Freeholder filed money claim for non-payment of ground rent/services - CCJ?

bertie1979

Posting on behalf of someone else so bare with me:

Lease owner had an agreement in place for payment of ground rent, made a couple of payments, then as they were selling their flat, they were waiting for that to go through to settle up final bill.

the service charges amounted to £1300.

in between this time, the freeholder accepted a payment and gave a leaseholder's seller pack for £768.

the freeholder has now instructed a solicitor and filed a MCOL on 01/09/23.

their statement:

25/12/22 - Interim Service Charge - £2624.73
05/01/23 - Payment received - £1650.00 (payment made)
23/03/23 - Excess Service Charge - £899.03
08/06/23 - Payment received - £500.00  (payment made)
13/07/23 - Payment received - £768.00  (payment made)
14/07/23 - PSE FEE- £768
01/08/23 - Letter Before Action - £240
30/08/23 - File Preparation Fee - £1200

money owed before this legal action (LBA & File prep fee) was £1373.76

now with the MCOL =
added interest is £144.04 (and accruing daily)
legal fees = £855

totalling £3813.16 on the MCOL

so two questions:

1) an LBA was never received, they've never provided proof of the letter sent or obviously proof of delivery.
What's the situation with regards to not receiving an LBA are they able to file an MCOL or will a judge throw it out?

2) if the court finds in the freeholder's favour, will a CCJ be issued to affect my friend's credit file? payment is no issue for him, but he doesn't want a CCJ against him obviously.

as said, he has more than enough to pay the whole amount, doesn't want to but will obviously pay the £1373.76 (and any interest) but the extra £2500 is ridiculous and the worry of the CCJ process.

any help appreciated.

eddddy

This sounds much more serious than you imagine.

The leaseholder is well along the path to having their lease forfeited - that means the freeholder would repossess the leaseholder's property - and the leaseholder would receive zero compensation. The leaseholder would lose the entire value of their flat.





Just to clarify....

1. Did the leaseholder receive a service charge demand?
2. Did the leaseholder fail to pay the service charge by the due date?
3. Did the leaseholder receive reminder letters saying that the payment was overdue (and perhaps threatening further action)?
4. Did the leaseholder still fail to pay their service charge?
5. Did the leaseholder perhaps receive a letter from the freeholder's solicitor demanding payment, and threatening legal action if payment wasn't made?
6. And did the leaseholder still not pay their service charge?

If all the above happened and the leaseholder still didn't pay their service charge - tbh, the leaseholder was very, very silly.




Getting a CCJ on their credit record is probably the least of their worries.

Once the Freeholder has a judgement against the leaseholder, they have 2 possible options...

• 1) The freeholder can can ask the leaseholder's mortgage lender to pay the service charge. The mortgage lender will invariably pay - and add it to the leaseholder's mortgage (probably along with more fees) - to avoid option 2 below happening

• 2) The freeholder can apply to court to forfeit the lease. As mentioned above, that means the freeholder takes back the flat - the leaseholder receives £0 - but the leaseholder still has their mortgage to pay off.

The bottom line...

• The leaseholder should pay off the full amount demanded (£3813.16) asap - to stop any further legal action and any further costs.

• If the leaseholder wants to, they can tell the freeholder that they are paying under protest and will challenge the fees at a tribunal.

bertie1979

it's MCOL for arrears and costs, nothing about lease forfeiture or anything like that.

1. Did the leaseholder receive a service charge demand? yes, Statement and a plan was in place
2. Did the leaseholder fail to pay the service charge by the due date? made a couple of payments, but is selling his flat and was waiting to sell before paying the remaining balance.
3. Did the leaseholder receive reminder letters saying that the payment was overdue (and perhaps threatening further action)? nope, no letters threatening action, no LBA and they even spoke 5 weeks before this
4. Did the leaseholder still fail to pay their service charge? NA
5. Did the leaseholder perhaps receive a letter from the freeholder's solicitor demanding payment, and threatening legal action if payment wasn't made? nope, the first he knew about it was the solicitors letter and MCOL pacl
6. And did the leaseholder still not pay their service charge? service charge still hasn't been paid, he has the funds, but wants to know the court process.

as said he has the funds to pay the full £3.8k, however happy to go to court and defend the extra £2500 costs especially as there's been no LBA (if that was actually sent, he would've paid the £1300 + the LBA fee) but the lack of receiving the LBA then has added on a further £2200 in costs, so this is what he wants to know, if there's no proof of LBA or delivery, would he have a decent chance to defend the additional £2.2k?

Grizebeck

Lack of lba is irrelevant in the eyes of most judges
A lot of costs are not recoverable on the small claims track especially legal costs
I'd like to know what those other costs are.
I would defend and do a part admittance on this case

fatbelly

The decision would rest with the judge, who would have to decide what was 'reasonable'

Solicitors know that they do not always get their own way, but you do have to stand up to them and ignore the bullying/harassment/misinformation

Good luck. Don't miss the deadlines for response

Grizebeck

fatbelly said:

The decision would rest with the judge, who would have to decide what was 'reasonable'

Solicitors know that they do not always get their own way, but you do have to stand up to them and ignore the bullying/harassment/misinformation

Good luck. Don't miss the deadlines for response

Legal costs cannot be reclaimed in normal circumstances on the small claims track. People should look over the relevant parts of the civil procedure rules

bertie1979

The costs by the management company as mentioned:

1) 01/08/23 - Letter Before Action letter (not received) - £240
2) 30/08/23 - File Preparation Fee (assuming this is a few PDFs emailed over to the solicitors) - £1200

so due to those 2 additional items.
the court document then details

Arrears - £2813.76 (original actual arrears £1373.76) 
Interest - £144.40 (£0.58 per day - not sure if this has been applied to the full £2813.76 from original deadline)
Legal Costs - £855 (assuming this includes the £205 court fee & £80 "legal represenative costs")

totals £3813.16

but can you 100% confirm that if it goes to court and a judge says that amount is owed, that doesn't mean it's a CCJ that adversely affects his credit rating? it only becomes a CCJ if it's not paid by a date set by the judgement?

eddddy

You should always pay service charges - whatever amount is demanded. You should always pay now and argue later. i.e.

• You should have paid the full £2624.73 service charge in December 2022 (your plan to sell was irrelevant)

• You should now pay the full £3813.16 service charge asap (under protest)

Just to be clear - the whole £3813.16 is now a service charge.

If you pay now, no more costs can be added. If you don't pay now, more costs can be added



If you want to ague about...

• The £2200 in fees
• That you didn't receive reminder letters
• That you didn't receive a LBA
• and/or anything else

... pay the full service charge now and take the freeholder to tribunal later.




FWIW, 

The Government Funded Leasehold Advisory service confirm you should pay under protest:  

• See: https://www.lease-advice.org/files/2016/09/service-charge-dispute-resolution-flowchart2.pdf

And other websites say things like:

We repeat this several times a week to leaseholders who contact us. No matter how egregious the charges, or how they have been inflated by the freeholder’s debt collectors, pay the bill in total. And then fight the costs rigorously in the tribunal.

Link: https://www.leaseholdknowledge.com/advice/service-charges/

eddddy

Grizebeck said:

Legal costs cannot be reclaimed in normal circumstances on the small claims track. People should look over the relevant parts of the civil procedure rules

That's seriously misleading advice to give the OP.

The OP's lease (and the law) almost certainly says that the freeholder can charge the OP legal costs associated with unpaid service charges.

So the freeholder is claiming a debt of £3813.16 owed to them under the lease. 

The debt that is owed has nothing to do with civil procedure rules.

If you want to read some relevant legislation, it's the Commonhold and Leasehold Reform Act 2002  (start with section 11) - combined with the wording of the lease.

Grizebeck

eddddy said:

Grizebeck said:

Legal costs cannot be reclaimed in normal circumstances on the small claims track. People should look over the relevant parts of the civil procedure rules

That's seriously misleading advice to give the OP.

The OP's lease (and the law) almost certainly says that the freeholder can charge the OP legal costs associated with unpaid service charges.

So the freeholder is claiming a debt of £3813.16 owed to them under the lease. 

The debt that is owed has nothing to do with civil procedure rules.

If you want to read some relevant legislation, it's the Commonhold and Leasehold Reform Act 2002  (start with section 11) - combined with the wording of the lease.

Legal fees cannot be recovered on the small claims track and FYI I have dealt with these on a number of occasions where the costs have been disallowed as its not been tracked correctly.  If the claim is on the correct track then it is not an issue claiming legal costs.
https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part27#27.14
To the OP yes if you lost then paid within the timescale you will be fine.
I would tell them to seek professional advice.

MultiFuelBurner

Judge Judy has a lot to answer for so please don't rely on responses here for the MCOL.

Your friend should not have stopped paying something because they were selling. Did they also stop paying council tax and other services  because they were selling?