Can we forfeit if service charges have been demanded / paid

[ram]

From posts on here, it seems that in order to proceed with an application to forfeit for a breach of the lease, ( but forfeiture proceedure is used only to enable us to recover solicitors costs as per lease mentioning Section 146 cost recovery )

you only have to "not" request ground rent.

Some have mentioned that you must not ask for the service charges, yet some learned members state only the ground rent has not to be requested / paid.

Which answer is right ?

My interpretation is that the service charge money does not belong to the freeholder, is only held on trust for the leaseholders, therefore the service charge money is not part of the freeholders property, unlike ground rent - which is.

We NEED the service charge money for urgent safety work, and we cannot "not" demand it, otherwise we would be commiting a criminal act not to do the required safety work.

Currently the ground rent has not been demanded or paid, but the service charges have ( we needed it ) so I hope we can go through the motions of suggesting forfeiture will be processed if the certain breaches of the lease are not rectified.

I hope the answer is -- Only the ground rent must not be demanded.

Thanks.

R.a.M.

[leaseholdanswers]

my post is correct, period. ground rent alone must be demanded since CLRA 2002 otherwise it is not due, having overidden any lease term to the contrary. section 146 does not apply to ground rent, if the time and amounts are sufficient, you proceed to proceedings.j

[ram]

Sorry, you have totaly lost me !

It's not about none payment of ground rent or service charges that we wish to go through the process of forfeiture.

Lets say they have fitted laminate flooring when the lease forbids it.

a) If we have requested ground rent and been paid it, we cannot go through the "process" of forfeiture.
*b) But if we have demanded service charges, and received it, we can go through the "process" of forfeiture ??

* See post number 1.

[leaseholdanswers]

A breach can be subject to forfeiture, but that can be waived where the landlord was aware of the breach but then did something that suggests he intended the lease to continue. Demanding or accepting any sum can be such an act of waiver.

[andydd]

I am under the impression that the FH has to act as if the lease didnt exist, and its under the lease that all service charges and ground rent are demanded, so surely the best bet would be to not demand either and be carefull with the wording of corespondence.

[ram]

Thanks all,

But if a breach which has to be rectified, then lets assume the service charges are due as it's the end of the financil year.
There are a few leaseholders that need to be "repremanded" for various breaches of the lease and cost implications would be that all would be "served" together.

1) But we cannot wait 3 months for the LVT ( FTT ) to make an appointment ( average = 10 weeks ) / come to a decision without any funds, or we cannot pay the insurance, the safety jobs, therefore we would have to waive every breach, in order to gain funds, which then means we go to solicitors and remove the covanants that have been waived - from the lease, as a waiver is forever !

2) Directors here act as leaseholders, not Directors / freeholders and they will not sanction dispencing with asking for service charges, as they want dampproofing areas where their flats are damp ( 50% of flats ) so I can look forward to massive changes in the lease ( Removing waived covenants )

It is not right that in order to comply with safety regulations, health and safety regulations, we have to allow breaches of the lease because we need the service charge money ! then Laminate flooring spreads through the flats and cannot be stopped ( as an example )

Blocks of converted flats do not have mountains of money, and where the Directors have no alternative but to waive the lease because they need the service charges is not the way forward, so we can look forward to having to rip up the lease ?

Thanks.

[leaseholdanswers]

Oh dear RAM, you do have a penchant for creating Gordian knots-you have completely conflated several points and created one. My last post explains the full and correct position , if there is a breach and you are aware of it ANY amount GR or SC demanded or accepted is potentially a waiver .

Taking your first point- ground rent and forfeiture. You can’t issue a section 146 notice for ground rent recovery ( see s146) so rent being demanded or not is irrelevant to s146 and costs. On the second point its as above any amount demanded or paid can amount to waiver.

……………………………………..

Your interpretation is wrong. It might only apply if the service charge were operated by an express trust which exists on its own, not an uncommon situation years ago where maintenance trustees were created, however as their role or function is often as a party to the lease, its likely still a waiver.

…………………………………
Your problem is that you were aware of a breach and demanded and accepted service charge. Issue a suitable letter before action stating, among other things, that there is a breach of the lease which you require remedied eg carpeting, failing which you intend to enforce the terms of the lease, by seeking forfeiture or via injunction.

See how they respond. You know that they might prepare a defence of waiver and that is a matter of fact to be argued and proven.

[leaseholdanswers]

Thanks.

I understand your problem, but that is simply a fact of life where poachers and gamekeepers are one and the same. Appointing a manager is one option mentioned before but if I recall was not practical in your case.

It is a question of choosing if laminate floorboards need to ripped up or not and the likelihood of a lessee taking action against the freeholder on any of those breaches.

There is no “removing of waived covenants” they might simply be covenants which are unenforceable through forfeiture, but might still be enforced by other methods. That however I understand is limited by cost recovery issues.

That then might be your answer, as a lessee, assuming that you are not a director and are prepared to resign, can through threats and court action require that they do the required works and enforce lease terms if you can show that the breaches affect you, such as a laminate floor above you, and especially where the lease has an express covenant for the freeholder act on a complaint.

The threat cost and implications of action(s) might bring them to their senses, especially if pushing them to insolvency..

[ram]

Thanks again.

Yes, appointing a manager is an option, but when Directors refuse to sanction "sueing" themselves, then breaches would be waived, so a Manager would be no good.

A manager would be no good if the Directors previously refused to suspend service charge income.

But as you said, there are other ways to ensure the "Company" complies with the lease, which I will be acting on, via your last few years of advice..

As a matter of interest, Directors have voted that Solicitors cannot be engaged on any "Company business", no matter what the problem ....... because THEY will have to write a cheque to cover it, so to speak ( add it to the service charge ) Great, yes ?

[leaseholdanswers]

RAM I am and was talking about a manager appointed by the FTT. The Board can vote to do what they like, not engaging a solicitor is pretty daft, and I suspect only to be intended to be held to until " they really have to " and change their mind.

[ram]

manager appointed by the FTT, yes, me too, but if a breach has been waived by the actions of the Directors NOT doing their duty under the lease, because they don't have a clue, and think only of themselves as leasholders, then an FTT manager will still has the same problems as I have at the moment.

But FTT is the way to go.

[leaseholdanswers]

yes waiver might still be an issue but for all other concerns its his call the board are no longer in charge. a notice saying sort the issues this way ,as required, might shake them up.

[andydd]

S146 and forfeiture is an old legal remedy and there are many who advocate its removal as it can be totally disproportionate, i assume that without it a Fh could sue a Lh for breaching the lease ?

[ram]

The ONLY way to get all your costs back for taking someone to court for a breach of the lease is to use the lease covenants that say you can get your costs back.

Very often, the ONLY part in a lease that allows you to do that is ( as it is in ours ) is a covanant that says the freeholder can charge for all costs in preparation, and implimentation of the S146 forfeiture.

That's why the forfeiture route is taken, even though the freeholder does nor wish to forfeit, but it's the only part of the lease that sates the leaseholder has to pay for all costs of the freeholder is during an S 146 proceedure, and for nothing else.

If we just take a LH to court, the freeholder cannot get his solicitors costs back.

[leaseholdanswers]

S146 and forfeiture is an old legal remedy and there are many who advocate its removal as it can be totally disproportionate, i assume that without it a Fh could sue a Lh for breaching the lease ?

Yes however at peril for his costs. The fact is that legal costs cost what they do, and if you strip that away there is no point in a landlord owning a freehold, and the lease becomes unenforceable, or they locate themselves outside the jurisdiction, make as much as they can until it all goes wrong or control is seized.

That then puts a residents group in the same dilemma, they as landlord, now cannot recover their costs!

Its probably the single biggest misunderstood defect of RTM, they cant get their legal costs back under most leases.

Very often a key factor in these cases that others like in have a common factor, rather then quickly responding and exercising their rights, they let the landlord take the initiative and think that logging onto a "whinge a lot" site will work a miracle.

Forfeiture could be retained for the daft cases where it is required with the requirement for a court appointed agent to sell the property and proceeds given to the former owner. Amendments should be focused on service charges or rents being restricted to county court money.
claims and a statutory amendment to all leases to allow costs to be recovered for that subject to sch 11.