LPE1 Forn vs Lease

Mikefaulkner

Good afternoon, hope everyone is well.   This my first post on here for a number of years.

In 2015 I put in an offer on a flat.  My solicitor handled everthing for me.   A concern he had was that the previous owner was paying her Service Charge in arrears, and had done since 2002 dispite the lease stating it was to be paid in advance.  My solicitor made an enquiry of the sellers solicitor who made an enquiry with the Management company who is reponsible for the upkeep of the building and collection of the service charge.   This cumulated with an exchange of letters between the parties confirming the Service Charge would be billed in arrears, this is also confirmed on the LPE1 Form which is signed by the Management company.  (I have copies of these)

I moved in early 2016, and as the 2014 - 2015 bill had been paid did not recieve a Service Charge from the Management company until 2017, which was for the year 16 - 17.  Fast forward to this year and the Management Company are putting in a demand for last years bill plus this years to bring everyone to payment in advance, they have also presented exactly the same bill for next year.   There is another Leaseholder in the building who has paid in arrears for the last 17 years continually without any problem.

So my questions are:

Do I have to agree to move to payment in advance?

Do I have any recourse against the Management Company for false information contained in the LPE1 form?

Do they have the right to propose a wildly fluctuating Service Charge be copied to next year without any consideration of what may be reasonable?

Thanks for listening to my query, hope you can help.

cattie

These are the best people to advise  you on most of your queries, it's a free government funded agency, Obviously it could take a good while to get through to somebody due to the current crisis. https://www.lease-advice.org/

As far as service charges are concerned, it's common for them to be estimated in advance, but  accounts are usually submitted at the end of financial year by managing agents to the accountants, to show the exact amount paid for upkeep, maintenance etc & to be signed off by said accountant. Service charge bills do tend to increase each year as costs do rise.

I'd say it's pretty unusual to pay service charges in arrears, ours are always billed in advance as it was in my previous leasehold property. As your lease states in advance then I think that you just have to accept it, as those are the terms you agreed to when buying the flat, but try to have a word with the lease advice people for full clarification.

anselld

Your lease states payment in advance so they are entitled to demand that.

It is not uncommon to use prior year actual as the current year estimate.  The actual will be adjusted next year. 

The LPE1 was correct at the time it was presented and it stated the current position at the time.  I doubt the exchange of Solicitors letters would have confirmed that billing would be in arrears for all future time but there is perhaps some recourse if it does.  

eddddy

Mikefaulkner said:

Do I have to agree to move to payment in advance?

It sounds like the lease states that the freeholder can collect an estimated service charge in advance, and you bought  the lease, so you have already agreed.

Mikefaulkner said:

Do I have any recourse against the Management Company for false information contained in the LPE1 form?

What was the exact wording of the LPE1? 

Mikefaulkner said:

Do they have the right to propose a wildly fluctuating Service Charge be copied to next year without any consideration of what may be reasonable?

If the lease allows them to collect an estimated service charge in advance, that sounds like a reasonable way of estimating. (Unless there were large one-off repairs etc, last year). Or can you think of a better way of estimating?

Mikefaulkner

Thanks Eddddy, I have enclosed screen shot of that particular part of the LPE1 and also part of a letter from my solicitor to the sellers solicitor.   I hope it makes sense.   The service charge will drop next year by about 2k as the Residents Association has negotiated some savings.  These have not been reflected in the projection.

Mikefaulkner

anselld said:

Your lease states payment in advance so they are entitled to demand that.

It is not uncommon to use prior year actual as the current year estimate.  The actual will be adjusted next year. 

The LPE1 was correct at the time it was presented and it stated the current position at the time.  I doubt the exchange of Solicitors letters would have confirmed that billing would be in arrears for all future time but there is perhaps some recourse if it does.  

I have enclosed a couple of screenshots which may clarify.  Thanks for the reply.

anselld

Mikefaulkner said:

anselld said:

Your lease states payment in advance so they are entitled to demand that.

It is not uncommon to use prior year actual as the current year estimate.  The actual will be adjusted next year. 

The LPE1 was correct at the time it was presented and it stated the current position at the time.  I doubt the exchange of Solicitors letters would have confirmed that billing would be in arrears for all future time but there is perhaps some recourse if it does.  

I have enclosed a couple of screenshots which may clarify.  Thanks for the reply.

Nothing there giving any future commitment. 

greatcrested

You must pay the service charge when it is due provided it is invoiced properly.

It appears your lease states payment in advance, so that is when it is due.

It is very common practice  for an estimated charge to be invoiced at the start of the year. At year end, when the actual costs for the year are known and listed in the annual acounts, you will receive a refund or further charge as appropriate, though this is likely to be done via an adjustment to the following year's estimated charge.

The LPE1 and related exchange of letters correctly reflected the practice at the time, but did not alter the terms of the lease.

Mikefaulkner

I must admit to being a little confused.  I accept that the lease says 'In advance each month', but surely the LPE1 is saying 'Is paid in arrears' means this is now the norm.  If it was a one off or a historical arrangement it would say 'was paid in arrears', the extract from the solicitors letter says 'are billed in arrears' not 'were billed in arrears'.   I accept that i will have to pay the amount but surely the wording of these documents indicate that this is an ongoing arrangement and should carry some weight.

Thanks to all who have contributed.

anselld

Mikefaulkner said:

I must admit to being a little confused.  I accept that the lease says 'In advance each month', but surely the LPE1 is saying 'Is paid in arrears' means this is now the norm.  If it was a one off or a historical arrangement it would say 'was paid in arrears', the extract from the solicitors letter says 'are billed in arrears' not 'were billed in arrears'.   I accept that i will have to pay the amount but surely the wording of these documents indicate that this is an ongoing arrangement and should carry some weight.

Thanks to all who have contributed.

It was the norm at the time the LPE1 was written and for some time since.   They have now decided to revert to the arrangement stated in the Lease.  There is no wording implying any ongoing arrangement other than what is stated in the Lease.

Mikefaulkner

I see.   So, what you are saying, is that the lease is the superior document which over rides anything which comes after it?   Unless, of course, another lease is agreed.   So if, lets say, the Management Company had historically charged for car parking in the enclosed area outside, which was accounted for in the LPE1 form, but wasn't in the lease, would the leaseholders have recourse to claim back all monies paid?