LVT decision - how to get my money back?

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Thanks leaseholdanswers,

The current LL is hiding behind the assignment of debt and even though I've been told by experts that obligations run with the land and have read s142 of the Law of Property Act 1925 (s142), part of me agrees with them.

The thing about s142 is that it says a lessor's covenants are to run with the reversion, but I can't think how this relates to a covenant in the lease. If I take the new LL to Court I'm going to have to convince the Judge. Do you know of any reference cases in this regard?

The informal deadline I gave the old LL and new LL to sort this out between themselves has now expired so I need to decide what to do next. Since I last posted I have received payment from the new LL for fees that were awarded by the LVT and also for reductions in service charges for charges that were incurred subsequent to the transfer of ownership. There was no covering letter, just a statement of account which makes no reference to reductions on service charges prior to the transfer. The amount of reductions for charges in the period prior to the transfer of the freehold is approx. £1500.

I've been doing a lot of reading on these matters and am totally confused by everything and think that the LVT case may have been a complete waste of time. I may need to go through the whole process again in the County Court.

Because of that, I'm now tempted to not bother taking action but just not pay future demands. However I am worried in case I am not really in credit as I have been advised. Perhaps the new LL does not owe me anything? Can anybody advise me what my risks are if I don't pay future demands by the current LL? My lease describes service charges as 'additional rent' and I've been warned that this means the LL can take action for forfeiture without having to go to the LVT first. Is that right?

There's nothing in the lease that allows the LL's legal costs to be passed on to leaseholders except in the case of action incidental to s146/147 where they can be passed on to the individual leaseholder rather than to all leaseholders as a service charge. If I'm not mistaken s146/147 doesn't apply for cases of non-payment of rent. What about service charges described as 'additional rent' though?

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Frankly your claim is really against your current landlord, how they dealt with matters between them is up to them.

Thanks leaseholdanswers,

The current LL is hiding behind the assignment of debt and even though I've been told by experts that obligations run with the land and have read s142 of the Law of Property Act 1925 (s142), part of me agrees with them.

The thing about s142 is that it says a lessor's covenants are to run with the reversion, but I can't think how this relates to a covenant in the lease. If I take the new LL to Court I'm going to have to convince the Judge. Do you know of any reference cases in this regard?

[leaseholdanswers]

While it is commercial transaction the type of debt under a lease of land is not covered in the way you have posted- you are not a creditor in that sense. Your claim agaisnt a direct is a possibility if you cha show that their undertaking or actions were personal between them and you, not as as a direct of the company.

You can minimise the liability by setting to a letter before action which gives either party the importunity to respond of negotiate.

Frankly your claim is really against your current landlord, how they dealt with matters between them is up to them.

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Well you are actually asking for is an answer which needs a detailed understanding of the facts. Not really a forum matter but in essence you issue proceedings against both parties in one action, so that they have to resolve those issues between them.

Hi Leaseholdanswers, thanks for your help.

I did toy with that idea but always put myself in the position of the innocent party. One of them will have to pay and the other won't. I was thinking that the innocent party might then have a claim against me for costs. Another option is adding the directors as individuals too. I've seen that claims can be made against directors who don't give consideration to creditors when entering into transactions, especially with connected parties.

Whether they have the funds or assets to meet a judgement is important to assess before you proceed, sitting tight with an account in credit might be your only practical alternative. That might lead to their insolvency but then that might be pyrrhic victory as the freehold might be sold, to one of them and the debt to you lost in the closing do the company. Or perhaps an even worse landlord.

That's what was worrying me.

Is your assessment of £2000 valid? How long are the leases and what ground rent is due?

999 year leases from 1984. 6 flats, each pay £25 ground rent.

[leaseholdanswers]

Well you are actually asking for is an answer which needs a detailed understanding of the facts. Not really a forum matter but in essence you issue proceedings against both parties in one action, so that they have to resolve those issues between them.

Whether they have the funds or assets to meet a judgement is important to assess before you proceed, sitting tight with an account in credit might be your only practical alternative. That might lead to their insolvency but then that might be pyrrhic victory as the freehold might be sold, to one of them and the debt to you lost in the closing do the company. Or perhaps an even worse landlord.

Is your assessment of £2000 valid? How long are the leases and what ground rent is due?

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Anyone?

Written more simply. If a landlord, which is a limited company, doesn't have the funds to comply with its obligations, what is the prognosis?

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I have been in dispute with a group of connected parties for about 3 years now and have just recently had an LVT decision go in my favour whereby service charges have been reduced by approx. £1500. This is about 3 years’ worth of current charges so I would prefer to have them refunded. The trouble is that the matter is complicated by the fact that the current landlord is a limited company and although they are connected to the landlord who was responsible (in the main) for the service charges that were disputed, they insist on the protection of the separate legal identities.

The parties in question are the old landlord (an individual), the old managing agent (a limited company with the old landlord and his father being directors) and the new landlord (a limited company with the old landlord’s mother and her sister as owners/directors). The new landlord has no assets apart from the freehold (bought for £2500 and probably worth around £2000) which is most likely not a net asset because I’m pretty sure that it was not bought with company money, so there is a debt of £2500 to somebody. The family own 3 of the 6 flats as individuals. Ground rent is only £150 per year in total.

I had originally been withholding payment of these charges but half way through the LVT case there was an assignment of debt from the new landlord to the old landlord for the service charges in dispute and proper invoices were issued which I decided to pay. If my understanding is correct then by virtue of the LVT decision I now have a claim against the new landlord which isn’t in a position to pay. I may have a claim against the old landlord by virtue of the ‘debt assignment’ possibly being deemed fraudulent or constructive fraud. They’ve assigned a debt which turned out not actually to be a debt.

I suppose my question is “what will happen if I enforce the decision against the current landlord”. That is the easiest option and something I could handle myself. I’ve heard I could have the company wound up if they don’t pay but that it will cost me close to £1000. I’ve also heard that it is the duty of the directors to wind the company up themselves if it is insolvent but doubt they will do this.

I suppose the other option is doing nothing and not paying future service charge demands, however I wonder how the freeholder will be able to deal with less funds than are needed to look after the property. This might be playing into their hands because they already try and get away with not spending any money and I wonder whether they could provide a reduced service of communal heating on the basis of not being able to afford to pay. Communal heating is something I rely on but they don’t need in their flats as they also have their own separate heating.

Any thoughts/advice appreciated.

There is nothing in the lease which dictates how service charges paid in excess of costs are treated.