Starting Forfeiture Proceedings

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    Starting Forfeiture Proceedings

    We have an unusual problem, and I think we need to start forfeiture proceedings. We are the management company holding the head lease of a block of 260 residential flats. We collect Service Charge & run the common parts of the building. When a lessee fails to pay the SC we get a CCJ, notify the lessee and the lender with a s146 notice, and the lender obviously pays to protect their security.

    In this case, we have done all that (observing the correct time limits etc) but the lender has not paid. They first claimed we hadn't sent them a copy of the CCJ, we did, but we have now sent it again (twice) by fax so we have proof of service. I even called and spoke to them and they said they would look into it and call me back, but didn't.

    I don't expect the forfeiture to succeed, we don't even want it to, we just need something to focus the attention of BofS so that they understand that either they pay up now or the consequences will be far worse.

    Under the lease, we can recover legal costs, so the simplest route is just to instruct a solicitor, but I'm trying to keep the costs to a minimum since it seems unfair that the lessee will end up carrying these costs due to their bank's incompetence

    Any advice much appreciated!

    #2
    Originally posted by Scooby7 View Post
    I don't expect the forfeiture to succeed, we don't even want it to, we just need something to focus the attention of BofS so that they understand that either they pay up now or the consequences will be far worse.


    you are talking to the wrong people !
    It is not that you need the B of S to comply, it's the Leaseholder.

    The B of S have not signed any legaly enforcable document ( the lease ) to pay the service charges.
    A mortgage company ( in other cases ) have no contract to pay the services charges to you.

    The person responsible for paying the service charges is the leaseholder, and no one else.
    Repeat, no one else is contracted to pay the service charges.

    Send a letter before action to the leaseholder, and then go to court.
    THAT's what you do now, that is your only course of action, trust me.

    Comment


      #3
      If sending a letter before action send a copy to the B of S.

      As ram suggests, there is no question of the Bank being incompetent. If the lessee wants to put his head in the sand it is proper he should pay costs. Instruct a solicitor. Forfeiture proceedings are not something you can do easily with a DIY guide.

      Comment


        #4
        ram,

        Perhaps I wasn't clear - we have already done the LBA, gone to court, got the judgement, waited 14 days, and served s146 papers on the lessee and BofS as required since they hold a charge over the asset.

        The reason they will choose to pay (even without a contract) is that having given them the 21 days notice required by the lease, we can forfeit and they will lose the security to whatever loan they made to the lessee.

        Comment


          #5
          You are being too kind.

          You have exhausted all possibilities.
          It is up to the leaseholder to talk to his bank, to see if they will pay the service charges, and the bank has all the information from you to decide to or not.

          You have told us you cannot get the service charges, so to get all your costs back, go the S146 route, employ a solicitor.

          Not your problem that no one wants to pay the service charges. You have a CCJ, then act on it, today.
          If the only way to get all your costs covered, inculding preparation of S146 costs and the actual S146 cost which will include solicitors costs, then that's what you must use and do.
          Don't contact the B odf S, as not your problem, just "do" the leaseholder and the service charges will get paid one way or another.
          The leaseholder can take out a loan if he has no cash ( I have to take out a loan for 5 years to pay for my car because I don't have the cash. We are talking £ 10000 worth of car. )

          You have done all you can, it's the leaseholders responsibilty, so go through due process and save time and hassle. Start proceedings today.

          Comment


            #6
            Just a query, say it were forfeited, who wins the flat?

            Comment


              #7
              When you say "s146 papers" what do you mean? I hope that you haven't served a notice under section 146 yourself.

              there is every chance that it is defective which is a problem in itself but many lenders will not act until they receive a copy of the valid notice. it may be that their legal department need to take a look at it.

              And perhaps are still laughing...... sorry couldn't stop myself .
              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
                Are service charges reserved by way of further rent. If they are you should not have issued a section 146 notice. This may explain why Bank of Scotland have not paid.

                Comment


                  #9
                  True, though it depends on the wording of the lease and whether the reservation is as simple as it seems, after 69 marina.
                  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 paulamis View Post
                    Just a query, say it were forfeited, who wins the flat?
                    The owner of the flat "Wins" the flat.

                    The owner is usualy the freeholder, and assuming it's a freehold building, and flats are leasehold.
                    The freeholder owns the buildings and the flats, and leases out the flats for a fixed term.

                    For a pitance of service charges, ( in relation to the retail cost of the flat ) no judge will forfeit the flat, but you have to go the S146 route if that's the only way to get your costs back.

                    I still say go after the leaseholder, using the advice as in Post 7 and 8. Forget the bank.

                    Comment


                      #11
                      Originally posted by paulamis View Post
                      Just a query, say it were forfeited, who wins the flat?
                      If the freeholder obtains possession of the flat by entering the property with a court bailiff and the grounds are for rent arrears then the lessee has six months from that date in which to seek relief from forfeiture.

                      However if the freeholder is gaining possession because he has previously issued a Section 146 Notice then the lessee can no longer seek relief from forfeiture once the landlord has entered the property with the court bailiff.

                      The lease will state whether the service charges are to be treated as additional rent, if not then a Section 146 Notice can be issued some 14 days after the date of determination that the sum falls due. A section 146 notice can only be issued for a breach of the lease other than rent

                      If the lease is forfeited and the title closed then it falls back into the freehold title and the freeholder can grant a new lease and make a substantial gain, he can also still pursue the lessee for the arrears

                      It is difficult concept to grasp because the consequences of forfeiture are so breathtaking and draconian and seem so unreasonable

                      Comment


                        #12
                        Its as rare as hens teeth yes and I have only done it twice on long leases, and several times on leases of 7 1/2 or 21 + when granted, but without checking which I ought to do as it is so rare, the mortgagee can seek relief as in the Abbey National Case of some years ago.
                        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
                          As above it is so rare that you have to think about it.

                          if as said the freeholder has through a court order obtained possession, it is that, not the right to re-enter-forfeit- in the lease on which he relies as his right to do so.

                          While relief as defined in LPA 1925 is as said, lost, however,as a judgement of the court both the tenant and the mortgagee, as a tenant themselves can ask the court to set aside the judgement or appeal the judgement on the usual grounds or argument. IN the past arguments of subrogation and unjust enrichment have been used and while the latter in particularly is not given any great weight, the latitude that a court has in weighing up the default versus the reward is likely to see any Court being very very sympathetic to most appeals.
                          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
                            Interesting points - the service charges are reserved as rent, but our solicitors always insist of s146 notices "to be on the safe side" (their words not mine)

                            Again perhaps I mis-spoke when I talked of serving the papers on the bank. In point of fact they are served on the lessee, but with a copy sent to the bank as we are required under the lease to give 21 days notice to them that we intend to start forfeiture proceedings.

                            Usually a copy of the CCJ & s146 sends them rushing for their cheque book to ensure that they don't lose their security. As I said at the outset I don't expect the forfeiture to stand, but unless a Court application is pending I can't see anyway to move the bank.

                            I should add that the bank (and other lenders) pay off in about 3 cases each month so they must be happy with the paperwork. This is the only time we have had this problem

                            Comment


                              #15
                              Originally posted by Scooby7 View Post
                              Interesting points - the service charges are reserved as rent, but our solicitors always insist of s146 notices "to be on the safe side" (their words not mine)

                              Again perhaps I mis-spoke when I talked of serving the papers on the bank. In point of fact they are served on the lessee, but with a copy sent to the bank as we are required under the lease to give 21 days notice to them that we intend to start forfeiture proceedings.

                              Usually a copy of the CCJ & s146 sends them rushing for their cheque book to ensure that they don't lose their security. As I said at the outset I don't expect the forfeiture to stand, but unless a Court application is pending I can't see anyway to move the bank.

                              I should add that the bank (and other lenders) pay off in about 3 cases each month so they must be happy with the paperwork. This is the only time we have had this problem
                              Notwithstanding that a Section 146 has been issued incorrectly, why not instruct your solicitor to now issue proceedings for possession. Surely at this point when a copy of those proceedings are issued the mortgagee they will want to settle and will also settle your solicitors costs in full.

                              Comment

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