Freeholder did not demand ground rent/service charge

[Rob.Marsh]

Hi all,

I need some help/advice.

I bought my flat 2 and a bit years ago and when paid my groundrent and share of the fees for the rest of 2007 at the time of completion.

Since then, the freeholder has forgotten to ask for groundrent and fees (2 years worth). Until now, sort of!

I had a few problems with debt collectors from the previous owner so when a letter from a solicitor turned up addressed to the previous owner I contacted them.

It turns out that a few months a go they incorrectly sent a letter to my flat address to the old ower asking for 2 years of fees explaining that the freeholder forgot to give notice, but they now require the full amount paid.
The letter I found yesterday was threatening legal action as they had not recieved payment.

So, the solicitor has re written a letter to me, arrived this moning, asking for the two years fees to be paid in full, imeadiatly. Can they expect this, is this reasonable even though they A) forgot to ask for it, and b) when they did they sent it to the wrong person so I never got the demand.

The reason I asked is My wife is currently unemployed, and the money to come up with immeadiately is a lot for me to try and find. I accept I do technically owe it, but isdemanding a full payment for 2 years reasonable?

The thing is, the freeholder had to sign the contract when I bought the flat, so they knew I owned it, and I have been in contact with him over work needing doing, so he was aware of me too. Thankfully he is a reasonable man & I should be able to work something out with him, but some advice on my position would be handy!

Thanks in advance,

Rob

[Poppy]

If the ground rent and service charges are properly demanded, then yes they can be demanded late in one go.

If you do not dispute the amounts, then you need to ask your freeholder for a bit of time to pay. If this freeholder is as reasonable as you say, then hopefully you can arrange something that you are both happy with.

The thing is, the freeholder had to sign the contract when I bought the flat

What contract would that be then? Did your solicitor issue a notice of assignment to the freeholder at the time of completion?

[Rob.Marsh]

Sorry, I am wrong in saying signing the contract.

My solicitor would have been incontact with my freeholder/solicitors to get the insurance details for the rest of the year and to gain the figures that I would have to pay for the rest of the year.

I am certain (99% as I am not in anyway a legal buff) that my solicitor who did my conveyancy when I bought the place did everything correctly and that was needed.

Bottom line I know, is that I will have to pay. I am not trying to wriggle out of that, its reasonable to be expected to pay.
What has surprised/frustrated me is the fact that after all the mess ups, (forgetting and then not sending the demands to me instead of the old owner), I am the one left with the problem and that its a case of just dealing with it.

How do you mean properly demanded?

[Poppy]

All lessees should be regularly saving money towards service charges and have it ready when properly demanded by the freeholder.

Here's my best lay language:

Ground rent must be demanded according to the lease and in accordance with section 166 of the Commonhold and Leasehold Reform Act 2002.

Service charges must be demanded according to the lease and be accompanied by a statement of your rights under section 21B of Landlord and Tenant Act 1985.

[Rob.Marsh]

All lessees should be regularly saving money towards service charges and have it ready when properly demanded by the freeholder.

I quite agree, and normally I would have the money upfront.
Ufortunately, when there is a redundancy and you lose half of a housholds incomes, finances shift slightly.

I will check the demand tonight, I simply know that it have arrived today, as my wife is at home, but it looks ike the demand, at present isn't fitting the coreect format required.
What happens if it doesn't? I presume I simple contact the solicitor and inform them it doesnt?

Thanks for your help and taking the time to respond Poppy, its much appreciated.

[Poppy]

If it doesn’t comply:

• you can pay anyway if you believe the figures to be accurate
• you can helpfully point out the error to the freeholder
• you can ignore it until it does comply
• or a combination of the above

[jeffrey]

If it doesn’t comply:
you can pay anyway if you believe the figures to be accurate
you can helpfully point out the error to the freeholder
you can ignore it until it does comply
or a combination of the above

Yes and, as far as concerns ground rent only, nothing is payable at all unless it is demanded in strict compliance with s.166 of the 2002 Act.
Any arrears older than six years that are claimed would be statute-barred too (i.e. you would have the defence of the Limitation Act 1980).

[FlatOwner]

Isn't there also a limitation freeholders only being able to charge the last 18 months service charges?

[andydd]

Isn't there also a limitation freeholders only being able to charge the last 18 months service charges?

20B. Limitation of service charges: time limit on making demands.

(1) If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then (subject to subsection (2)), the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred.

(2) Subsection (1) shall not apply if, within the period of 18 months beginning with the date when the relevant costs in question were incurred, the tenant was notified in writing that those costs had been incurred and that he would subsequently be required under the terms of his lease to contribute to them by the payment of a service charge.

Andy

[dominic]

All lessees should be regularly saving money towards service charges and have it ready when properly demanded by the freeholder.

Here's my best lay language:

Ground rent must be demanded according to the lease and in accordance with section 166 of the Commonhold and Leasehold Reform Act 2002.

Service charges must be demanded according to the lease[, in accordance with all other service charge provisions in the LTA 1985] and be accompanied by a statement of your rights under section 21B of Landlord and Tenant Act 1985.

My emphasis added. And this is what Poppy means by "properly" demanded.

Poppy, you forgot to mention to the OP, as I think the last poster has, that for any charges incurred more than 18 months ago, the lessee is relieved of his liability to reimburse the FH (unless an interim notice under s.20B(2) has been provided to the lessee).

Second, just extending what Poppy says re s.21B, unless and until the demand is accompanied by a summary of your rights, you may not have to pay.

Third, the other rights you have under the LTA 1985 are roughly as follows:

a. services must have been reasonably incurred;
b. they must be of a reasonable standard;
c. any work carried out costing each lessee more than £250 must have been the subject of the statutory consultation process otherwise the lessee's liability to pay for such service is capped at £250;
d. all management/admin fees must be reasonable (this is found in Sch 11 of the C&LRA 2002);
e. you have a right under s.21 to require F to provide you (at no extra charge) with a summary of all the charges for the last accounting year, AND once he provides you with the summary you have a right to inspect the receipts of such charges; failure to comply is a criminal offence (unless F is a local authority).


OP: your conveyancer before purchase should have advised you, following enquiries, of the staus of the previous owner's service charge account (particularly if it is in debit!)

[jeffrey]

OP: your conveyancer before purchase should have advised you, following enquiries, of the staus of the previous owner's service charge account (particularly if it is in debit!)

Yes, because V's debt to L 'travels' with the leasehold, so P becomes liable to L (albeit with the back-up of V's indemnity covenant).

[blckbrd]

OP, you may find it useful to check your lease to see when service charge payment is due so that you can see how s20b/18-month rule applies.

Also, for a few quid you can check when/if your purchase was registered on Land Registry. http://www.landregistry.gov.uk/

If, along the line, you are taken to court for arrears, be very honest about your circumstances, make a reasonable offer of payment and the court will most likely agree.