month late.
    Given there was a letter lost in September, should I ask the Managing company to provide a proof that they send such letters?

    4. Further within the 2nd letter I received from the Debt Collection company, they do not attach my rights and obligations regarding those expenses.

    My currently understanding that those charge by both management company and debt collection agency may qualify as this "administration charge". So per paras 4 Sch.11 Commonhold and Leasehold Reform Act 2002, do I have the rights to withholding those administration charge?

    5. The reasonableness of those charges listed.
    I would definitely argue that £447.6 payable to the managing company and £618 to debt collection agency are not reasonable. I have asked the management company provide more detail of those expense, their explanation is that the fee consists of both £120 + VAT from management company and the collection agency for their services.

    I don't think this is a precise and detail explanation for those charges. Note that none of this explanation were mentioned in the letter send from the Debt Collection Company. There was just a list of charges.

    Am I right to argue and tell the management company that I don't think this are reasonable and want to take to tribunal?

    6. I have checked the lease with the lease document, it only stated that "The service charge year shall run from 1st January to 31 December in each year or such other annual period as the landlord may from time to time determine and in the event that the landlord changes the service charge year then the landlord should be entitled to alter the dates for payment"

    Another clauses referring the lease may put me in for solicitors expense are the following:
    "to pay all reasonable expense of the landlord and the landlord's solicitors and any managing agents appointed to manage the building in respect of any requests for information and/or enquires made to such persons"
    and
    "to pay to the landload all costs charges and expense(including legal costs and fee payable to a surveyor) which may incurred by the landlord in contemplation of proceedings under SEction 146 and 147 notwithstanding forfeiture may be avoided otherwise than by relief granted by the court.

    From the above related clause, I don't think any of them give the management company permission to escalate this expense to a debt collection company without inform me.

    Am I right to make the above assessment?



    Very appreciate for your helps on this matter.

    I just feel being blackmailed by the managing company.

    Thanks






    #2
    Hi,

    You need to contact the DCA and ask that it is put on hold, this will give you time to seek advice from Citizens Advice or Lease Advisory Service;

    https://www.citizensadvice.org.uk/

    https://clients.lease-advice.org/App...reSafety=False

    There are those on here that will advise you not to contact the DCA, however in my opinion that route can lead to further costs being applied, i.e., court costs, that can then easily see this escalate to over £2000.

    Is this a management company as part of the lease or a managing agent?

    The DCA should have provided you with the correct summary of rights and obligations for administration charges as you mentioned.

    If the DCA was acting correctly the management company or managing agent should not have accepted payment at the beginning of October, by accepting payment they may have waived any right to further charges but the organisations above are better placed to advise.

    Comment


      #3
      Accepting part payment does not mean that a full payment is not due (if it is due)

      The failure to advise of rights does mean the admin charge is not payable - but that is only temporary - it can simply be corrected by providing that.

      A 5 month delay in payment might well incur this sort of charge. It is how they make their money ........ yes the fees are excessive and a rip off, but lawyers do deserve £500 an hour for doing nothing.

      You got an invoice which you ignored. You got a reminder which you ignored. The letter that you claimed not to have received is neither here nor there. They contacted your mortgage company..... How did you think this was going to turn out....

      Of course they have the right to escalate it without asking your permission. Whether the fee is excessive is a different matter. Of course it is but ...

      Comment


        #4
        Andrew,

        If you can't offer advise why bother posting at all?

        I actually believe that the problems with leasehold and the abuses will not be improved while there are responses like yours!

        Comment


          #5
          That's a nonsensical comment I'm afraid. My advice was perfectly correct, and is advice.

          Advice that banking of a part payment absolves one from the rest of the payment is incorrect advice.

          It is YOUR advice that is not only unhelpful (both your posts) but also entirely wrong.

          Comment


            #6
            Really, I read your post as an attack on the OP who was seeking advice and certainly not criticism for missing a payment.

            I further advised the OP to contact better placed organisations where they will receive a better understanding and advice, something that I believe was missing in your post!

            Comment


              #7
              OK if OP wants advice.

              a) Pay the charge and the administration charge in full and do so immediately.
              b) Don't waste time contacting lease or the DCA in this particular instance
              c) Don't think that the failure of a "rights" letter with the admin charge is going to help in the long run
              d) Apply to the FTT with regard to reasonableness (HAVING PAID IN FULL - anything else is folly) if so inclined

              I agree the charge is probably unreasonable, and OP should also review their lease. However the FTT/Upper Tribunal would probably regard charges of £100/hour for 5 months of chasing including having to involve the mortgage provider to be perfectly reasonable, lots of other letters will suddenly appear. And there is also interest.

              Comment


                #8
                Thanks Andrew, the OP can now decide.

                Comment


                  #9
                  The OP is also advised to read tribunal judgements. Here is one for example

                  About £400 for two letters
                  https://decisions.lease-advice.org//...4000/13332.pdf

                  The OP describes a scenario that wold have involved multiple requests, an approach to the mortgage company, and then to a debt collector who would have charged a fee. I wouldn't bank on £1000 being regarded as unreasonable.

                  Comment


                    #10
                    Originally posted by fos333 View Post
                    I read your post as an attack on the OP who was seeking advice and certainly not criticism for missing a payment.
                    And by the way, OPs don't get to avoid criticism. If they don't want to get criticism they should seek advice privately. I don't see this forum as an advice column, though sometimes it is. And the advice is often not specific to the OP but applies generally.

                    Advice along the lines of "If you buy a leasehold property and don't understand that this might well involve severe penalties and risk, and that failure to adhere to some basic principles is idiocy" is good advice. It may be too late for the OP, but these stories are lessons for others.

                    AST Landlords often get advice of a similar flavour, and rightly so.

                    Comment


                      #11
                      Ellen,

                      Does your "one year service charge period" operate from 1st Jan or 1st July ? Is there any clause in the lease to say service charge payments fallen into arrears are subject to 4% interest above Nat West Bank rate or similar bank?

                      I believe that you can argue that it does not become a debt until after the end of the complete service charge year and after you have admitted to the debt and refused to make payment. I believe you can make an application to the FTT for judging the reasonableness of the charges which are not written into the terms of your 99 years or 125 years lease.

                      Comment


                        #12
                        No, the only clause I could find within the lease was the one mentioned that the service charge run from 1st Jan to 31 Dec and paid in advance half yearly. No other mention abouif the service charges fallen into arrears are subject to any interest.

                        I think my key issue here is the case of not receiving the first letter from the debt collection agency. As if I would received it, it won't go into further escalation even to my bank and with additional charges.

                        Given the factor that the 2nd letter from the debt collection agency dated on the 21 Sep was received until 23 Oct. Would I have a chance to argue the on time delivery?

                        Also, the 1st letter from the debt collection agency I suppose should have included my rights and obligation. But again, this letter was lost.

                        I'm asking the management company/Debt collection to provide the evidence of they did send me the first letter.

                        My next question would probably be, what are the acceptable form of this evidence. I'm worry they may just come back with a copy of letter dated in early September. But issuing letter is not correct evidence that they posted right?

                        Thanks

                        Comment


                          #13
                          AndrewDod,

                          I have read your link of the latest case.

                          I do admit that I forgot to pay in the first instance. However, I think my current argument is around 1st letter from the DCA.

                          Since this 1st letter should contain everything and the fail of delivery of this first letter is key drive for the later escalation charge.

                          Comment


                            #14
                            ellenchen95,

                            When it appears at Tribunal you will find in the bundle a half a dozen other letters you have never seen before. That is how it works. On the balance of probabilities they will say it is completely expected that those letters would have been written over a protracted period of non-payment.

                            The invoice is due when it is due (according to the lease). There is no such thing as it not being due (if the lease says it is due) until the lease-year has ended.

                            In any case debt collection agencies (and lawyers chasing debts) generally bombard you with letters - they don't write just one letter in 6 months. That is not their business model.

                            Comment


                              #15
                              So in summary, you would suggest, pay all the £1000, do nothing. Let it go?

                              I thought I do have some a bit right to argue a bit?

                              Comment

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