Services charges!

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    Services charges!

    Hi all,

    This is my first post so apologise if it’s in the wrong area.

    I am a freeholder on a new estate I have a car barn that came with the house which is under lease agreement. The car barn and all communal areas fall under a management company and we therefore have to pay a yearly service charge.

    We have lived at our current address for 5 years and up until now we had not known anything about the above lease agreement on the car barn etc. The management company have recently changed directors and our first correspondence with them was last year when they wrote to us informing us who they where and what they do and an invoice for the service charge. I checked the deeds to the house to make sure they were correct and I paid the charge.

    This year we have again received our invoice and paid, this was then accompanied by a demand for the other 3 previous years that we hadn’t paid. I wrote to them asking why I had not been invoiced before and they said that the last directors had been lacking in that department hence the change.

    I have been in contact with the Lease hold advisory service and they said there is a law under the Landlord & tenant Act 1985 20B and 21b that covers this type of thing but only if it’s a dwelling and because we cannot live in the car barn etc it doesn’t count. Does anyone have a different opinion that might help me?

    Many thanks Stuart

    #2
    if the services were provided and the amount requested fair why don't you just pay ?

    Comment


      #3
      Originally posted by stuartrw79 View Post
      We have lived at our current address for 5 years and up until now we had not known anything about the above lease agreement on the car barn etc.
      Didn't your conveyancing solicitor explain this? Didn't you know what you were buying?
      Originally posted by stuartrw79 View Post
      I have been in contact with the Lease hold advisory service and they said there is a law under the Landlord & tenant Act 1985 20B and 21b that covers this type of thing but only if it’s a dwelling and because we cannot live in the car barn etc it doesn’t count. Does anyone have a different opinion that might help me?
      I think they've got that wrong (without actually rereading the act). That may be true if the lease is solely on a garage (or car barn, whatever that is), but it's included on the lease on your house, yes? You could ask them to quote the specific clause which they rely on and compare that to your situation...

      Originally posted by quarterday View Post
      if the services were provided and the amount requested fair why don't you just pay ?
      Why should OP pay, if there is no liability...? The law was put in place for a reason... Having said that, the OP should also consider their relationship with the LL. If he/she is a good LL, then consider paying to maintain the relationship. Also consider that the LL might start enforcing things which have previously been allowed/ignored.
      I am not a solicitor, I am a lessee/shareholder in conflict with the management. Please seek your own legal advice before relying on my comments in this forum!

      Comment


        #4
        Are you a leaseholder or do you own the freehold on the house and only the car barn is leasehold ?

        If so the question the OP is asking is do leasehold laws (mostly The L & T Acts) apply to garages, etc ?. I'd be interested in this as there are two garages at the raer of my property that do not belong to the flats here, which i believe are leasehold.

        Andy
        Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

        I do not accept any liability to you in relation to the advice given.

        It is always recommended you seek further advice from a solicitor or legal expert.

        Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

        Comment


          #5
          Originally posted by stuartrw79 View Post
          I am a freeholder on a new estate I have a car barn that came with the house which is under lease agreement.
          Well spotted Andy, I missed that bit! :-)
          I am not a solicitor, I am a lessee/shareholder in conflict with the management. Please seek your own legal advice before relying on my comments in this forum!

          Comment


            #6
            As a matter of interest was a ground rent reserved (of even a very small sum) under this lease; and were the service charge amounts reserved as an additional rent? At the end of the day, the freeholders will be asked are there any arrears when you come to sell or remortgage your interest and in my view it would be churlish to withhold payment purely because the landlord has allowed your four years' credit ! In general you open yourself to additional costs and litigation the costs of which may be recoverable from you by refusing to pay money laid out for your benefit and owing to your landlord under long lease.

            It is not quite clear from your post whether the company owning the common areas and parking barn is single purpose or is in fact a property company with which none of the residents have any particular connection. Often in situations such as this the developer's scheme of disposal will provide for a covenant on behalf of each purchaser to take a share in the single purpose company to whom the common areas are to be divested. In such a scenario you may care to offer your services as a director thereof.

            One problem in practice with this arrangement is that although the f/h and l/h interests are charged to mortgagees, they rarely think ahead to keep the share certificate and a transfer signed by the borrower with the deeds so that a buyer has to faff around trying to get a new certificate issued in order to perfect title.

            It would devalue your property for the common parts to fail to be maintained which is why I suggest coughing up unless you think that the charges requested are in some way fraudulent

            Comment


              #7
              If you contribute as a part of your title deeds, as a freeholder the 18 month rule does not extend to you, it is a contractual debt, albiet required to meet the other criteria for service charge cost being " fair and reasonable".

              Their ability to recover may be limited by the wording of that covenant, deed or estate rent charge, and therefore specific advice has to be taken on your title and any related documents.

              This has arisen in a webinar with a leading firm of solicitors and took some time to get the answer. Section 20b clearly says "tenant" precluding a freeholder enjoying the limitation.

              As to why should they pay if they feel there is no liablity well becasue it is the decent thing to do. This is not an external managing agent but neighbours of the OP trying outof their own time at no cost for that time to arrange the affairs of their community.
              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
                If the only leasehold owned is a car barn [eh?], none of s.18-30 of LTA 1985 applies to it. Those sections relate simply to residential properties (houses and flats)- not to leasehold storage areas owned by a residential freeholder. As someone's already asked, why did OP not know all this before exchanging contracts?
                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                4. *- Contact info: click on my name (blue-highlight link).

                Comment


                  #9
                  Originally posted by jeffrey View Post
                  If the only leasehold owned is a car barn [eh?], none of s.18-30 of LTA 1985 applies to it. Those sections relate simply to residential properties (houses and flats)- not to leasehold storage areas owned by a residential freeholder. As someone's already asked, why did OP not know all this before exchanging contracts?
                  In the majority of cases yes however they are subject to the Act if there is a relationship to a leasehold property and service charges.
                  If in this case thre are flats which contribute as part of their lease, then with the exception of the 18 month rule, they gain, albiet indirectly , from the protection afforded to long leaeshold dwellings.

                  Members should not assume that the repairs to their garage block, or services to it, are always unprotected.
                  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


                    #10
                    But OP does not own a flat; only a freehold house.
                    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                    4. *- Contact info: click on my name (blue-highlight link).

                    Comment


                      #11
                      Interesting stuff, at my property, us two leaseholders also own a garge each, a couple of years ago the freeholder started the S20 consulation process and informed of us of repairs he was going to do to the garage/driveway area, now according to the above comments it would seem that because I own the leasehold property, then the provisions of LTA 13-30 do have an affect, but there are also two garages that are 'on their own', (there is no residential property) (also leasehold) would I then be correct in assuming that the LTA provisions would apply to me and the other leasehold owner but not the leasehold owners of the garages ?. That seems a slightly strange situation (as far as I am aware the freeholder served identical S20 Consulation notices to the garages owners, even though he may not of actually needed to).

                      Andy
                      Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                      I do not accept any liability to you in relation to the advice given.

                      It is always recommended you seek further advice from a solicitor or legal expert.

                      Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                      Comment


                        #12
                        But in your case you are a flat-leaseholder; OP is not.
                        Your flat+garage are within LTA 1985; the leasehold garages not owned by flat-leaseholders aren't.
                        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                        4. *- Contact info: click on my name (blue-highlight link).

                        Comment


                          #13
                          Originally posted by jeffrey View Post
                          But in your case you are a flat-leaseholder; OP is not.
                          Your flat+garage are within LTA 1985; the leasehold garages not owned by flat-leaseholders aren't.
                          Thats right.

                          Of course as the "section 20 " procedure establishes a fair and reasonable cost, they indirectly benefit, even though the other protections such as
                          right of consultation and nomination, right to make observations, do not apply.
                          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


                            #14
                            Originally posted by jeffrey View Post
                            But in your case you are a flat-leaseholder; OP is not.
                            Your flat+garage are within LTA 1985; the leasehold garages not owned by flat-leaseholders aren't.
                            HHmm...Which would mean that the 'garage only' owners have little or no protection against sky high costs and no consultation...or even being handed bills long after the usual 18 month period.

                            Andy
                            Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

                            I do not accept any liability to you in relation to the advice given.

                            It is always recommended you seek further advice from a solicitor or legal expert.

                            Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

                            Comment


                              #15
                              Originally posted by andydd View Post
                              HHmm...Which would mean that the 'garage only' owners have little or no protection against sky high costs and no consultation...or even being handed bills long after the usual 18 month period.

                              Andy
                              Well they do in that the landlord has the contractual obligation under the lease, and while the cost of proceedings might outweigh the differences in cost, they do have recourse, in the majority of cases to arbitraion under the lease, arbitration under court proceedings, Unfair Contract Terms or Supply of Goods and Services. Or selling 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

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