Service charge arrears and small claims court

bouicca21

Leaseholders are thinking of going down the right to manage route.  Obviously lots to learn about the process but one significant issue is that we are aware that someone is not paying the service charge - not for inability to pay, but because of dissatisfaction with the service. This is largely about communication and slow responses from the managing agent (if he responses at all). The service charge has not been formally challenged. Some of the things Awkward Git wants fixed are improvements not covered under the terms of the lease.

i know from the leasehold advisory website that those arrears would not become the responsibility of a new RTM company, but what is the position if Awkward Git continues to refuse to pay?  No one would want to let things go as far as formal removal from the lease.  Is it possible to go straight to small claims court ?

There is of course the whole issue of dealing with Awkward Git on a day to day basis, but the rest of us will think that through if we can be sure we can get him to pay up.

mjm3346

Knowing those now responsible are their neighbours could be very handy for Awkward Git if they decide a little direct action is required on top of non-payment

NameUnavailable

I think if you take over the RTM and a leaseholder hasn't paid their charges, you will take over that problem as well.

The non payment is a breach of the lease, in which case you have to warn them that unless they pay you will have to start the process to forfeit their lease. If they don't agree with the charges they have to take it to the tribunal.

I think you need to try and speak with them directly, explain how RTM will benefit them and what the service charge can and can't cover.

bouicca21

Thanks.  No one seriously wants the nuclear option with all its intricacies. Though he must be well over the £350 trigger.

That’s why I wanted to know if small claims court would be an option.  Going straight to small claims would send enough of a message.

The ridiculous thing is that we pay our charge in arrears - I.e. for actual expenditure, so not paying means less and less in the pot and less and less that gets done.

eddddy

Yes - you could take the awkward leaseholder to the small claims court.

But are you planning to employ an experienced management company to look after all this?

Leases and Landlord / Tenant law can be complex. The laws were designed to protect leaseholders from dodgy freeholders, but the result is that freeholders and RTM companies have to jump through lots of hoops.


For example, to win a court claim...

• Service charges can only be claimed as prescribed in the lease
• Service charge demands must be in the correct format
• Charges must be notified within 18 months
• Section 20 consultations are required in certain circumstances
• Service charges must be reasonable

If you get any of that stuff (or other stuff) wrong - you might not win in court. And then you might have a 'hole' in your finances - i.e. the RTM company won't have enough money to pay the bills.


The RTM company (or the management company) might even want to hire a specialist Landlord / Tenant solicitor to assist with making any claim, to make sure it's done right. Hopefully, the awkward leaseholder would end up being responsible for the solicitor's fees - but if not, the costs might have to be split across all leaseholders.


Overall, it would be much better if you could reason with the awkward leaseholder, to see if they will be co-operative from the outset.

bouicca21

Thanks @edddy that’s really useful.  I’m pretty sure we would use a managing agent - I can’t imagine anyone would want to take on day to day maintenance, we just want to have more control.  

Most leaseholders complain about high charges, we are actually wanting to spend more money.  Apart from poor communication, our current managing agent treats all expenditure as if it’s coming out of his own pocket and a very small pocket at that.  Even little things don’t get done in a timely fashion (or at all).

mjm3346

"we are actually wanting to spend more money" 

so maybe Awkward Git will not be a problem if you will be tackling some of their issues  (might be an idea to get them involved early on so they can have some input)

"Some of the things Awkward Git wants fixed are improvements not covered under the terms of the lease."

bouicca21

Ah yes, Awkward Git will want to be involved.  But being prepared to offer a shot across the bows might be necessary.  We are talking bluster and bullying - and given the generally poor communication from our managing agent it may well be true that he does not understand the limitations of the lease.