Reasonable Costs to Serve a Section 146 Notice

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    Reasonable Costs to Serve a Section 146 Notice

    Hi

    We have recently bought a leasehold property that has a section 146 notice served against it. The reason for the notice is that the previous leaseholders altered the property without the freeholders consent, thus breaching the lease.

    The freeholder has issued the notice in accordance with the lease. They are claiming an undisclosed amount of compensation. Essentially the costs incurred would be a surveyors report, and possibly some legal costs. The flat is a small one bed flat.

    My question is what would be reasonable compensation, and if the freeholder was employing themselves as their own 'legal advisor' can they claim that cost? Also we do not consider their costs reasonable is this something the LVT can decide upon?

    Thanks in Advance

    #2
    Originally posted by gehhood View Post
    Hi

    We have recently bought a leasehold property that has a section 146 notice served against it. The reason for the notice is that the previous leaseholders altered the property without the freeholders consent, thus breaching the lease.

    The freeholder has issued the notice in accordance with the lease. They are claiming an undisclosed amount of compensation. Essentially the costs incurred would be a surveyors report, and possibly some legal costs. The flat is a small one bed flat.

    My question is what would be reasonable compensation, and if the freeholder was employing themselves as their own 'legal advisor' can they claim that cost? Also we do not consider their costs reasonable is this something the LVT can decide upon?

    Thanks in Advance
    They cannot seek compensation in the form of damages as well as reinstatement. The test of damages is what difference in value the alterations will have when the landlord gets the property back at the end of the lease.

    If they have demanded or accepted ground rent or service charge, or other act that might indicate that they intend to continue the lease, since becoming aware of the breach, then as a once and for all breach, you have the defence of them having waived their right to forfeiture.

    If you recetely purhcased the poperty, the vendor would have been asked about alterations and therefore you should ask your solicitor, as you may have recourse to the vendor. It might also be that the landlord already knows and consented but that has been lost in their records- it does happen.

    I think with a notice served you should arrange to see your solicitor, or one who deals with residental leases, and make sure you ask what sort of experience they have on these issues ( to many meet you and then have to look it up).
    Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

    Comment


      #3
      What is the alteration in flat ? removal of a non-load bearing wall ? If so, would it be cheaper to re-instate wall ?

      Comment


        #4
        Hi there

        Thanks for the reply

        We are planning to complete the alterations, which would remedy the original breach. It is not the compensation I am querying, as we would not pay any.

        The costs I am querying are the costs that are being claimed to issue the section 146 notice (ie survey and legal costs) by the freeholder. Can the LVT judge on these?

        Comment


          #5
          Originally posted by gehhood View Post
          Hi there


          We are planning to complete the alterations, which would remedy the original breach. It is not the compensation I am querying, as we would not pay any.

          The costs I am querying are the costs that are being claimed to issue the section 146 notice (ie survey and legal costs) by the freeholder. Can the LVT judge on these?
          Actually that was your very first question ( and even rectification does not preclude damages).

          And why ask about the breach and compensation if you are already rectifying the alterations issue whe you posted?

          Yes the LVT can reveiw charges But again the earlier answer showed that if you can prove waiver then you need not go to the LVT at. And if you did they can consider waiver as well.
          Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

          Comment


            #6
            Hi

            Thanks for your reply, apologies for the confusion, in my first entry I meant compensation in the sense of the legal + survey costs incurred by the freeholder to issue the S146.

            So to clarify the LVT can decide on these charges ie a reasonable level.

            The reason I'm keen to clarify the point is that the freeholder has sent us a list of charges which relate to the supposed breaches of the lease including a surveying charge and a charge for "legal fees" - these legal fees are actually from his own company -ie his time! These are by far the majority of the fees. For this reason I think he will try to press on with the s146, even if we alter the property.

            if we alter the property can a s146 still be made? and are his costs valid if it cant be validated?

            Thanks Again

            Comment


              #7
              On the basis of the section 146 notice having been served, it should set out the breach and before carrying out works, you should if not already done, agree with the freeholder of your works will remedy the breach, and to any conditions imposed to ensure that you do not in turn create a further breach.

              The LVT can agree on the reasonableness of costs. It is however the lease that sets out what charges, often regardless of quantum, that can be levied. Look at the clauses in relation to legal costs for non payment, breaches or disputes as to what costs can be charged and post, and then look at the service charge clausesfor similar references.

              This allows you to

              1: Establish which costs are due, and not due under the lease as the lessee
              2: Establish which costs are due, and not due under the lease through the service charge
              3: Challenge the resonableness and inculsion of costs at the LVT.

              If the alterations would otherwise be acceptable, and the breach is that consent was not obtained ( and perhaps is being unreasonably withheld) then that can also be considered at the LVT. If however that is the case, then I would still look at the original post at proving waiver, and therefore negating all costs.
              Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

              Comment


                #8
                leaseholdanswers This might be 9 years old but you are wrong on that point. The lease does not have to mention costs for serving a S146 because the law entitles the Lessor to recover his costs under S146(3) whether they are legal, surveyors costs or otherwise. In addition S146(1) references remedying breach AND paying compensation to Lessor, i.e for his costs incurred.

                Comment

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