Service charge problem!...Help needed....

[31gregg]

Hi guys,

First time posting on this site but hopefully you guys can help me out. Having problems with my management company and the service charge. My lease clearly states:

Payment of the service charge:

2.1 - On or before each accounting date or if that shall be impractical then as soon as practicable after the management company shall prepare an estimate in writing of the service costs which it expects to incur.

The management company is stating that payment in full must be paid 1st September every year, for the forthcoming 12 months. For several years, payment was paid monthly over 12 months. They suddenly changed this and demanded payment in full 1st September.

Are they legally allowed to do this?

As my lease states above, ..'if that shall be impractical then soon as practicable..' meaning if I cant pay it in one lump sum, then monthly payments over 12 months is legally allowed, does this sound correct?

Can they legally add interest for paying the full amount monthly over 12 months?

I know of high level court cases (unsure of the case titles) that have ruled in favor of the defendant regarding service charge payment for their lease stated the same details as above. Does anyone know of these cases? If so, the dates and names of them?

Any help would be amazing guys thank you!

Gregg.

[JK0]

I don't think your lease allows you to pay in installments. If you don't have the money, I suggest you get a bank loan, and pay it off over the 12 months.

Try to save up so you don't have to do the same next year.

[31gregg]

Thanks for your reply mate. Why don't you think payment can be made in another way? Payment was always made monthly before and then suddenly just changed. It doesn't state in my lease anywhere that one single payment must be made on the 1st September. Just says that it should be paid for the year. Not how or when. Thanks.

[andydd]

Im sure the lease must say more about the actual payment dates, the part you posted just says about when an estimate will be sent. (That on its own wouldn't warrant any payments being made IMO).

It would be unusual to allows installments, most leases require a payment in full in advance (with the balance either debited or credited later), some lease (like mine) just mention that the LH must reimburse the FH in that case, they can only ask for money after they've actually spent or incurred it.

Obviously in the latter a LH could pay in installments if he wanted I guess, effectively he would be paying in advance although not legally obliged to, but if its the former then the FH would effectively have to loan you the money whilst you caught up with installments (which reminds me, my FH originally had a scheme like this, although this was a bit of a a con as the lease didn't warrant advance payments anyway not that it stopped him trying it on).

[ram]

Just says that it should be paid for the year. Not how or when.

The lease states when an estimate of the service charges should be supplied and invoiced.

When you receive the Service charge demand, you usualy have to pay within 30 days.

The problem with paying monthly, if there are no funds in the bank, is it will take 12 months before some work can start.
Lets say you need a new roof, or major repairs, and you have not enough money in the bank, then you can't start the work till you have the money in the bank and that wont be until the 12 month if you all pay monthly.
Paying monthly wont work, and someone would sue the freeholder for not stopping the leaks for 12 months.

You want a car, you pay before you receive the car. ( Or the dealer gets paid by a finance company before it leaves the showroom )
Want repairs to your property ? then you have to have the money in advance to be able to pay the invoice.

Apparently, the monthly thing does not work any more, and propbably because of above.

And, re-post above this, if the freeholder has to borrow money, then he often cannot pass on the interest payment costs to the leaseholders, therefore he loses thousands of pounds in interest payment every year.
So freeholder / man agent need the money in advance, or the work does not get done for 12 months - which is not good.

[andydd]

And, re-post above this, if the freeholder has to borrow money, then he often cannot pass on the interest payment costs to the leaseholders, therefore he loses thousands of pounds in interest payment every year.
So freeholder / man agent need the money in advance, or the work does not get done for 12 months - which is not good.

True. But one could argue the FH should of read the lease before purchasing and if he identified problems such as no ability to charge in advance he should of walked away.

Interestingly many leases in my local area have very similar wording,.i.e no advance payments or sinking fund, my local LVT Chairman has often commented on this and pointed out perhaps a voluntary agreement to pay in advance or have sinking fund could be agreed between the parties, very strangely though in my LVT case, he suggested that it would possibly be reasonable for a FH to borrow money and 'pass on any identifiable interest' to the LH, he is of course completely wrong in this, its a pity that many LVT members to take it upon themselves to make such weird suggestions.

[31gregg]

Ok thanks for the advice guys. Much appreciated.

The management company have plenty of money in the pot. £58000 if I remember correctly. Does this now make a difference? My question is.....if we were all paying monthly before, for several years, why does it suddenly need to be in one full payment 1st September? Can they LEGALLY just change the payment plan without our input or consent?

Any help will be great guys thanks.

[andybenw]

What have the management company said? Have you actually queried them re the change?

[31gregg]

Yes I did straight away. They gave some long winded bullsh*t response. It was a few years ago now so can't remember exactly word for word.

I was paying monthly with added interest, then they wanted the full amount paid over 6 monthly instalments in the first 6months, then that changed again and it's all in one payment.

My question is simple....can they do that?? Can they keep changing the payment plan like that? NOTHING is written in my lease that states they can. Hence why I'm asking about playing in installments with added interest.

Thanks guys.

[ram]

I was paying monthly with added interest, then they wanted the full amount paid over 6 monthly instalments in the first 6months, then that changed again and it's all in one payment.

Can they keep changing the payment plan like that? NOTHING is written in my lease that states they can.

Ref Post number 5. ( When you receive the Service charge demand, you usualy have to pay within 30 days.)

Ref your post number 0ne.
"As my lease states above, ..'if that shall be impractical then soon as practicable..' meaning if I cant pay it in one lump sum, then monthly payments over 12 months is legally allowed, does this sound correct ?"

Not correct.
That clause only applies to the preparation and delivery of the service chage demand letter, ( Issue it soon as practicable ) and nothing to do with payment.

If you have difficulty paying in one lump sum, such as the bank wont lend you any money, then you can Apply to the freeholder / MA - or whoever issues the service charges, that you would like to pay monthly, and include "that it is understood that they should offer you the option if hardship is encountered"

You now need to know what the £ 58000 is held for.
and if there is no money reserved for a sinking fund we assume this would be the "float" to be used to pay for the maintence before all the money comes in.
You know how much money is spent every year on maintenence, and is it £50,000 per year, or £ 20,000 per year.

WHAT is the demand £ for service charges you have been given, so we can understand better.

But if there is nothing in the lease, then the service charge demand is payable within 30 days.

[andybenw]

It's all very well telling us what is NOT in your lease.

Tell us what IS in your lease.