Ground Rent and Legal Fees

NRH12

Hi

I own the leasehold to my apartment and pay annual ground rent, which is usually billed/due early in the calendar year.

This year the request for payment came through as usual but it completely slipped my minded to pay it. There has been no reminder either by mail or any other method but I have now received a “Section 146 Notice” from a solicitor which also adds £600 legal costs, the total value payable directly to them. Now I’m quite prepared to hold my hands up and say it was my fault that it didn’t get paid, but to add a £600 legal fee when there has been no previous attempt to seek payment seems out of balance. For what it’s worth, the annual ground rent is £225 and when it increased two years ago inline with the lease the management company neglected to amend the amount and billed in arrears in the following year. 

Any thoughts on where I stand here?

TYIA

anselld

See section 12 ...  https://www.lease-advice.org/advice-guide/service-charges-other-issues/#32

It would seem the Section 146 Notice is unlikely to be valid for various reasons, not least that you owe less than £350.

You should probably seek advice from Lease Advice or similar expert but my inclination would be to pay the £225 and tell them that their 146 notice is invalid.

eddddy

A section 146 notice is the start of the process to forfeit your lease - i.e. repossess your flat. You should take it seriously.

Probably the best thing to do is pay the money under protest, to stop the court forfeiture process -  and to prevent more legal fees being added to you bill. Then challenge it at a tribunal, and hopefully get a big chunk of the £600 back.

But in your position, I might try writing to the freeholder first saying something like...

• The law requires that Administration Fees must be reasonable.

• The section 146 notice is invalid, as no tribunal has ruled that the lease was breached, and the amount in dispute was less than £350. It is not reasonable to serve an invalid section 146 notice, so it is not reasonable to charge a £600 fee for doing so.

• Even if the section 146 notice is valid, it is not reasonable to serve a section 146 notice without first sending reminder letters about overdue ground rent. Since it was not reasonable to serve the notice, it is not reasonable to charge £600 for doing so.

• A reasonable fee for a reminder letter would be £50 or less, therefore I am prepared to pay a fee of £50 on a 'without prejudice' basis, and without admission of liability - if you agree to cancel the unreasonable £600 charge.

• If you insist that the £600 fee is payable, please provide a copy of the invoice from your solicitor showing that you have incurred a £600 fee

• Additionally, if you insist that the £600 fee is payable, I will only pay it under protest, and I will make arrangements to challenge it at tribunal

But if the freeholder doesn't reply, it might be best to pay to stop the court process and escalating legal fees - and then challenge it.

NRH12

Hi

Thank you for the replies. The fee is due within 14 days of the letter, so I felt on limited time to challenge. I’ll pay and then take it from there.

Thanks again. 

eddddy

NRH12 said:

The fee is due within 14 days of the letter, so I felt on limited time to challenge. I’ll pay and then take it from there.

Ok - but it's important that you say that you're paying under protest and/or that you don't agree that the fee is reasonable.

(And especially do not give any indication that you are agreeing to the fee.)

Otherwise the tribunal might later reject your challenge.

NameUnavailable

I would phone the solicitors and point out the errors mentioned above first and see what they have to say. If they insist that they're right then pay under protest and challenge.

The only thing then is that the freeholder can usually claim their legal costs back under your service charge, so you will probably end up worse off whatever you do.

NRH12

Thanks again

I’ll respond to the both the solicitor and the management company. Also, the therms allow for a £60 admin fee in the case of late payment, they’ve charged £72. 

Thanks, N

AdrianC

£60+vat is £72.

Them charging a £60 fee would see you paying £72, if it's £60 actually being received by their VAT-registered business...