Failure to pay service charge. What course of action can we take?

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    Failure to pay service charge. What course of action can we take?

    We collect the service charge twice a year, one of the residents has informed us that they won't be able to pay. The flats are all privately owned and lived in by the leaseholder, (share of freehold).

    What action can we take to obtain the money?

    If legal action is taken who pays the cost of the solicitors and court fees?

    If the owner can't pay what options does the Residents association have to get the money?

    Can the owner be forced to sell or obtain a bank loan to pay?

    We have never had this problem before and unsure as to what rights the association has to get the money.

    Thanks

    #2
    1. What is the reason for not being able to pay sc ? Lost job or illness or divorce ? Continue to send demands to the leaseholder in arrears of service charges and ask for payment . Send a copy to the Mortgage lender asking for payment.

    2. Google search on internet for "solicitor + service charge arrears". The y will give you a quote for their recovery service.

    3. Informally,ask the leaseholder in arrears to sell their property and buy a freehold house which has no sc to pay.

    Comment


      #3
      What a muddle- its is freehold no such thing as share of freehold owned by either a group of people who are also flat owners, as THE freeholder, or their company. residents associations are rarely actually those in charge or have any legal authority and are representative groups, thats all.

      So you are either the freeholder or a company that owns the freehold with leaseholder that owe funds.

      First read this and check the bills are in order. http://www.landlordzone.co.uk/forums...-Might-Be-Here
      Posts 1 and 2


      Second you need to discuss with them in coincidence which means that only two of the board or committee have the full information and do not disseminate it to others as to why they cannot pay, as this information is personal and can be quite upsetting for them and is key step to working out what you do next. it may be temporary situation or one that you can live with or accept installments and trying to reach a solution will affect the outcome in court. Moreover if their situation is that dire, 4 moths down the line the court will only grant a small installment anyway.

      Third if the situation is so dire that there is no way out of it you mirth want to then consider whether to seek forfeiture action in effect terminate the lease and repossess, the threat of which will normally get their mortgagees to pay for them and add it to the loan. With this in mind the owner might want to ask them anyway, and you may have to send the letter to threaten them to help them conceive the lender to help out.

      if you think that they can pay but would prefer not to and go on holiday instead then the robust instruct a lawyer route is best.
      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
        Thanks for the replies. The situation is that the current owner an elderly lady has a full time carer living in as she doesn't want to go into a home. A gentleman who tells us that he looks after her finance affairs has said that due to the care costs she doesn't have any money left and she doesn't want to move. (Maybe he is trying to protect her money as she is receiving state help, which I thought was means tested?)
        The owner has no mortgage on the property. It is a tricky one but the association can't afford to have non paying members as we have maintenance and contractual obligations that require attention.

        I don't know the full details of the gentleman who sorts her financial affairs, maybe he's a beneficiary in her will. Would it make sense for us to find out if he is an appointed with power of attorney, if so does this mean that he has to ensure her bills are paid?

        Lets hope it doesn't get to us having to take forfeiture action. Who would be responsible for any costs that the association occur in seeking legal advice, would this come out of the current monies in the bank or be paid by the owner once a ruling has been given?

        Thanks

        Comment


          #5
          This is a sticky one. No courtis going to be very happy over granny being evicted or sued so you need to determine who this chap is and whether she has someone who has control of her affairs if she is not able to do so. The fact is that you are right that the other owners should not have to subsidize her and that she is responsible for contributions under the lease.

          Either through this chap her or failing that with help from social services a dialog has to be opened up and I would suggest that you employ solicitors to handle part of that at an early stage so that you approach this correctly and supportively. As this may involve her remortgaging or releasing equity in the flat it may be a complicated process. A court tribunal or lengthy proceedings will end in the same result of having to find away for the judgement to be enforced and if you therefore try and sort it out beforehand a court will be far more prepared to enforce an application.
          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
            To answer the questions........

            1. There are really two legal routes for outstanding debts, A County Court claim (generally this would be a small track claim) or a Forfeiture claim (If the lease allows, most do). Forfeiture is a big stick and certainly can scare tenants into paying, also if mortgaged, the mortgage compoany may step in and offer to pay.

            2. Generally court rules are that the loser pays the costs, BUT be aware, that small claims costs are not recoverable apart from some fees and a minimal amount for time spent. The LVT has similar rules. Some leases do however allow legal costs to be recovered regardless of who actually 'wins', (although this can be challanged with an S20C order).

            Even if general legal costs are not recoverable under the lease, they may be under the Forfeiture/S146 clause, this is why some freeholders use this clause (or rather sneakily they follow the standard CC monetary claim but make reference to the forfeiture clause in an attempt to recover costs, wrongly IMO).

            3. Same as above.

            4. Im not sure they can be 'forced to sell, the forfeiture option is listed above and a successful CC court could place a charging order on the property

            So have a read of the lease and find out the situation regrading legal costs, it may be they are not recoverable as a servicre charge which could cause you problems.
            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


              #7
              Don#t over look that the LVT, now FTT, has its own new rules on costs.

              Andydd is right however when turning up with "sweet little old lady and carer in the dock" the court will want to see a lot of effort in attempting ADR before hand. While it is not right that neighbours should be expected to subsidise the other, the view that might be expressed is that having as a group taken on the freehold, management of arrears and financial hardship is to be expected and funded as a company/ group as such problems are part and parcel of being the freeholder.
              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
                Indeed althought the new rules still rely on wasted costs or on the other party acting unreasonbly, and that from what Ive read the bar is set quite high.

                Found this site which explains all and is easy to understand > http://bradysolicitors.com/lvt-and-f...s-environment/

                It is worth remembering that in a small claims court and whether transfered to FTT or not if you are using a solicitor charging you £200 plus an hour and you cant recover the costs, it quickly becomes not worthwhile pursuing cases (although that hasnt stopped my Freeholder !).
                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

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