How can our management company recoup outstanding service charges from leaseholder?

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    How can our management company recoup outstanding service charges from leaseholder?

    This is something that's been allowed to drift by the management company I'm part of, but one of the leaseholders has not paid any contribution for the last four years. All six leaseholders pay a certain amount by direct debit but this one guy - a multiple landlord, so we know he has the funds - has just flatly refused, paying the ground rent to the freeholder but then pushing back and querying every single quote we receive.

    He was a cash buyer so has no mortgage lender we can lean on to pressurise him. Letters from lawyers have not worked either, as he just sends back evasory letters that sap our budget and it becomes attritional.

    We plan to go to the Small Claims Court but would anyone recommend best practice here to increase our chances of success?

    Any help would be gratefully received.

    #2
    You have two main options
    1: Apply to the LVT to determine the charges and then the County Court
    or
    2: Apply to the county court and expect them to refer it to the LVT.

    Best practice means that
    -the invoices are properly raised with the correct information, that they have been calculated and billed as set out in the lease, and accounted for in accordance with the lease
    - that the charges and services are fair and reasonable as set out under the Landlord and Tenant Act 1985 (as amended)
    - any and all statutory obligations have been discharged eg consultation on major works or long term agreements.

    If you look ( actually read it thoroughly - it will take time) at lease_advice.org and get a copy of the RICS code of practice for residential service charge £20, you will get an inkling, and may feel that you can take it on yourself.

    But as a landlord, with funds who is likely to get a solicitor, it is best practice for you to get advice from a solicitor now, and ask them in particular to first look at what and how any legal costs are recoverable.

    if they are a company then there are other options however the costs are higher and may not be recoverable except under a court order, putting you all out of pocket (eg winding up orders & statutory demands)
    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
      Thanks for that, much appreciated - so no Small Claims, straight to LVT?

      Comment


        #4
        Originally posted by Duende View Post
        Thanks for that, much appreciated - so no Small Claims, straight to LVT?
        Well to the solicitor first to ensure that your records will pass muster and not fail on a "technicality" eg you failed to invoice SC with the summary of rights and obligations.

        There are pro's and cons of which method; if the dispute is primarily non payment, as opposed to say disputing section 20 process and the choice of the contractor,the court is the best application. if however you are restricted to recovering costs under section 146 proceedings and you proceed that way, then the LVT first might be better.

        Your solicitor needs to look over the case and advise the best choice of action for you.
        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


          #5
          Originally posted by Duende View Post
          Any help would be gratefully received.
          If you know who is advertising his property for sale, write to them saying that
          "please be aware that the service charge has not been paid on this property for
          4 years, and the Management company will be looking for these arrears to be
          paid off prior to the sale, and if not by the seller, by the buyer."

          Irrespective if this is true or not, it May get someone moving.

          You can also write to him saying that "enough is enough, and we will now ask
          the courts for forfiture of your flat due to none payment of service charges.
          through due process, which of course you will end as you having no flat to sell !"
          ( Yes, I know you have to go through the LVT first, but no need to mention that )

          Don't hang around, you has got to the point of no return, so act now !, send
          letters out now, you have nothing to lose as he won't pay.

          Next one is the solicitors will ask the managing company if the service charges
          are paid up to date, and your answer wil be NO, in which case, they should
          deduct the service charges owed from the sale price and pay you.

          R.a.M.

          Comment


            #6
            Originally posted by ram View Post
            If you know who is advertising his property for sale, write to them saying that
            "please be aware that the service charge has not been paid on this property for
            4 years, and the Management company will be looking for these arrears to be
            paid off prior to the sale, and if not by the seller, by the buyer."
            Simply put; don't. The flat owner has the right to have that information held privately and only to be disclosed with their consent.
            It opens you to civil liability and prosecution under the DPA.

            Start your proceedings; the vendor must declare those to any purchaser.
            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


              #7
              Writing to third parties (in this case the mortgage provider) was critized by an LVT in this case here, http://www.lease-advice.org/decision...r/pdf/5894.pdf so i would of thought it wouldnt be recommended, simply put it may well be that an error may have been made somewhere in the service charge demand process and that nothing is payable, which is why the OP was recommded to check that all statutory obligations have been complied with.

              The normal course of action by freeholders is to file aclaim at court and this is transfered to an LVT, it appears that sometimes there is confusion on the point of transfering to an LVT (I have witnessed this first hand) so it may be wise to request transference to an LVT if applicable.

              In a dispute with my freeholder I did the revererse process, LVT first and then small claim when they didnt refund the amounts stiplualted in the LVT decisions (although the LVT were rather vague about what amount(s) were actually unrecoverable) and said nothing on whether they should be refunded/credited/whatever.

              If all the obligation/practises listed by leaseholdanswers have been followed than the process should be relatively straight forward.

              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


                #8
                Originally posted by Duende View Post
                Thanks for that, much appreciated - so no Small Claims, straight to LVT?
                Try google search for "Service charge arrears + Solicitor"

                Comment


                  #9
                  There is a subtle difference in writing to a mortgagee as they have an interest in the property and any proceedings.

                  Every leaseholder is entitled to privacy of contract and data held is subject to the data protection legislation. Revealing it to an estate agent, or for example naming and shaming, especially if the information is wrong or incorrect ( such as not being due by virtue of failing to contain prescribed information), can lead to civil action criminal action and of course, libel.

                  Do it the right way. Much as some would find matters easier, and perhaps fairer, if we could put a red x on the front door of a service charge avoider.
                  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
                    Originally posted by leaseholdanswers View Post
                    There is a subtle difference in writing to a mortgagee as they have an interest in the property and any proceedings.
                    IMO writing to the mortgage company is, nowadays, a waste of time.

                    It wasn't so many years ago that mortgage companies would clear a leaseholders debt on the simply on the basis of an itemised claim. Invariably, they now seem to require a forfeiture judgement before they will even consider settling a leaseholders debt.

                    Taking the route of lease forfeiture is a long, tortuous and complicated procedure with significant legal costs. My suggestion is to consider the debt purely as a money debt and work on this basis:
                    1. Send a fully itemised and validated claim and demand for payment for the full debt owed, making reference to each element to the relevant clause in the lease. Also make sure you have previously served, if appropriate, the ground rent demands in the prescribed format. Give 14 days for payment.
                    2. If no response, send a letter before action giving 7 days to pay.
                    3. Start an action in the small claims court
                    4. Enter judgement as a money debt if no defence
                    5. Consider method of enforcement - bankruptcy; charging order then an order for sale; oral examination to determine other methods.
                    On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

                    Comment


                      #11
                      Originally posted by Esio Trot View Post
                      IMO writing to the mortgage company is, nowadays, a waste of time.

                      It wasn't so many years ago that mortgage companies would clear a leaseholders debt on the simply on the basis of an itemised claim. Invariably, they now seem to require a forfeiture judgement before they will even consider settling a leaseholders debt.

                      Taking the route of lease forfeiture is a long, tortuous and complicated procedure with significant legal costs. My suggestion is to consider the debt purely as a money debt and work on this basis:
                      Well it depends on who the approach comes from and how well it is drafted, the lenders and the status of the borrower. Self managing people should consider investigating a solicitors letter, and apply all the documentation with a declaration that these are correct from the instructing principals. Some lenders even require a letter of authority to collect from clients and a copy of the management agreement!

                      The risk of money claims is that the costs involved are not always recoverable, save what the court awards. If the balance cannot be put on the service charge and the debtor only liable for the court award, who pays the rest?

                      This needs attention looking at the lease first and when acquiring freeholds or exercising RTM, thinking about collecting monies for irrecoverable non service charge and admin expenses from the members.
                      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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