Service charges

Unionjack

I.dont live in it I.own it it's up for sale now

EssexHebridean

OK - so sounds like the OP is a Leaseholder then. 

In a matter of disputed service charges on our flat some years ago, our freeholder threatened to contact everyone's mortgage companies, so that is very much a risk. whether a mortgage Co would actually take any action at that stage however is another question - most of our group took the view that they would prefer not to find out however. In our case, as it was a dispute, we simply responded to the freeholders that while the dispute was ongoing it would be unreasonable behaviour from them if they did this. 

Without question - where there are service charges payable for a property, those charges need to be considered a priority bill in the same way that mortgage, rent, council tax etc are. In the event of there being insufficient money to meet all outgoings, unsecured debt should go unpaid to ensure that priority debts are paid. A credit card company will just get a bit upset, whereas a freeholder has very real powers to make life unpleasant.  

Unionjack

Ok it's my second post re unpaid service charges on leasehold property previous post I said how I know it's my fault I have tried to keep up to date with payments partner keep s quitting jobs...I have had a letter from solicters I.have to to reply by 27th Nov I am ringing today ..I am hoping they will give me 2 more weeks to pay in full as I have got some of money owed together..can I have views please is this a good thing for me to do? 

Brie

Always a good thing to engage with the people chasing you for money.  Some are complete barstewards.  Others are business people and human beings who don't want to cause you any more distress than possible and don't want more expenses than necessary.  Tell them what you can easily pay and what your plan is to pay the whole amount.  Maybe X per month for 3 months will be acceptable.  You don't know until you ask.

EssexHebridean

I've requested a merge of this with your previous thread - best to keep all discussion and advice around it in the same place IMO. 

MSE_Laura_F

I've merged the two threads. Thanks,

MSE Laura F

Unionjack

Do you think they may accept that option ev3n tho they say payment due by 4pm 27th Nov? Am panic stricken here

eddddy

EssexHebridean said:

In a matter of disputed service charges on our flat some years ago, our freeholder threatened to contact everyone's mortgage companies, so that is very much a risk. whether a mortgage Co would actually take any action at that stage however is another question - most of our group took the view that they would prefer not to find out however. In our case, as it was a dispute, we simply responded to the freeholders that while the dispute was ongoing it would be unreasonable behaviour from them if they did this. 

This is getting a bit technical, and moving away from the OP's original question, but...

For the purposes of an example, assume that
- £1k in service charges is outstanding
- The flat is worth £200k
- The mortgage is £150k

The freeholder will essentially say to the Mortgage Lender:

"The leaseholder owes us £1k in service charges. If it is not paid immediately, we will start proceedings to forfeit the lease. (i.e. the leaseholder will lose ownership of the flat.) So the leaseholder will still owe you £150k, but the leaseholder will no longer own a flat as security"

So mortgage lenders will be keen to pay the £1k to stop that happening - and add the £1k to the mortgage. (And their mortgage t&cs allow them to do that.)


It's also worth bearing in mind that if the lease is forfeited, the leaseholder loses the £200k flat - and the leaseholder ends up with £0 in compensation.

(It's not like a bank repossession, where the flat is sold, debts are paid, and the leaseholder gets any money that's left over.)

EssexHebridean

Yes, however @eddddy their actions do have to be proportionate - and the debts have to be quite high, very persistent, or both before there is any substantial likelihood that forfeiture is likely to occur. But yes - that is certainly the theoretical possibility. In a situation where there was a genuine dispute, part of which had already been agreed in our favour in any case - and with evidence from the mortgagees side to confirm the situation (which in this case included a very real possibility of the Leasehold Tribunal service becoming involved), there's also a good chance that the mortgage co will hold off. That situation is rather different from the one the OP faces though - and I simply mentioned it in response to an earlier post relating to involvement of the mortgage co. Our scenario involved a freeholder who was effectively trying to bully us into accepting substandard work at a vastly overblown cost (think £8k > £14k area, and with repairs to that work still being done now - that gives an idea of the nature of the dispute). 

OP - you really can't know what they will accept until you ask the question. I think in your situation though I would be inclined to make an immediate payment of what I had available now, then contact them with a plan to pay the rest, and a clear message that you have now reworked your budget to ensure that missed payments will not occur again. Is it possible to pay the SC's monthly rather than 6-monthly? 

peb

As EH says,. usually if the property is for sale then they will wait before taking further action so long as they are kept informed and some payments are made.    Pay what you can and continue to do so.