Lease holder debt

Bolto

This might be a complicated one as stay with me. 

About 10 years ago I rented out my flat which was a lease hold. I emailed the building management company (who happen to be a housing association) to let them know what I was doing and told them to bill my tenant. They didn’t email me back so I figured that was that. The flat in the meantime has been let to two separate tenants. The last set of tenants trashed the flat so I issued a no fault eviction and they vacated 6 months ago. I contacted the building management company to let them know I was back in charge of the flat and to bill me from here on. Happy days. I planned on selling the flat so I asked them for a summary of charges (ground rent, service charges) so I could pass this on to the selling agent for any potential buyers. Again all good. 

It was only after my flat sold and my solicitor requested a building management pack that we discovered that the ground rent and service charge had not been paid for the last 10 years. To be clear, I had received no red letter, no bailiff in the whole 10 years. Nothing. And no mention of it in any of the correspondence I’d had with them in the last 6 months. The bill totalled £1850. It was of course massively unexpected but I had some money and could cover the outstanding amount. It was inconvenient given how close it was to Christmas but these things happen. Anyway, cut to today, Friday and we’re scheduled to complete on Tuesday when my solicitor calls me and says that they’d forgotten to mention another outstanding amount of £8500 for works carried out on the exterior of the building. They claim to have informed me but they had not. They’d sent letters to the flat I was not the occupant of. The buyer won’t complete until all outstanding debts are settled. I have minimum equity in the property as I sold for less than I bought it (I bought in Nov ‘07 - IYKYK). 

My question here is - Do I have any leg to stand on to dispute these charges as I was not consulted? They knew I was not responding to bills for 10 years so that should have indicated I wasn’t getting the bills? Any advice welcome here

HampshireH

Yes and no.

Have you ever updated your records with them with your actual address.

No freeholder is going to invoice a leaseholders tenants. The leaseholder is responsible for their own costs. HAs do not have a relationship with sub tenants.

This all sounds like they didn't have another address on file.

As a leaseholder did you not think it was weird you weren't receiving your annual statements or increase letters. Because I would. 

In terms of consultation works. Why would they expect you to respond? Most people don't. Likewise many don't respond to bills.

You're lucky they havent taken action for forfeiture of your lease with such high arrears.

So No you don't have a leg to stand on as to not being consulted UNLESS you can prove they should have your address as a correspondence address and they failed to update their records
 Then you may have an argument.

Bolto

I have given them my new address many years ago. I have email proof of this. Perhaps I should send that on. 

To be honest I didn’t think it was wired. Foolishly I thought that as they had the new tenants details they were billing her. I had assumed if I’d got that wrong they’d be in contact to correct me. It was my first flat and I didn’t have any experience of what charges I should be expecting to see from them annually. I accept that the £1850 of missed service charge was payable. I’m a little annoyed that nobody thought to mention it in 10 years but I sucked it up because I would have had to pay that money anyway.

 It’s the £8500 that I’m totally wiped by. It’s for works that happens in 2022 and according to the email to my solicitor today “The major works were completed some time ago but we have only recently been able to invoice due to amended costs and completion dates coming through”. Again I reiterate that I’ve specifically told them when dealing with them over the service charge arrears that I have not had a single communication from them. 

As I haven’t experienced anything like this I was wondering if lease holders had to agree to such costly works. As I said, this is a housing association so most people in the block are not owners. Maybe I’m clutching at straws? It just all seems very unfair to slap someone with such a hefty bill without so much quote coming my way. 

HampshireH

You don't have to agree to the works no. You can object and they can still go ahead/be enforced as per the terms of your lease as long as they are reasonable 

The HA need to evidence completion of the s.20 process and that it was complied with.

It's a very complacent HA who hasn't chased £10k but it's also a complacent leaseholder who hasn't bothered with the paperwork or who thought their tenants could pay their bills.

Errors on both sides.

If you intend to fight the charges your starting point will be proving you gave them a correspondence address and asked them to use it for all correspondence. Presumably you now have copies of all paperwork addressed to you at your flat

Cloth_of_Gold

I'm amazed that 10 years' SC only came to £1850. A lot of leaseholders pay more than that a year. Are you sure that is correct?

eddddy

Bolto said:

I emailed the building management company (who happen to be a housing association) to let them know what I was doing and told them to bill my tenant. They didn’t email me back so I figured that was that.

So it sounds like you told the management company to continue sending bills to the flat.

But you cannot transfer liability for paying the service charge from you to your tenant, but you can ask the management company to send your bills to your tenant, if you want.

What was the exact wording in your email?

Bolto said:

It was only after my flat sold and my solicitor requested a building management pack that we discovered that the ground rent and service charge had not been paid for the last 10 years. 

The management company can usually take action to recover Service Charges for up to 12 years (in England/Wales)

Or up to 6 years for Ground rent (in England/Wales).

Bolto said:

“The major works were completed some time ago but we have only recently been able to invoice due to amended costs and completion dates coming through”.

Section 20 of the Landlord and Tenant Act 1985 says that the landlord must (usually) consult with leaseholders, where the cost of major works is over £250 per leaseholder.

But perhaps they sent the consultation notices to your flat.

There's also an 18 month rule...

Section 20B of the Landlord and Tenant Act 1985 says that a landlord must notify you within 18 months of service charge costs being incurred or demand payment from you. If they fail to either notify you or demand payment within 18 months you don't have to pay.

But if they did a section 20 consultation, they would have notified you.

Bolto said:

As I haven’t experienced anything like this I was wondering if lease holders had to agree to such costly works. As I said, this is a housing association so most people in the block are not owners. Maybe I’m clutching at straws? It just all seems very unfair to slap someone with such a hefty bill without so much quote coming my way. 

You can challenge the charges at a tribunal, if you think they are unreasonable. e.g. if you think the work was unnecessary, or the work could have been done more cheaply.

A section 20 consultation should have been done, and 3 notices should have been sent to you - presumably at the flat address.

Bolto

eddddy said:

What was the exact wording in your email?

It’s was a form I filled in via their website to notify of a change of occupancy. My address was on it. My email address was sent a copy. 

Bolto

Cloth_of_Gold said:

I'm amazed that 10 years' SC only came to £1850. A lot of leaseholders pay more than that a year. Are you sure that is correct?

Yes. It was roughly £15 a month. 

Bolto

HampshireH said:

It's a very complacent HA who hasn't chased £10k but it's also a complacent leaseholder who hasn't bothered with the paperwork or who thought their tenants could pay their bills.

“Not bothered with paperwork ” is incorrect. 

I had informed them of both my address and the new tenants detail. Had I been sent paperwork I would have dealt with it, as I am now.