My Freeholder is refusing to complete a management pack.

Mappyman1955

My freeholder used to manage our property but the block of flats where I live won the right to manage RTM. I am all paid up on my service charges with the new management agent for more than 10 years. I am about to move and would like to sell my property. I bought LTE1 management pack with I paid for quick completion £950 pounds. Now I found out I also have to buy a rent pack from the Freeholder whom I pay a peppercorn £25.00 a year rent. 

When my solicitor asked for this pack the company stated they wanted £550.00. Which is a lot since I already had a management pack. But the odd thing was they said I was in arrears for £4,500. When I queried this, they brought up accounts 12 years back which were not paid. I did not pay them then as the costs were too high. We won in court to get a RTM when they fought tooth and nail. They never demanded any money for the last 10 years or did they chase me for money owed. Now they say they want this money and are not going to complete a management pack. This is too put pressure on me believing my sale will fall through if a management pack were not available. 

Through using AI I could learn that a freeholder cannot with hold completing a pack due to arrears not being paid. I told the freeholder this and they say this information is not correct. I pushed them again and share other results. Again they said this was false. Now they insist I pay the 10-12 year old arrears. 

Any ideas what I should do from here? I guess an ombudsman could comment on this. It looks like the freeholder is using this management pack to get what they think they are owned even though they cannot directly claim what they are owed due to the statue of limitations which is 6 years. Its funny how the freeholder insists time and time again I clear the arrears. 

Does anyone have some ideas? I think this freeholder wants me to pay up due to the fear the sale will fall through. I think Freeholders do this a lot. But the law seems to state a freeholder cannot refuse to complete a management pack. Does anyone think I should stick to my guns or just pay them? 

eddddy

• Unfortunately, there is no law which says a freeholder must complete a management pack. (If your AI says otherwise, ask it to quote the legislation.)
• See: https://www.lease-advice.org/faq/im-selling-my-property-is-my-landlord-obliged-to-respond-to-pre-sale-enquiries/

• Section 8  of Limitation Act applies to service charges (not section 5), so the limit for claiming service charge arrears is 12 years (not 6 years).
• See: https://www.legislation.gov.uk/ukpga/1980/58/section/8

• If you think that the £4,500 service charge is not reasonable - you can challenge it at a tribunal. But perhaps you could pay it 'under protest' in order to get the management pack done, and the property sold - then challenge it
• (But did you get a bill for the £4,500 service charge 10 years ago? If you didn't, it might be too late for the freeholder to bill you now.)

I've no idea what a tribunal's view would be of a 10 year old service charge bill - e.g. whether they would be sympathetic towards you, or not.

Also, if you pay under protest, you might have to declare a service charge dispute to your buyer, and/or your freeholder might mention it in the management pack - and that might worry your buyer.

(Although now you have an RTM company - you could argue that the dispute with the freeholder is not important.)

Mappyman1955

Than Eddy for your feedback. Yes AI says it cannot withholder providing a management pack. AI also says it is using it as a tactic. Also AI says it is the duty of the Freeholder to allow a sale to go through slowly. 

This freeholder used to manage the company. We fought them for |high charges and finally won the battle for the right to manage. That was 12 years ago and there may be some arrears at that time. They have not sent an invoice for about 10 years. Most of the charges which they now want paid were actually 13 years ago. Now even asking 3 times if they can refuse to make a management pack until I pay up they said yes. All arrears must be paid. I knew I may have owed some money but not that much and not with multiple £300.00 legal charge added to the bill. 

Yes it is one way. Pay under protest then go to a tribunal. Then attempt to get my money back but wonder when and if paid would I ever get it back. Some people have said Freeholders often do this, as they know it may make a sale fall through so people pay it. 

The funny thing prior to this time a previous managing took one of the residents to court for not paying the high service charges. The resident won and the managing agent was made to reduce the cost to resident. That was the origins of why many of us no longer paid their charges. After we won the RTM we never heard from them again. Now they want not just what they think is owed, but legal charges. Swines.

eddddy

Mappyman1955 said:

... and not with multiple £300.00 legal charge added to the bill. 

They can't arbitrarily add £300 legal charges to your bill (unless your lease specifically states this, which is unlikely).

They can require you to pay their resonable costs/expenses resulting from your failure to pay on time.

For example...

• If they had to send you a reminder letter - that might have taken 30 mins of an Administrator's time, plus the cost of an envelope and stamp - so maybe charge you about £40

• If they had to instruct a solicitor about it - you'd have to pay their solicitor's bill, which could be £300

• If they had to instruct debt collectors - their fee could be £300

But they should have sent you maybe 1 or 2 reminder letters (at £40 each) before instructing solicitors or debt collectors. And why did they need to instruct a solicitor/debt collector on multiple occasions, at £300 a time?



In theory, you could ask them to justify these costs (e.g. what was each £300 for?. if they instructed solicitors - why?. Can they show you the solicitor's bills?), and threaten to challenge them at tribunal.

But a 'nasty' freeholder might respond by saying something like "You need to agree that the full £4,500 is payable and confirm that you won't challenge it at tribunal - otherwise we won't provide a management pack."

So maybe one tactic is to pay it 'silently' without saying that you agree that it is payable, in order to get the management pack - so that you can then challenge £4,500 at a tribunal.

Mappyman1955

Hi Eddy, thanks for this. You are very knowledgable. 

Yes a few £300.00 legal fees they say. And interest. But this is in history, and goes back 10 years. They have never demanded anything for 10 years.

as a freeholder they only collect rent £12.50 twice a year. Apparently the last two invoices I had for them said I was in credit. 

We have a new management agent now and I am all paid up with them for 10 years. They only say I am in arrears of £4.250 when asked them for a management pack.

I wonder if I pay them this amount where the money will go. They never chased me for it and only want it now. They have stated they will not complete a management pack until it is paid.

seems to me if these charges were to pay ffor insurance, maintenance and gardening, why are demanding payment when they no longer manage the property. Can they keep the money that that does not benefit the leaseholder and this money given to the new agent. Not sure why they suddenly want money that they never chased me for it. But it seems they have me in a corner.

thank you for you kind replies.

eddddy

Mappyman1955 said:

I wonder if I pay them this amount where the money will go. 

seems to me if these charges were to pay ffor insurance, maintenance and gardening, why are demanding payment when they no longer manage the property. 

Based on what you've said, the management company are saying...

• 1) The management company paid for some insurance, maintenance and repairs 10 years ago - and you haven't paid them back your share yet. So They are out of pocket at the moment.

• 2) Because you haven't paid your share of the costs, the management company have had to chase you for the money. And chasing you has cost them £300 multiple times (maybe in solicitors fees, etc). So they are out of pocket, because of you.

So the management company wants you to repay them what they have already paid out for items 1 and 2 above.

But if you believe that items 1 and 2 above add up to less than £4,500, you can challenge the service charge at tribunal.

silvercar

Another query is whether the management company have the right to add service charge arrears to the freehold peppercorn rent bill. I would have thought the debt of management charges would be a debt included in the management accounts and passed to the RTM company at the time of the transfer. Is it legal for them to add it to your ground rent bill?

I don’t know enough about the pack you need for the ground rent, but could you say that the company is refusing to produce a pack and show a rent statement that you are up to date with the ground rent? The buyers may well accept that and think the struggle for a pack is unnecessary for such a small annual rent.

Mappyman1955

Hi Silver

I cannot work out whey a freeholder wants money from 10 years ago before they lost the management. Now it is a RTM, not sure why they want money when surely even if due it does not belong to them but must be collected for the present management company who from there accounts I am all paid up. Very strange. Seems they are trying to get money out of me thinking I will just pay up. Do not like the idea that they are refusing to complete a management pack. I am thinking I have to pay them and then go to a tribunal and attempt to get any money I pay back. 

eddddy

Mappyman1955 said:

I cannot work out whey a freeholder wants money from 10 years ago before they lost the management. 

Now it is a RTM, not sure why they want money when surely even if due it does not belong to them but must be collected for the present management company who from there accounts I am all paid up.

Maybe it's easier to look at it like this...

The freeholder was managing the building until 2015, and you had to pay them for doing that. (Then the RTM company took over the management). The freeholder is saying you still owe them some money from the time before 2015, when they were managing the building.


Conceptually it would be like...

Talktalk were providing your Broadband service until 2015. Then BT started providing your broadband service. And Talktalk are saying that you still owe them some money for the broadband service they provided to you before you switched in 2015. 

JustinTime19

I went through a similar situation where the freeholder wasn't providing the documentation I needed to move(LPE-1 etc) 

Even if you can provide the evidence of regular payment etc for ground rent, this won't be enough to assure the buyers solicitor as more questions are asked than just ground rent, including questions about disputes etc.

Was the 4500 the legal costs of the freeholder, or maintanance costs that weren't paid. 

Either way, without providing the information and having a dispute with the freeholder is going to lead into more questions from the buyers solicitor and likely affect you being able to sell. As a buyer, would you want to walk into this situation? 

What has your solicitor recommended? 

eddddy

JustinTime19 said:

Was the 4500 the legal costs of the freeholder, or maintanance costs that weren't paid. 

The OP seems to be admitting that it relates to Service Charge bills that the OP failed to pay around 10 or 12 years ago (plus resulting legal costs from those unpaid bills).

Mappyman1955 said:

When I queried this, they brought up accounts 12 years back which were not paid. I did not pay them then as the costs were too high...

If the OP believes that the costs were too high, the OP needs to explain why. For example...

• The freeholders paid £3000 for a buildings insurance policy. They could have got one for £1000

• The freeholders charged £1000 a year for window cleaners, but no window cleaners ever turned up

• The freeholders replaced the front door for £1000, when they could have just got it repaired for £200

• etc, etc

Then potentially, the OP could challenge the Service Charge at a tribunal.

But based on other tribunal decisions, I suspect the tribunal would say "If you believed that the Service Charge 10 years ago was too high, you should have challenged it 10 years ago. It's too late now." - and reject the OP's claim.



Edit to add...

There might or might not be other grounds for challenging the Service Charge at a tribunal, but the OP needs to be a bit more forensic in presenting the facts, the timeline, etc.