Managing agency demanding service charges from 6 years ago

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  • Managing agency demanding service charges from 6 years ago

    Hi,

    Since the 1 August 2012 the building's managing agency has started to demand services charges dated June 2006.

    At the time the building was managed by another agency. According to the information the current agency has given me the previous agency told them that at the time I didn't pay these charges.

    Since June 2006 when I received the demand and paid for the charges I have never received any letter or formal demand asking for overdue payments, neither from the previous agency or from the current one.

    The current agency doesn't want to contact the previous agency to request all the paperwork related to my payment history, yet they still demand the payment.

    I have written to the current agency indicating the Landlord and Tenant Act 1885 as advised by Leasehold Advisory Service but they have replied saying that it doesn't apply in this case.

    Can someone shed some light in this situation as to what I can do?

    Thank you

  • #2
    Originally posted by mochima View Post

    Since June 2006 when I received the demand and paid for the charges I have never received any letter or formal demand asking for overdue payments, neither from the previous agency or from the current one.
    Are the new agency saying that demands were made?

    What about neighbours? Did they receive demands over that period?

    Unless Landlords have notified you in writing about service charges they are limited by law to only demanding costs incurred within the previous 18 months. If the lease allows they can demand payments in advance and the amount demanded in advance cannot be questioned in relation to the 18 month rule.

    Your lease may impose further criteria that the Landlord has to comply with.

    Why do the new agency say that LTA1985 doesn't apply?
    I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

    Comment


    • #3
      Section 20b does not apply where the lease, most likely, estimated service charges in advance.

      Those interims/on account SC are recoverable for 6 years. They do not actually have to be demanded or notified as they are an estimate, however the lease may put limitations on the timing and calculation which may frustrate that.

      Section 20b would apply where the "actual" costs as certified under the lease and/or section 21 exceed those interims ie a deficit for that accounting period.

      I would suggest,

      1: You check the lease to see how it arranges service charge

      2; Ask the Agent , if they are in advance amounts, for a set of accounts/certificate for each year so that you can calculate the estimate - actual and any difference so you reach a net amount.

      3: Decide if the services billed in that year(s) were fair and reasonable, and if not challenge them you can do so up to 12 years.
      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


      • #4
        Originally posted by leaseholdanswers View Post
        Those interims/on account SC are recoverable for 6 years. They do not actually have to be demanded or notified as they are an estimate
        I would have thought that a demand was required to satisfy the wording of s20B. "If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment..."
        I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

        Comment


        • #5
          that's for relevant costs. An interim is simply an estimate.....
          dont forget about
          Gilje v Charlegrove Securities Ltd
          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 replies.

            The demand was made in June 2006 through a formal demand and the charges were paid in that year.

            The charges are not for an advance amount but for the relative service charges of that year.

            The other residents did receive their demand as same as I did.

            My question is, can they demand money for service charges incurred at a period where they were not the managing agency?

            Can they demand this payment even though I have never received a letter or formal demand after the date of service charges i.e. between June 2006 and December 2012?

            Thanks

            Comment


            • #7
              What do you mean by relative? What does your lease say?

              If you mean the demand was an amount after the estimated and actual were entered in compared, then any deficit would be irrecoverable but the rest may depending on the lease.

              If you mean the lease calculates charges in arrear then section 20b applies.

              They can as the agent only demands on behalf of a client, a freeholder or RMC for example.

              We need to know what the lease says and the narrative for the demands to help further. I know you want a yes or no or something simple but thats not the case- these issues end up in the Court of Appeal!
              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
                Originally posted by leaseholdanswers View Post
                that's for relevant costs. An interim is simply an estimate.....
                dont forget about
                Gilje v Charlegrove Securities Ltd
                No, that's the case I was thinking of when I referred to amounts demanded in advance in post #118. In that case interim demands were made. I know Etherton J made some sweeping comments in that case about what he considered to be the intention of the law, but they don't change the law.
                I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                Comment


                • #9
                  Originally posted by siva View Post
                  No, that's the case I was thinking of when I referred to amounts demanded in advance in post #118. In that case interim demands were made. I know Etherton J made some sweeping comments in that case about what he considered to be the intention of the law, but they don't change the law.
                  Siva, you are missing the point. Interim on account service charges are not subject to section 20b - they are based on an estimate, its not a question of changing the law at all.

                  Relevant costs are already defined, see for example the Peveral case on electricity, and are costs expended or incurred, to which section 20b does 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


                  • #10
                    Originally posted by leaseholdanswers View Post
                    Siva, you are missing the point. Interim on account service charges are not subject to section 20b - they are based on an estimate, its not a question of changing the law at all.

                    Relevant costs are already defined, see for example the Peveral case on electricity, and are costs expended or incurred, to which section 20b does apply.
                    I don't agree that estimated costs are not subject to s20b. I think that is what people have incorrectly concluded (and probably successfully argued too!) from the Gilje case. I think they are just cherry picking what they want from the Gilje case and that it is only estimated costs that have been demanded which satisfy s20b.

                    Under s18 of LTA 1985 relevant costs are defined to include estimated costs.
                    I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                    Comment


                    • #11
                      Hi,

                      I'm going to have a look at the lease and will reply tomorrow with more information.

                      Thanks everyone

                      Comment


                      • #12
                        Originally posted by mochima View Post
                        Hi,

                        I'm going to have a look at the lease and will reply tomorrow with more information.

                        Thanks everyone
                        Good stuff.
                        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


                        • #13
                          Originally posted by siva View Post
                          I don't agree that estimated costs are not subject to s20b. I think that is what people have incorrectly concluded (and probably successfully argued too!) from the Gilje case. I think they are just cherry picking what they want from the Gilje case and that it is only estimated costs that have been demanded which satisfy s20b.

                          Under s18 of LTA 1985 relevant costs are defined to include estimated costs.
                          Siva disagree as much as you like the issue is long settled, full stop Go back and read Brent v Schulem.

                          You simply cannot incur an estimate! That's why relevant costs are defined in s18 and sct 20b refers to those relevant costshaving been incurred. The Peveral Case is a good exposition as to when costs are incurred.

                          While there was a thought in either Brent or the "StagnantPond" case that section 20b was actually intended only to apply to major works, the estimated costs are subject to either contractual determination or statutory control, partly by section 20b where a landlord is out of pocket if he exceeds the estimate, or by determination as to what a reasonable amount was.
                          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
                            The Brent v Schulem case isn't really relevant. In that case 'in anticipation' demands weren't allowed by the lease.

                            In the Gilje case (where interim demands were allowed by the lease and were made) the argument by Counsel which Etherton J agreed with was only for when actual expenditure didn't exceed payment on account.

                            In the OP's case no interim demands have been made and he has just received a demand for 6 years arrears. It is this current demand that is too late for anything other than cost incurred in the last 18 months.

                            Here's what s20B says:

                            "If any of the relevant costs taken into account in determining the amount of any service charge were incurred more than 18 months before a demand for payment of the service charge is served on the tenant, then the tenant shall not be liable to pay so much of the service charge as reflects the costs so incurred."

                            The demand has only just been served and there have been no others since 2006.

                            I suppose the lease might detail payments that are due without demand but that would make the demand of 2006 look odd.
                            I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                            Comment


                            • #15
                              Originally posted by mochima View Post
                              Hi,

                              Thanks for your replies.

                              The demand was made in June 2006 through a formal demand and the charges were paid in that year.

                              The charges are not for an advance amount but for the relative service charges of that year.

                              The other residents did receive their demand as same as I did.

                              My question is, can they demand money for service charges incurred at a period where they were not the managing agency?

                              Can they demand this payment even though I have never received a letter or formal demand after the date of service charges i.e. between June 2006 and December 2012?

                              Thanks
                              You should ask for a credit /debit statement for your service charge account for the last 6 years ( 2006-2012) showing the payments due and the payments made by you . If there are any arrears , they should have been billed to you in 2007 or 2008 and the arrears would have been recorded in the audited service charge accounts in 2007, 2008, 2009 , 2010, 2011 for your block ???

                              Comment

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