Section 146 Notice

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  • Section 146 Notice

    Hi

    I am new to this so I hope someone can provide a view on the issue below:

    I purchased a leasehold flat back in early 2010 and was made aware that there were service charge arrears. However, the banks solictors gave an assurance that no liability would not transfer to me.

    I was subsequeently sent demands for the arrears and eventaully the matter was referred to the LVT. Although I had attempted to pay what was due from the date of assignment but these were rejected.

    At the tribunal (following much research) I succesfully argued that I was not liable for arreas prior to the assignment of the lease to me. I found a number of references supporting this.

    The tribunal found that I was not liable to pay the arears as the lease was pre 1990 and it was agreed that payment of the outstanding amount for 2010 was payable (as I expected).

    Since receiving the determination I have been trying to contact the Freeholder and Managing Agent to arrange payment. They did not responded to any of my correspondance.
    Then about two weeks ago their solitor sent me a Section 146 Notice alleging that I had not paid the money agreed.
    I of course immediately wrote to them making them aware of my attempts to contact their client (I have proof of posting) and sent a cheque to the solicitor.

    He has now sent the cheque back but not provided any explanation.

    I am at loss to understand what the position of the Freeholder is and how to respond to the Section 146 Notice.
    I spoke to the Leasehold Advisory Service who said that the Notice was invalid and rather than incurr additional costs just write to the Freeholder.

    I would appraciate any vieww on the above.

    Thanks
    Warner

  • #2
    Service Charges do stay with the property not the individual therefore its is possible to buy a property and be chased for arrears however this is normally sorted out at the buying stage, there have been cases where this hasnt been sorted and individuals have sued the solicitor involved.

    Anyway it appears that the arrears situation is sorted and you are only libale for the period since you live there.

    Firstly have you been sent a valid demand ? See Leaseholdanswers post (#3) here > http://www.landlordzone.co.uk/forums...-or-to-not-LVT for some important info., S47 & S48 are prob. quite important becuase I assume that that is the address that correspondence and payments are to be sent.

    I havnt heard of anyone returning service charge cheques before, returning Ground Rent ones is more common due to the fact that accepting them can be viewed acceptence of any breaches and also sometimes freeholders like to tack on huge admin charges.

    Perhaps your freeholder has his eye on forfeiting your property ?..this is hardly ever carried through to completetion, and in your case you have proof that you attempted payment, as the S146 Notice should of told you..it HAS to go before a Court or LVT for determination, at which surely he would lose, beyond that its hard to tell what he is playing at ?

    Has he surved valid demands ?(S47/S48 and 'Summary Of Rights' attached ?)...and have you made any form of admission ?

    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


    • #3
      The demands prior to the LVT hearing were valid in their structure as far as I could determine but included all the charges that were outstanding ie the arrears.

      Since the LVT decision I have not recieved a demand for the specific amount agreed at the LVT, although I had written on many occasions. When I submitted the cheque I made it payable to the Managing agent since they hold the service fund.

      The following is the decision of the tribunal:

      1) The tribunal determined that the service charges for 2005 to 2010 were reasonable.

      2) The tribunal determined that pursuant to Section 81....... the service charges for the service charge year 2010 were £2,517 of which £1,511 was unpaid and was payable by the Respondant.

      3) The tribunal declined to determine that the unpaid service charges for the years 2005 to 2009 were payable by the Respondant.

      At the tribunal I stated that I was not in dispute of any service charges due since assignment of the lease to me and had all attempts to pay that amount rejected. So the figure mentioned for 2010 has never been in dispute.


      The Notice states that I am required to pay this amount £1,511 and ends with the statement
      "These breaches are remediable and you must remedy the breach within a reasonable period of time. You are also required to make reasonable compensation in money due to the landlord for breaches of the covenant. In default your landlord intends to foorfiet your lease"

      I suspect that the Freeholder and Solicitor have some kind of game plan.

      I also wonder if the the Notice is valid in respect of the tribunals findings and that I am trying to make the payment.

      Warner

      Comment


      • #4
        Is the LVT decision online ?. (All decisions are published on LEASE and RPTS sites).

        Was the LVT case a determination that a breach had occurred (there was mention of S81 relating to Forfeitures) or did you make an admission that the money is owing ?. I ask because it sounds as if the freeholder believes this to be the case, that you have breached a covenant of the lease and that a S146 Notice can be served (without the need for a determination).

        Of course if you have been trying to pay then the above is rather irrelevnat because then the breach has only occurred because of their refusal to accept payment,.

        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
          I'm going to guess that this probably has something to do with costs, either of the LVT or in preparing the notice. Everyone seems to have differing opinions over what constitutes waiver and for this reason many landlords (and sometimes their solicitors!) refuse to either communicate or accept any payment other than the full amount they want.

          What, if anything, has been said about the costs of the LVT or the solicitors fee for the s146 notice? I'd be surprised if they don't want paying for one or the other (even if they're not entitled).

          You said:
          Since receiving the determination I have been trying to contact the Freeholder and Managing Agent to arrange payment. They did not responded to any of my correspondance.
          Did you try just sending them a cheque at that point?

          Comment


          • #6
            The decision is online ref CAM/22UN/LSC/2011/10046.

            I do not believe the determination was that a breach occured, however I am also thinking that they have an intepretation of the wording relating my agreement of the charges due for 2010.

            At the hearing I submitted evidence that I had attempted on several occasions to make payment for service charges due since assignment and therefore agreed that amount for 2010.

            Hence as soon as I received the determintaion is wrote on 4 occassions to the Manageing Agent (who reprseneted the Freeholder)in order to arrange payment but requested a formal statement. It was only when I actually sent a cheque that I recieved as response ie a Section 146 Notice.

            For further background, prior to the LVT hearing they had infact served me with a County Court Notice and prepared a barrister etc and so incurred costs. At the CC I argued that the case should be heared by the LVT and hence it was transferred to them. No costs have been granted to either party at the CC or the LVT.

            I wonder then if the statement " You are also required to make reasonable compensation in money due to the landlord for breaches of the covenant" have some bearing on their intentions.


            Warner

            Comment


            • #7
              I can't find that decision on their website, do you have a link?

              The problem is you seem to have encompassed two quite complicated areas of law in your case. Firstly, the service charges prior to your purchase cannot be recovered from you as debt - but common thinking seems to be that non payment is an ongoing breach - which is why as Andy says, the service charge arrears tend to run with the property. Secondly, very recently the Court of Appeal decided that the costs of LVT proceedings can, if the relevant clause in the lease is wide enough, be recovered as costs incidental to the preparation of s146 notices. The reasoning of the tribunal may throw some light on whether or not that is the line they are taking.

              Also, since this was started in the County Court it will be referred back. They may be (probably are) intending to continue those proceedings and have the costs dealt with there since the tribunal cannot award costs other than in exceptional circumstances.

              Comment


              • #8
                Aha..its becoming clearer, I was under the impression that the LVT case was about them payability and/or reasonableness of service charges BUT it is actually a determintaion for breach of the lease, on two counts..the lack of notice of assignment and then service charge arrears.

                However it is rather confusing to say the least !...it is not really clear whether there was a breach for the non payment of service charges 2005-2009but it would appear that that can be ignored and its only the 2010-2011 that you are liable for.

                Dose anyone else care to have a look > http://www.residential-property.judi...1_17_19_03.htm its not very clear whether the LVT does actually conclude that a breach has occurred !?

                To summarize it would appear for a breach to have ocurred then the arrears must have been owing for a reasonable time, upon what date did you receive any demands and for how much ?...and on what date did you receive the LVT decision and on what date did you (try) to pay the arrears (£1511).

                Ultimately I guess that the management comopany wants the £1511 amount AND some compensation for your breach but the decision could be clearer !

                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


                • #9
                  Originally posted by Tulula View Post
                  I can't find that decision on their website, do you have a link?

                  The problem is you seem to have encompassed two quite complicated areas of law in your case. Firstly, the service charges prior to your purchase cannot be recovered from you as debt - but common thinking seems to be that non payment is an ongoing breach - which is why as Andy says, the service charge arrears tend to run with the property. Secondly, very recently the Court of Appeal decided that the costs of LVT proceedings can, if the relevant clause in the lease is wide enough, be recovered as costs incidental to the preparation of s146 notices. The reasoning of the tribunal may throw some light on whether or not that is the line they are taking.

                  Also, since this was started in the County Court it will be referred back. They may be (probably are) intending to continue those proceedings and have the costs dealt with there since the tribunal cannot award costs other than in exceptional circumstances.
                  There is a typo in it..but Ive linked it above...and yes I agree surely this should now go back to the CC to tidy it up a bit as its rather messy.
                  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


                  • #10
                    Ok .. Ive re-read it and some of my above comments were wrong.

                    The LVT application is BOTH to determine whether as breach had occured (they 'refused' this so the answer is neither yes nor no !), AND to determine reasonablness (they concluded yes although strangely there seems no investigation of costs/amounts).

                    So initially I'd say they can't serve a S146 because there has been no determination BUT does Paragrpah 18-19 mean an agreement or admittance has taken place ?. (its rather sneaky if so, but I had a similar scenario, I was served a s146 then nothing then later the freeholder refered to a court claim where I admitted the money was owing..I was niave and foolish at the time, it appear you may have fallen into the same trap).

                    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


                    • #11
                      They decided there was no breach re the notice.

                      Paragraph 22 is more difficult though, it's not very well reasoned when you read it in conjunction with para (5) of the Woodfall extract, but anyway, they seem to have found in Warner's favour re the arrears prior to purchase.

                      They are in a position to issue s146 because they have a determination under s81 of the HA 1996.

                      I think the reason they won't accept Warner's payment is because they don't want to risk waiver, and they'll be going for costs in the County Court as a part of forfeiture proceedings.

                      Warner, if there are still solicitors involved you might try writing to them and asking what it will take to settle the matter. I'm not saying you should agree to it, but you need to know where they're coming from (what they want).

                      Comment


                      • #12
                        Tulula

                        When they returned the cheque, the referred to Paragrahs 19 and 21 of the determintaion stating that "the service charges of £1,511.48 were payable by yourselves" yet returning the cheque for the same amount, which is why I have found this to be puzzling. Having now read through the threads it is becoming clearer as to their possible intentions.

                        I have drafted another letter today to return the cheque and ask for clarification.

                        At present I have not instructed a solicitor. I had done so for the intitial County Court hearing but of course once barrister costs became a possibility I had to judge whether the costs incurred would be greater than those saved.

                        I imagine that costs would have been incurred as far back as 2005 when they were trying to get the arrears paid by the previous lessee. have you any thoughts as to the extent of costs that could potentially be in considertaion? ie those that pre date assignemnt of the lease to me?

                        Warner

                        Comment


                        • #13
                          Returning the cheque does seem rather bizzare and may be looked upon unfavourably be a court, after all they could accept it AND still chase you for costs/compensation for breach costs (if there had been one).

                          I at the limit of my knowledge now, perhaps you could have a quick visit to a solicitor for half an hour or so to give you a quick explanation of the LVT's decision.

                          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


                          • #14
                            I don't think recovery costs incurred prior to purchase could be claimed from you.

                            As to their costs in the county court and LVT proceedings, it's anyone's guess really, not least because we don't even know yet whether your lease allows the recovery of costs "in contemplation of or incidental to" the preparation of s146 notices. Can you find that clause in your lease and post it in full? It costs about £500 + VAT to get a solicitor to draft a s146 notice, it could cost many thousands to take a case through the courts and LVT.

                            Comment


                            • #15
                              I will read the lease again tonight, I recall that there is a clause relating to the recovery of costs in preparing proceedings. I correct in thinking that these would only relate to the costs of the s146?

                              Thanks everyone for your input on this.

                              I'll provide updates as things develop as it may be of interest or help to others.


                              Warner

                              Comment

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