Service charge debtor still collecting rent!

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    Service charge debtor still collecting rent!

    In our block we have flat owners who let them out ,collect rent but do not pat gr or service charge.
    i am considering asking the tenant to pay the freeholder to pay off the debt and embarrass the flat owner. Any comments?

    #2
    More information is required really, are you just a leaseholder or do you hold another position?

    Why would the tenant pay anything to the freeholder?

    Why isn't the freeholder collecting the arrears?

    Comment


      #3
      There is no legal basis for the tenant to pay the freeholder his/her landlord's service charges. If the tenant did, they would not be able to deduct the sum from rent or recover the monies from their landlord. I cannot think why you would imagine otherwise.

      It is up to the freeholder to take action against the non-paying lessees to recover service charges.

      Comment


        #4
        Originally posted by vmart View Post
        There is no legal basis for the tenant to pay the freeholder his/her landlord's service charges. If the tenant did, they would not be able to deduct the sum from rent or recover the monies from their landlord. I cannot think why you would imagine otherwise.

        It is up to the freeholder to take action against the non-paying lessees to recover service charges.
        Get CCJs and a third party debt order, would probably do it.

        Comment


          #5
          You'll need to get the service charges determined first unless these were already agreed by the leaseholders.

          Comment


            #6
            You raise separate issues, perhaps you should be asking why the leaseholder is not paying and why the freeholder does not appear to be taking any action. I would be more concerned with the apparent breach of GDPR that you know the identity of another leaseholder who is in arrears.

            Comment


              #7
              Originally posted by eagle2 View Post
              You raise separate issues, perhaps you should be asking why the leaseholder is not paying and why the freeholder does not appear to be taking any action. I would be more concerned with the apparent breach of GDPR that you know the identity of another leaseholder who is in arrears.
              It has already been determined that this is not a breach of GDPR if the absence of payment is impacting on the person to whom the information is revealed, and if FH has to provide accounts under statute and under the lease. Anonymised accounts are not on.

              Comment


                #8
                Originally posted by AndrewDod View Post

                It has already been determined that this is not a breach of GDPR if the absence of payment is impacting on the person to whom the information is revealed, and if FH has to provide accounts under statute and under the lease. Anonymised accounts are not on.
                That is a very dangerous path to follow. What happens when a Tribunal finds that the FH's charges are unreasonable and not payable? How has the disclosure impacted the person to whom the information has been revealed? If the arrears have been confirmed by a court or a tribunal, that may be a different matter, there may be information in the public domain, which could be disclosed.

                Comment


                  #9
                  Originally posted by eagle2 View Post

                  That is a very dangerous path to follow. What happens when a Tribunal finds that the FH's charges are unreasonable and not payable? How has the disclosure impacted the person to whom the information has been revealed? If the arrears have been confirmed by a court or a tribunal, that may be a different matter, there may be information in the public domain, which could be disclosed.
                  Lessees are entitled to see unredacted accounts under most leases. ICO think that trumps hiding information. Hiding information about potential crooks is never a good thing. Calling them a crook is something else -- saying Flats X,Y Z have failed to pay their service charges, which is why you are an extra £20K out of pocket is something else. If it has absolutely no impact on other lessees I agree there may be an issue, but that would HAVE TO imply that the FH is paying those missing SCs out of his own pocket.

                  If I have to pay an extra service charge I am entitled to know why that is the case. There are also cross-obligations under the lease usually.

                  Comment


                    #10
                    Originally posted by AndrewDod View Post

                    Lessees are entitled to see unredacted accounts under most leases. ICO think that trumps hiding information. Hiding information about potential crooks is never a good thing. Calling them a crook is something else -- saying Flats X,Y Z have failed to pay their service charges, which is why you are an extra £20K out of pocket is something else. If it has absolutely no impact on other lessees I agree there may be an issue, but that would HAVE TO imply that the FH is paying those missing SCs out of his own pocket.

                    If I have to pay an extra service charge I am entitled to know why that is the case. There are also cross-obligations under the lease usually.
                    The crook is usually the freeholder, not the leaseholder. I am all for accounts providing full disclosure, what about how much of the service charge expenditure works its way back in one way or another to the freeholder and his close associates? You are unlikely to be required to pay anything extra as a result of a leaseholder failing to pay ground rent and service charges, whereas you will definitely be required to pay extra when a freeholder inflates the charges.

                    Comment


                      #11
                      Originally posted by eagle2 View Post
                      You are unlikely to be required to pay anything extra as a result of a leaseholder failing to pay ground rent and service charges
                      How does that work then. You will be paying for services under a lease where those services are not carried out (and usually what happens is that reserve funds are raided to carry out works), and you will have paid for the lease itself where that lease is not being upheld. So absolutely you will be paying - unless as I said the freeholder does.

                      Can't put pegs in non-existent holes.

                      But of course FHs are usually the crooks - one way they do that is by not collecting service charges from some and then stealing from others to stick the peg in the non-hole.

                      Comment


                        #12
                        Originally posted by Codger View Post
                        In our block we have flat owners who let them out ,collect rent but do not pat gr or service charge.
                        i am considering asking the tenant to pay the freeholder to pay off the debt and embarrass the flat owner. Any comments?
                        If the flats are the only service address then yes you can certainly post a notice through door saying forfeiture is being considered for non payment.
                        The responsible flat owners are subsidising the businesses of these freeloaders and it's something up with which you must not put. The quickest way to resolve it is normally advise the mortgagees that their security is at risk.
                        Hopefully the freeholder will add ample admin charges and interest to deter them doing this in future.

                        Comment


                          #13
                          Thanks for the replies. I have flats in the block and have recently bought the freehold in order to improve management. The few bad payers risk needi ng to go back to expensive professio nal management.
                          in my experience management cos look good on paper and in court but in reality neglect the building.

                          Comment


                            #14
                            Hi,

                            Now you have made it clear that you are actually the freeholder others may offer advice of how to get the bad payers to pay the GR and SC.

                            I do agree with you that managing agents neglect the building and reason for that is that they do not collect all SC due, so some pay whilst others do not resulting in insufficient funds for repairs and maintenance.

                            Comment


                              #15
                              I agree that it does assist if we are given all the relevant facts at the outset.

                              The best way is to meet the leaseholders and have a serious discussion about the way forward trying to avoid legal action and costs. It is always worth asking if there are any reasons for non payment in order to avoid surprises at a later stage and so that you can resolve any genuine disputes.

                              With managing agents, it is important to ensure that you set out their duties clearly at the outset, remember that they are your agent nothing more and you should monitor their performance,

                              Comment

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