Increased invoice for same service charge

Ozvaldo

We have owned a flat in a purpose built building consisting of 12 flats for the past 9 years and have had nothing but problems with management companies dealing with services,
Our latest issue is that each flat had been issued an invoice to be paid for management services this charge was paid in full in the allocated time but now 3 months on we have been sent a second invoice for the same service upon contact we have been notified that it's because the first invoice did not cover the cost and the management company went over on there origanal budget!
Is this this legal in anyway?? As it feels like we are being charged for somebody else's miss calculations.

saajan_12

Is the new invoice correct / representative of the expected cost of the services? If so, you aren't paying more than you would have if they had invoiced correctly the first time, the only impact to you is the minor admin of having to arrange the payment in two bits.

I'd look at your lease / contract with the management co. to see what charges are allowable and whether this is fixed or variable depending on the work needed.

Ozvaldo

The original invoice was a final amount and no different to how we had recieved our service charge previously,
The second invoice which was recieved 3 months after was just to pay more for the original service charge we just can't understand how this is able to be done??
Even if the contract is variable surely this would still only effect the original invoice not allow a follow up invoice for more funds??

eddddy

I guess the management company either made an error in the first invoice, or a bill from a contractor came in late.

Assuming the second invoice is accurate, you would have to pay it.

The grounds for challenging it would be something like if they were charging you for things that you are not responsible for.


(Obviously, if they had overcharged you in the first invoice, you would expect them to refund the extra. But as they've undercharged, so you need to pay them the extra.)

G_M

It's hard to be sure without looking at the invoices, reading the lease, and checking the management company's accounts (to see where the money has been spent.

However it is quite common for a fixed amount to be paid, in advance, either annually, bi-annually, or (as here?) quarterly.

Then at the end of the period, the freeholder/management company checks what was actually spent (rather than what was expected to be spent).

If the actual expenditure was greater than the advance payment (perhaps some extra maintenance was required, or the garden contractors increased their fees etc), then an additional invoice is sent to cover the shortfall.

Once a year the full accounts should be submitted, showing what income the Manco received (from all the leaseholders) and where it went (maintenance, communal electricity bills etc, Manco's fees, accountant's fees etc). The income and expenditure should balance.

Whether this is the case here I can't tell.

3mph

Yes the flat I am buying has clearly stated in the lease that at the end of the financial year the Management Company's accounts will be audited and if there is a difference then any shortfall will be apportioned out and charged to lease holders to be paid within I think 30 days, any surplus will be treated as a credit on each lease holders account.

But the Management Company which owns the freehold is also owned by the leaseholders on the basis that each property is a member of the company.

G_M

3mph wrote: »

But the Management Company which owns the freehold is also owned by the leaseholders on the basis that each property is a member of the company.

The 'but' is irrelevant.

Who owns the freehold and/or management company makes no difference. What matters is what the lease says can be charged, at what intervals, and on what basis.

Ozvaldo

I'm still slightly unsure how this way of charging a service is deemed as legal??
I am myself a sole trading roofer and if I was to agree and be paid an invoice by a client and then I realised further down the line that I should have charged a greater amount them I'm sure it would be down to me to swallow the loss and that it should have been estimated better on my part?
Sorry if this not a great example of my understanding of the situation but it makes me feel that the door is open to unexpected charges.

Freecall

Ozvaldo wrote: »

I am myself a sole trading roofer and if I was to agree and be paid an invoice by a client and then I realised further down the line that I should have charged a greater amount them I'm sure it would be down to me to swallow the loss and that it should have been estimated better on my part?

..... and those are your terms of business, which is fine.

When Balfour Beatty or Carillion get a contract to re-roof the Albert Hall you can be pretty sure that they will have contract terms which describe in some detail what happens if there are over-runs or additional costs. That will be their terms of business, which is also fine.

As G_M says, what matters here is what the contract (lease) says. It is not at all uncommon to allow managers to bill for costs incurred above those expected after the year end figures are known.

At the end of the day however it probably makes very little difference anyway. The only source of funds for the on-going maintenance/management of the flats is the leaseholders. Who else is going to pay?

eddddy

Ozvaldo wrote: »

I'm still slightly unsure how this way of charging a service is deemed as legal??
I am myself a sole trading roofer and if I was to agree and be paid an invoice by a client and then I realised further down the line that I should have charged a greater amount them I'm sure it would be down to me to swallow the loss and that it should have been estimated better on my part?
Sorry if this not a great example of my understanding of the situation but it makes me feel that the door is open to unexpected charges.

So as a roofer you quote somebody £500 per day plus materials to repair their roof.

It takes you 5 days.

But you only invoice for 4 days and forget to include some of the materials on the invoice (perhaps because you haven't had the invoice from your supplier yet).

So you issue a revised invoice.

(Or you might choose to swallow the loss as a gesture of good will, but there's no legal requirement for you to do so.)

Or you might offer guaranteed fixed prices - but managing agents don't do that either.

Ozvaldo

I completely understand that with a job/service there can be unforeseen issues that may require further added funds but as I stated in my initial question we have been paying service charges for 9 years without any further invoices ever being sent,
I also understand that the cost will rise year by year but surely so would a management company if this is what they do as there line of business,
So if the lease states it should be a fixed service charge not variable where do we stand then??