Freehold Rentcharge extinguished?

spring30

We have a freehold property with a £5 yearly rentcharge, but we have had the property for 19 years and never had a demand for it, until now.

We are being asked to pay £5 for this year and £45 arrears. I believe we should only be paying £30 arrears anyway (maximum 6 years).
But I have also read this advice from Rent owners on Landlord forums:

'Rent charges can be extinguished if not demanded for 12 years or more.'

What does this term actually mean?

DVardysShadow

I think that this arises under the Limitations Act 1980. If we are talking about England, the Statute of Limitations does not extinguish debt - it merely makes it unenforceable in court.

And the limitation period is 12 years for debt arising under deed, rather than the 6 years for debt under contract. Asking for 9 years is very cunning. If they asked for 13 years, it would effectively be an admission that the limitation period had passed. But at 9 years, they are probably planning to represent that the account has been paid up to 10 years ago.

Now the tricky point to get to the bottom of is that while they certainly cannot claim back more than 12 years, this is not the same as the rights being extinguished if they are not exercised for 12 years. I believe that the rights [as opposed to the debt] would be extinguished - but I would not put my head on the block for that.

For £60, I doubt they would go to court - if they did, you might get a CCJ- but if you pay it off within 28 or 30 days or something like that, it does not go on the public record.

If is is not worth the while of the owner of the rentcharge rights to go to court, it is scarcely worth your while to buy them out. And actually at £5/year it is scarcely worth collecting. If you find that the charges are not extinguished, you could pay £5 for this year and when threatened send another £5 and ask for a monthly installment plan. It would not take much effort to make it extremely uneconomic to collect.

propertyman

The process of extinguishing is more tiresome and costly than paying the £45! You are far better exercising your right to buy it out.

The rent charge will be extinguished automatically 60 years after it was first implemented.Check your deeds.

http://www.communities.gov.uk/documents/housing/pdf/1962809.pdf

DVardysShadow

propertyman wrote: »

The process of extinguishing is more tiresome and costly than paying the £45! You are far better exercising your right to buy it out.

The rent charge will be extinguished automatically 60 years after it was first implemented.Check your deeds.

http://www.communities.gov.uk/documents/housing/pdf/1962809.pdf

Good find! Link made clickable

http://www.communities.gov.uk/documents/housing/pdf/1962809.pdf

From the link

Q. How much will I have to pay to redeem my rentcharge?
A. Most rentcharges have less than 60 years to run, and in such cases the cost of redemption is, at present, about 16 times the annual amount of the rentcharge.

spring30

propertyman wrote: »

The rent charge will be extinguished automatically 60 years after it was first implemented.Check your deeds.

I have just seen this regarding the Rentcharges Act 1977:

"3. Extinguishment of rentcharges.

(1) Subject to this section, every rentcharge shall (if it has not then ceased to have effect) be extinguished at the expiry of the period of 60 years beginning—

(a) with the passing of this Act, or

(b) with the date on which the rentcharge first became payable,

whichever is the later; and accordingly the land on which it was charged or out of which it issued shall, at the expiration of that period, be discharged and freed from the rentcharge."

Does this basically mean all rentcharges it refers to, would be extinguished 60 years after the passing of the act (therefore not until 2037), as the act prevented any new rentcharges being created after the act was passed in 1977?

propertyman

Any rent charge before the Act ends in 2037.

Any rentcharge created afterward runs for 60 years.

National_Rentcharges_Unit

Rentcharges on freehold properties can be redeemed (bought out) by applying to the Department for Communities and Local Government at [EMAIL="rentcharges@communities.gsi.gov.uk"]rentcharges@communities.gsi.gov.uk[/EMAIL]

All Rentcharges (apart from Estates Rentcharges) created before 22 August 1977 will be extinguished on 22 August 2037 (60 years) as a result of the Rentcharges Act 1977.

If a request for payment on a rentcharge on a freehold property has not been received for 10 or 12 years or more, it may be possible to extinguish it under the provisions of the Land Registration Act 2002 (if your property the rentcharge is registered at the Land Registry or (if unregistered) the Limitations Act 1980.