Building insurance dating back two years - do I have to pay?

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  • Building insurance dating back two years - do I have to pay?

    Hi,

    After not hearing from my managing agents for two years, except for one bill for annual ground rent last year, I have suddenly received a bill out of the blue for £3,000 for building insurance and service charges.

    I understand they have to bill us for service charges within 18 months otherwise we are not obliged to pay. Does the same count for building insurance? They included building insurance in the service charge statement, but then they took it out and invoiced separately in the demand for payment.

    Any help would be much appreciated.
    Many thanks.

  • #2
    Originally posted by mrsb2b View Post

    I understand they have to bill us for service charges within 18 months otherwise we are not obliged to pay. Does the same count for building insurance? They included building insurance in the service charge statement, but then they took it out and invoiced separately in the demand for payment.
    Yes, if the lease says you must pay towards the building insurance then it qualifies as a service charge.

    It is when the LL incurred a charge that is important for the 18 month rule. This is the date when it becomes payable by the LL. This is normally when he receives an invoice but if there is an agreement between supplier and LL, that defines when work or services become payable,then this will be the date the cost was incurred.

    I would ask for copies of invoices, receipts and contracts.
    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
      ..........yes and ask for time to pay and ask why this has come about so late in the day.



      Freedom at the point of zero............

      Comment


      • #4
        As mentioned above, insurance IS a service charge, what does the rest of the service charge consist of ?, if it relates to building works of more than £250 then the S20 consultation process should of been followed, even amounts not caught out by the 18 month rule could still be disputed on terms of reasonableness/amount.

        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
          One twist, as most practitioners have caught onto this - though I have done this for years- is that in accounts there are often accruals/prepayments where the amount in accounts straddle two accounting periods.

          Where you have annual contracts especially chunky ones like insurance, if the accrual starts in the year prior, then the rule of thumb- get it out within 6 months after the year end- is out the window.

          If say you have a March Annual payment with a December year end, the 3 months into the current period means that they have to be notified or demanded within 3 months of the current year end, not 6, as they were incurred more than 18 months prior.
          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 everyone, thanks so much for your posts, they're much appreciated.

            Andy, I have only been sent the service charge statement for June '11 to June '12 so I have also requested June '10 to June '11 as I have never been sent these. But for the 11-12 period, most of the cost is things like emergency lights (£222), five year electrical installation periodic test (£312), fire alarm assessment (£199) and fire alarm testing (£100), plus the insurance (£835) and management fees (£666). The property is a period house split into three flats so this cost is divided by three.

            Leaseholdanswers, could you please clarify for me? The year runs June to June and, according to the service charge statement, the insurance starts 1 July. Would I have to pay for the June '10 to June '11 period?

            Thanks again.

            Comment


            • #7
              Hi.

              Well you could perhaps dispute the lights, the testing, etc..its unlikely the lease allows such costs but it may be possible an LVT deems them recoverable as they are required by various health & safety laws.

              The amounts dont seem too excessive, my insurance is about £1500 for a small 2 flat property qhich is clearly a rip off.

              But it may well be the 18 month rule has effect, this will depend on what your lease says about payments, dates, in advance, etc

              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 mrsb2b View Post
                Hi everyone, thanks so much for your posts, they're much appreciated.
                I imagine everything in accounts to the end of June 2011 should be unrecoverable but it's best if you try and get hold of the invoices before mentioning the 18 month rule. Anything incurred by the LL more than 18 months before you received the demand cannot be recovered by the LL unless you had been notified in writing about the expected charge. If the LL received their insurance demand more than 18 months before he sent his demand to you then he won't be able to recover the cost.

                If you start questioning in terms of the 18 month rule you may well find that the LL's invoices have later dates on them! Especially the managing agent fees which may be a connected company.

                Ask for access to copies of the invoices including use of photocopying facilities. Quote section 22 of the Landlord & Tenant Act 1985.
                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
                  Thanks siva,

                  The only payment I am querying is buildings insurance. Our insurance runs from July to July and the date of the insurance payment on the statement of account is 1 July 2010. As our year runs from June to June, I'm of the understanding that the landlord should have demanded this payment (or written to let us know he would be demanding this payment in future) by the end of 2011.

                  They have also billed me for insurance for the years 2011-2012 and 2012-2013 which I am not disputing and will pay. It is just the year 2010-2011 that I feel I can use the 18 month rule on.

                  Comment


                  • #10
                    But what does the lease say about payments ? Does it require advance payments or payments after costs have been incurred ? You may find more costs were incurred more than 18 months ago and therefore theoretically not recoverable too.

                    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
                      Hi Andy,

                      My lease requires payments in advance - it says I should make two equal half-yearly payments in advance. It also says the landlord is required to provide an estimate of the likely costs of repairs to be carried out in the forthcoming year and that at the end of each year, the landlord is required to provide an account and certificate indicating the actual expenditure (he hasn't done either of these since 2010).

                      Thanks for your help with this - it is a total minefield to me!

                      Comment


                      • #12
                        Often the best policy, if you dispute service charges, is to pay them and then bring a case at the LVT asking them what is payable. This will most likely take away the risk of the landlord being able to recover their legal costs. However if you suspect the LL may not be in the position to repay any over-payment from the LL then you may be best withholding the amount you are confident has been overcharged.

                        If the LL starts or threatens legal action before you pay then they may be able to recover their legal 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


                        • #13
                          Well..if the lease requires certification and it isnt done then the service charge(s) (since 2010) are not payable at all, there are plenty of LVT's about this scenario. It would appear then you could legitimately withold service charges, perhaps further costs will then fall foul of the 18 month rule ? (depending on whether you were actually informed of costs incurred even if they were not payable due to technicalities).

                          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
                            Originally posted by andydd View Post
                            Well..if the lease requires certification and it isnt done then the service charge(s) (since 2010) are not payable at all, there are plenty of LVT's about this scenario.
                            Yes, you are right, but I still feel payment and then reclaiming is generally the best policy. Litigation is never straightforward and you might end up in front of a Judge who takes a dim view of withholding payment, especially if you haven't given your reason. The lease may allow recovery of costs or the Judge may decide it is unreasonable behaviour.

                            Also, if the lease allows recovery of costs you have to go to another trial to dispute the demand for costs from the LL.
                            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
                              I must clarify what has been posted "that without a certificate no charges are due"

                              If as in #11 a interim payment is made, the relationship between the end of period certification (under the lease) varies between leases.

                              In general terms, as leases are infinitely variable;

                              -It is therefore conceivable, and relatively common, that the interims stand alone in the calculation of the estimated charges whehter or not a certificate in produced. The only remedy in that case is not simply the LVT, but the County Court to order the landlord meet the terms of the contract-the lease- and certify. While the LVT might determine what is due for a period the landlord can still insist on his interims and the court would be require him to reconcile them as the lease dictates.

                              -In the case where any surplus is rolled into reserves, the interims would still be due as demanded, unless the the LH challenged them ( and the RF) as being fair and reasonable at the LVT.

                              -It is only where the service charge is expressed as calculated as a final charge, in arrear, less any on account amount, that the LVT might then determine"the" service charge.
                              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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