Paying balancing service charge

danco

I live in a purpose-built block of retirement flats. As with all such properties, we pay an estimated service charge that requires a balancing fee at a later date when the accounts are completed.

I have just received a bill for the balancing charge. I agree that the amount is payable in due course.

The trouble is that for various reasons the management did not provide final accounts in a timely manner (though they did issue the required Section 20b notice). They have only just issued the invoices for 2021-2022, 2022-2023, and 2023-2024. The invoice for 2024-2025 should follow in a month or so, maybe less.

The amount due is large. The management have said that we can make a payment plan with them, but they have only offered payment over 12 months. As the bill was only issued yesterday, the residents have not had time to discuss it among ourselves or to raise the issue with senior management.

Hopefully senior management will agree to a longer payment period, as requiring us to make three years' payment over one year is unreasonable and unacceptable when the issue was caused by them. I don't think they are nasty, though they regularly fail to provide information we asked for or get details wrong.

If we don't get a positive response, is there any action people can suggest. Would this be an issue we can raise with the First Tier Tribunal or an ombudsman?

El_Torro

On the face of it, it seems reasonable that if the charges cover a 5 year period then they should allow you 5 years to pay it. I don't see what justification they have for not informing you of the costs going back to 2021. Were there no estimates given for what the cost would be throughout the years?

I'm not sure if the LEASE advisory service is relevant to your situation, here's a link in case they are: https://www.lease-advice.org/

eddddy

Did the Section 20B notices mention the actual costs incurred?

If so, unfortunately, I suspect you won't have much of a case.

Your building has needed maintenance and repairs over the last 4 or 5 years, so you could have been required to pay those costs over the last 4 or 5 years. So I think that a tribunal would say that you've been 'lucky' that you haven't had to pay them until now.

Obviously, if the charges are not 'reasonable', you can challenge them at tribunal, just like any other service charge bill. Not 'reasonable' might mean things like:

• The maintenance / repairs were not required
• The maintenance / repairs could have been done more cheaply by a different contractor
• Your lease does not require you to contribute to those specific types of maintenance / repairs

danco

Yes, and I would have been happy to pay over the past few years.

The section 20b notice gave, as they always do, a figure that was noted as the maximum possible. The actual figures are much less.

The problem is not that there was a delay, it is that they are asking for three years' charges to be paid in a short period. Had they been efficient, we would have had three years to pay three years' charges.

I am not questioning the amount, I think it is acceptable (and legally 'reasonable'). But to ask for three years' amount to be paid in one year is certainly unfair. Of course fairness is not usually a matter that the law takes into consideration

eddddy

But to be fair, you were told each year that a bill would be coming, and the (maximum) amount that bill would be. So you could have put that amount of money aside over the 3 years - maybe in a savings account, that would have paid you some interest.

But I guess there's no harm in asking for a payment plan. The management company might agree - as a goodwill gesture (if they have sufficient financial resources).

danco

Another matter has come up. It doesn't affect me personally, but one of the other residents. She moved in a couple of months ago and has been invoiced for the balancing charge for three past years, all before she moved in.

If there had been major works subject to a section 20 notice, there is no doubt in my mind that she would have been liable, but that her solicitor should have enquired as to whether there was such a notice and the seller should have communicated this, and then arrangements could have been made to cover such costs. But I am not clear whether the same holds when there have been section 20b notices issued (and not section 20).

eddddy

danco said

Another matter has come up. It doesn't affect me personally, but one of the other residents. She moved in a couple of months ago and has been invoiced for the balancing charge for three past years, all before she moved in.

If there had been major works subject to a section 20 notice, there is no doubt in my mind that she would have been liable, but that her solicitor should have enquired as to whether there was such a notice and the seller should have communicated this, and then arrangements could have been made to cover such costs. But I am not clear whether the same holds when there have been section 20b notices issued (and not section 20).

I would have thought the seller (leaseholder) should have declared the section 20b notices on the TA7 form in reply to this question:

And maybe…

And the management company / freeholder should have said something on the LPE1 form in reply to these questions:

But in any case, the Standard Conditions of Sale suggest that the seller should pay the buyer a service charge apportionment, when the final service charge bill is issued:

danco

Yes, that is my understanding. I wanted to see if others agreed with me or had more information. I think the trouble arose because the seller was the executor of the deceased owner and probably was unaware of the issue.

But you indicate that the management company should have also reported the matter, which may well help the resident involved.

danco

I am glad to report that the resident's solicitor had noticed the issue during the purchase and put the suitable procedure into place. So panic over.