Forfeiture proceedings for ground rent arrears

tizzle6560

Some advice if possible please -

The Company who represents the Freeholder of our building, instructed their solicitors to commence forfeiture proceedings against 1 leaseholder who is in ground rent arrears. We're talking 4+ years worth here..

It has been over 15 months since any updates on this, other than 'it's still with the solicitors'.

This is compounded further by the fact that the same leaseholder in question, is in breach of their lease for another entirely different matter, that is directly affecting all of the other leaseholders in the building.

However the company representing the Freeholder says that they cant instruct their solicitors to take action against this additional breach as it could constitute as a waiver point for the ongoing forfeiture proceedings.

So my question is - is that entirely true about the waiver point, or could they not just ultimately run the two proceedings against the leaseholder simultaneously?

Or secondly - can we, the other leaseholders not take separate action against them for the 2nd breach affecting us all?

TIA

G_M

I'd contact leaseadvice and ask.

Or consult a solicitor specialising in the area.

eddddy

As I understand it...

Once the forfeiture process is underway, the freeholder must not do anything that suggests that a lease still exists. (Otherwise the freeholder waives their right to forfeiture.)

So if the freeholder took action against somebody for a breach of a lease covenant, that would be an admission that the lease still exists.

Plus it's much harder to claim forfeiture for breach of covenant, rather than for non-payment of ground rent. A court or tribunal hearing is required to determine whether a breach has occurred.

... but I'm no expert on this.

tizzle6560

eddddy wrote: »

As I understand it...

Once the forfeiture process is underway, the freeholder must not do anything that suggests that a lease still exists. (Otherwise the freeholder waives their right to forfeiture.)

So if the freeholder took action against somebody for a breach of a lease covenant, that would be an admission that the lease still exists.

Plus it's much harder to claim forfeiture for breach of covenant, rather than for non-payment of ground rent. A court or tribunal hearing is required to determine whether a breach has occurred.

... but I'm no expert on this.

That just sounds so bizarre..! Of course the lease still exists, the leaseholder is simply in breach for major ground rent arrears. I cant get my head around why action against another, separate breach, should impact the existing forfeiture process?

My next question therefore, and most likely the answer involving the length of a piece of string, is - how long does this need to go on for before a tribunal hearing gets underway?

Browntoa

This explains it all , they are correct in taking no other action whilst the forfeiture is in progress

https://www.walkermorris.co.uk/publications/real-estate-matters-january-2014/the-basics-of-forfeiture-explained/

eddddy

tizzle6560 wrote: »

That just sounds so bizarre..! Of course the lease still exists, the leaseholder is simply in breach for major ground rent arrears.

Not really.

In simplistic terms, the freeholder is saying "You have not paid the ground rent, therefore the lease is ended (forfeited). You are not the leaseholder any more."

And since the occupant no longer has a lease, the freeholder is probably applying to a court for possession (i.e. to evict the occupant).

And since the occupant is no longer a leaseholder, they are not required to do anything that it says in the lease.

tizzle6560 wrote: »

I cant get my head around why action against another, separate breach, should impact the existing forfeiture process?

The freeholder could have taken a different route, and claimed the overdue ground rent through the small claims court.

i.e. The freeholder would be saying "You are still the leaseholder and you owe me £x in overdue ground rent."

Then the freeholder can take further action against the leaseholder for other breaches of covenant.

tizzle6560

eddddy wrote: »

Not really.

In simplistic terms, the freeholder is saying "You have not paid the ground rent, therefore the lease is ended (forfeited). You are not the leaseholder any more."

And since the occupant no longer has a lease, the freeholder is probably applying to a court for possession (i.e. to evict the occupant).

And since the occupant is no longer a leaseholder, they are not required to do anything that it says in the lease.



The freeholder could have taken a different route, and claimed the overdue ground rent through the small claims court.

i.e. The freeholder would be saying "You are still the leaseholder and you owe me £x in overdue ground rent."

Then the freeholder can take further action against the leaseholder for other breaches of covenant.

OK this makes mores sense, but surely in either scenario - forfeiture or small claims court route, there is a finite time-frame in which the leaseholder has to pay the outstanding? Otherwise ultimately this can just go on forever.

Having spoken to the leaseholder in question when I asked them about the outstanding arrears; they intimated quite clearly that they know how to 'play the game' with this, and also how long they had before the freeholder could take any drastic action against them.

eddddy

tizzle6560 wrote: »

OK this makes mores sense, but surely in either scenario - forfeiture or small claims court route, there is a finite time-frame in which the leaseholder has to pay the outstanding?

I think that with a possession (forfeiture) hearing, the leaseholder can pay the outstanding ground rent and freeholder's costs anytime before the hearing - and if that happens, the lease continues as though 'nothing has happened'.

So it depends on how quickly the freeholder can get a hearing arranged.

And/or the leaseholder can apply for relief of forfeiture (like making an appeal) for up to 6 months after.

Either way, your neighbour will have to pay a hefty chunk of legal fees/court costs.

Anyway, that's my understanding, but I'm not 100% sure.

InterestedParty2018

^^^^ what edddy says^^^^

Edddy has explained correctly about the forfeiture. Once action has started, the leaseholder should not be treated as such (no demands, no circulars etc) , ie put on stop. It does make recovery of service charges a nightmare, and can result in cash-flow issues for the managing agent.... and as you say, ultimately having an impact on the other flat owners.

As explained ground rent is relatively easy to prove as being a breach - it has either been paid or not. However, Freeholder are obligated to issue demands/invoices in a specific time frame, with specific wording/content. If the Freeholder fails, they are at risk of not having served the documents correctly, and their action being invalidated.

Depending on the severity of the impact on the other lessees in the building, you may consider challenging the freeholder on their obligation to undertake certain works/actions. eg. if they cant recover service charges from neighbour x for insurance/management/electricity etc, then the freeholder should consider covering the cost and then recovering it separately from the neighbour. (Of course, there may be a clause which protects the freeholder in so far as they can only fulfil their obligation if all the flats pay... etc etc.. However, it is worth a try.)

G_M

https://www.lease-advice.org/faq/im-a-landlord-how-can-i-forfeit-the-lease-if-the-leaseholder-is-in-breach/

tizzle6560

InterestedParty2018 wrote: »

^^^^ what edddy says^^^^

Edddy has explained correctly about the forfeiture. Once action has started, the leaseholder should not be treated as such (no demands, no circulars etc) , ie put on stop. It does make recovery of service charges a nightmare, and can result in cash-flow issues for the managing agent.... and as you say, ultimately having an impact on the other flat owners.

As explained ground rent is relatively easy to prove as being a breach - it has either been paid or not. However, Freeholder are obligated to issue demands/invoices in a specific time frame, with specific wording/content. If the Freeholder fails, they are at risk of not having served the documents correctly, and their action being invalidated.

Thanks for your advice on this. It is specifically Ground Rent that is in arrears, so as you said - fairly easy to prove this. He simply hasn't been paying it.

All the Freeholder's company will tell me is that they have instructed solicitors to recover the outstanding balance, and numerous letters have been sent out to the leaseholder over many months. This has been going on for 18 months+ now though..

Providing they've taken the correct course of action re. demands,invoices etc., how long can the leaseholder effectively hold out for until proper action can be taken?