Ground rent problems

[andydd]

Ive just answered almost the same issue so ill cut n poaste my last reply...

 

 

 

 

Ground Rent is only payable if you receive a valid demand as per S166 of CALRA 2002 > http://www.legislation.gov.uk/ukpga/2002/15/section/166 if you dont receive it then the ground rent is not due and neither is any associated late payment charge.

 

However if this case went to court or FTT (http://www.justice.gov.uk/tribunals/...ntial-property) then it can be difficult to prove you didnt receive the demand, you may say you didnt get it, they may say they sent it, it may depend on did they send by recorded post, did other neighbours receive it ?

 

Secondly find your lease and read it, does it allow for late payment charges (many do not), also to be payable the freeholder/managing agent has to send you the Summary of Rights - Administration Charges > (many freeholders/managing agents forget this !) > http://www.lease-advice.org/publicat...asp?item=14#23

 

Even IF he has complied with all of the above, you as a leaseholder can apply to the FTT to determine the 'reasonableness' of such amounts (Note: They dont have juridstiction over ground rent BUT do have juridstiction over admin charges connected to ground rent). In my case, the FTT concluded that £25 would be a reasonable amount.

 

The LEASE site is very useful. > http://www.lease-advice.org/

 

Also have a look at S47 here > http://www.legislation.gov.uk/ukpga/1987/31 again this and S48 often catch landlord/freeholders out, Im not sure but I would of thought that any demands should show the adress of the landlord/freeholder and not just the management company.

 

Do you know who your Freeholder is ?

[andydd]

Yep..Ive heard of Simarc, my freeholder uses same trick in that management company is effectively the same company in all but name, but it appears nothing legally wrong with this, in my case, the LVT described it as a 'shell' company.

 

So in your case, look at the lease, does it allow admin/late payment charges ?, it may not.

 

Even if it does, many if not most fh/ma's simply forget to send the Summary of Right - Administration Charges attached to the demand for the extra charge, did you get one, if not then only the ground rent is payable.

 

Even then, you can apply to the FTT (previously LVT) to argue its not reasonable, I woulkd of thought £25 is a reasonable amount for a simple letter, however it may not be worth the hassle to save £35 !, but you could 'collect' a list of disputes and then make an application for lots of charges/amounts you think excessive or unfair upto 12 years in the past (for service charges) and 6 years for ground rent.

[andydd]

I cant believe they would contact the mortgage provider for such a small amount, in fact its a bit of a bluff.

 

In reality a mortgage company should only be concerned if the property is at risk, most leases have a S146 forfeiture clause but it only applies to amounts owing over £350 or 3 years and the amount must be deemed owing and the leaseholder in breach by a court/ftt, this is a very long process and rarely succesful, but keep your eye open....many mortgage companies are very dumb and some pay up sums when freeholders contact them in ignorance of the actual law.

[andydd]

No idea.

 

Many FH/MA's will try on all sorts of extra charges, when you look into it, the actual profit FH/MA can legally obtain is tiny, normally only the ground rent and a management fee, these are often very low, in my case £30 and £120, so my FH (and associated MA) can only make a profit of £150 per year, not much, this is why so many are involved in various dubioius schemes to make extra profits, the most common being extra charges for late payment (some have been accussed of deliberatly allowing leaseholder to run up GR arrears), various commissions/claims fees connecting to insurance - bumping up insurance premiums to sky high levels, high fees for consents to let, high management fees on building works = 15-25%, etc.

 

Have you looked at your lease re: administration/late payment fees ?

[andydd]

Aha..Ok.. I forget. Due to my endless court battles with my FH I have so much leasehold stuff all scanned and on my OneDrive I can access it anywhere

[andydd]

Well..extra charges are only payable as per the lease, that is your contract between you and the FH/MA, they cant just add on extra charges when they feel like it.

 

Have you got the 'attached schedule' ?, I assume that just lists various charges.

 

If the lease makes no mention of charges and if youve tried to pay the GR but its been returned then you have done everything correct.

 

As mentioned above, the FTT is the tribunal to judicate on admin charges relating to GR (but not GR itself).

 

The proper course of action is to write to them asking them to point out the provision in the lease allowing them to charge admin charges, if no response write again pointing to the RICS Code that says they should correspond with you. (http://www.landlordzone.co.uk/forums/showthread.php?43583-Service-Charge-Residential-Management-Code-of-Practice).

 

If no satisfactory response send a NBA (Notice Before Action) and then if no luck put in an application to the FTT, claiming that admin charges are not payable, that youve tried to pay GR and ask for any costs/fees be reimbursed and ask for costs as per Paragraph 13 of FTT Rules (http://www.justice.gov.uk/downloads/tribunals/general/si-1169-l8-.pdf) due to the FH acting unreasonably.

[andydd]

Ha..Muppets.

 

It wouldnt matter anyway, they can send whatever they like, its the lease that counts.

 

Did the demanmd for the extra charges also come with Admin Charges - Summary of Rights (worded EXACTLY as here > http://www.lease-advice.org/publications/documents/document.asp?item=89), if not another reason not to pay.

[andydd]

Well..after youve done the steps in #14 there are different schools of thought about applying to the FTT, you could just wait for them to chase you for the money and let them start legal action, but this can get complicated and some FH are too quick to approach your lender who sometimes pays up without even refering to you.........the recommended course is for you to be pre-emptive and apply to the FTT first but this can be a pain and youve have to pay fees upfront, although hopefully you can retrieve them.

 

Does the lease allow the FH to recoup legal costs ?, many do, but some dont (with the exception of S146 costs).

[andydd]

What rubbish.

 

Did you ask under what provision of the lease they are payable ?

 

So lets go through it.

 

Yes, they are correct GR is payable in accordance with the lease (although S166 CALRA 2002 overides this where applicable).

 

As to how the sum is calculated, they would have to explain to an FTT how a fee is calculated so saying 'we are not obliged' isnt a fair answer.

 

Now it may technically be true that a breach has occurred (but of course never admit this), and possible scenarios are:-

 

1. They try and forfeit the lease (as per S146 of LTA 1926), BUT you cant do this for under £350 plus it is almost impossible for it to succeed these days.

 

2. Sue for damages, they claim youve breached, so they could in theory claim for damages to cover any loss BUT they havnt followed this route. (Plus like parking charges you could argue that £60 is not an actual loss)

 

3. Charge a set fee, this is the route they have chosen and is quite common IF the lease allows it, many modern leses will say that failure to pay will incur a charge (similar to banks/cards) or that any legal/other costs are recoverable.

 

So double check the lease, as you want to be sure they cant charge you, feel free to scan and post it or email it to me.

 

As mentioned in #16, your secret weapon is that despite all the above even if payable, you have right to withold as no Summary of Rights was included.

 

Here is great thread by the knowledable LeaseholdAnswers > http://www.landlordzone.co.uk/forums/showthread.php?55587-Late-payment-charges-SC-and-GR

 

Also to add, a wise move maybe to pay the full amount and then straight away start a county court claim to claim it back, small track CC claims are cheaper easier and faster than starting a claim at FTT.

[andydd]

Often FH ignore correspondence when it suits them and there is not much you can do about it other than keep reminding them of the RICS Code.

 

If you want to be a pain you can use S21 of LTA 1985 to request summary of service charges and even S22 to visit them and inspect paperwork.

[andydd]

Ive been in endless battles for about 10 years, after the FH ripped me off I wised up, been refunded £1000 overpaid ground rent, had 6 years of their service charges (about £5000) struck out, and theyve been forced to refund me about £2000.. all good fun

 

If I were you I'd pay up (to avoid any risks) and then start court claim to get it back (plus interest, costs, etc).

[andydd]

Aha..no..see here > http://www.legislation.gov.uk/ukpga/2002/15/schedule/11

 

P5 (5) says "But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment." but its always wise to also mention you are paying under protest and you reserve your right to make an appliucation under the above legislation to question the payability/reasonableness of the amount.

[andydd]

Aha..

 

Out of the 4 charges in that case, the Tribunal dismissed 3 in full, they allowed the debt referal fee, BUT that is beacuse there does appear to be a service charge debt and that there debt was actually refered to a debt collection company. (In your case all theyve done is send a letter)

 

In your case its about GR not SC and you have tried to pay the GR.

 

It pointles for them to point to a LVT case which has no relevance, yes, they maybe right that £60 admin charge is a reasonable amount BUT they are missing the main points that your lease does not allow for such a charge and in addition as they havnt sent the Summary of Rights - Admin Charges then you have a right to withold.

 

Youll see that in the above case the Tribunal conclude at paragraph 18 that the phrase used is enough for the landlord/freeholder to recover such admin charges, it is rather vague though and I suspect you could argue against this, you should check your lease to see if you have a similar clause.

 

In any event other LVT cases are not binding, I had Bruce Eddington at mine and he certainly ignored lots of LVT cases I put before the Tribunal, he even commented on it at the end.

 

 

Its interesting that that case is a re-hearing, Ill try and track down the original one.

[andydd]

I'd write to them...

 

Dear Sirs.

 

Thanks you for your previous correspondence. I make the following observations:-

 

Previous LVT/FTT cases are not binding upon another Tribunal.

 

In the case you referenced, the Tribunal concluded that three quarters of the charges were found to be unreasonable and not payable at all.

 

I again, ask you to point to the provision of the lease that allows the collection of admin charges and I remind you of the provisions of The RICS Code which require you to reply to leaseholders concerns.

 

I again, enclose a cheque for the outstanding Ground Rent.

 

Yours

[andydd]

So found the original application..which makes things clearer.

 

http://www.lease-advice.org/decisions/8587pdf/9001-10000/9097.pdf

 

Yes, they conclude that the admin fee for not paying ground rent is payable but again that is because iuch fees are payable under the lease (see Paragraph 15), check yours to see if it has similar clause.

[andydd]

Sometimes you can 'force' payment of the GR by paying by standing order/bank transfer into their account if you know the details.

 

As mentioned before it is always best to pay up and sispute later or start an FTT application disputing the amount (alas this is a slow process and a bit of a pain) as oppossed to waiting for the FH/MA to start action.

[andydd]

Are you sure there are no other parts that mention breaches of the lease or breaches of covenant ?

 

Is there a part that mention S146 ?, this is a standard forfeiture clause that often allows extra fees BUT only if the S146 route is followed, which is quite rare these days.

[andydd]

EEkk.. The usual legalease gooblydok.

 

I cant see any obvious that would allow admin charges to be recovered, but here are some possible clauses:-

 

(2) To pay and discharge all rates taxes duties assessments charges and outgoings whatsoever whether parliamentary parochial or of any other description which now are or during the term hereby granted shall be imposed or charged on the demised premises or the Lessor or the Lessee or occupier in respect thereof

 

This to me sounds like any extra fcosts, taxes, etc imposed on the property can be recovered from you, not extra admin charges they feel like adding on.

 

 

(3) From time to time during the said term to pay all costs charges and expenses incurred

by the Lessor in a

bating a nuisance on the demised premises or any part thereof and

executing all such works as may be necessary for abating such nuisance in obedience to a

notice served by a local or other competent authority

 

This sounds like they could recover costs in stopping you being a nuisance in some way

 

 

c) …..of all rates taxes charg es duties impositions outgoings and obligations

whatsoever which now are or shall at any time during the said term be taxed charged

rated assessed or imposed upon or payable in respect of the Development including the

demised premises unless the same shall be separately taxed charged rated assessed or

imposed upon the demised premises or the Lessee or the occupier in respect thereof such

proportion in the case of difference to be settled by the surveyor for the time being of the

Lessor whose decision shall be binding AND to keep the Lessor indemnified against all

costs and expenses as aforesaid

 

Not sure about this, it sounds similar to the first one (2) in that extra taxes and charges imposed on the property could be recovered but I'm not 100% sure.

 

(10) If the Lessee shall make default in any of thecovenants hereinbefore contained relating to the repair of the demised premises it shall be lawful for the Lessor (but without prejudice to the right of re-entry hereinafter contained) to enter upon the demised premises and repair the same at the expense of the Lessee in accordance with the covenants and provisions of these presents and the expenses of such repairs shall be repaid by the Lessee to the Lessor on demand

 

This says that if there are parts you are obliged to repair but dont then the FH can come in and repair them

 

(16) To pay to the Lessor all expenses (including solicitor's costs and surveyor's fees)

incurred by the Lessor incidental to the preparation and service of a notice under Section

146 of the Law of Property Act 1925 notwithstandingforfeiture is avoided otherwise than

by relief granted by the Court

 

. This is standard clause and it would allow extra charges and legal costs to be recovered but only if the S146 forfeiture route is used, my FH used to be sneaky and kind of follow the S146 route but then just use standard civil money recovery route, he was doing this in an attempt to try and recover extra costs and charges.

 

(17) To pay all costs charges and expenses

(including Solicitor's Counsel's and Surveyor's

costs charges and fees) reasonably incurred either in granting any consent under this

Lease or in connection with any application for any such consent

 

. Again, costs can be recovered if you ask for consent to sublet or build extension, etc.. This is not the case here

 

 

Clause 7 THE Lessee hereby covenants with the Lessor that ifat any time during the subsistence of the said term any sum or sums shall be expended by the Lessor under or by virtue of the last proceeding clause hereof and shall be unpaid to it by the Management Company

 

Not sure about this, the last clause it refers to is about the management company not doing its job or being disolved

 

 

 

the Lessee will on demand pay to the Lessor such a proportion of the aggregate amount of such sum or sums as shall be certified by the Surveyor for the time being of the Lessor as being a fair and just proportion thereof but without prejudice to any right of recovery contribution or indemnity from the Management Company

 

as above

 

(ii) If the rent or other monies hereby reserved ormade payable or any part thereof shall

be in arrear for twenty

-

one days after the same shall have become due whether the same

shall have been legally demanded or not or in the event of any breach non

-

performance

or non

-

observance of any of the covenants conditions and agreements on the part of the

Lessee herein contained then and in such cases it shall be lawful for the Lessor

or any

person or persons duly authorised by it in that behalf to enter into or upon the demised

premises or any part thereof in the name of the whole and peaceably to hold and enjoy

the same thenceforth as if those presents had not been made but without

prejudice to any

right of action or remedy of the Lessor in respect of any antecedent breach of any of the

covenants by the Lessee hereinbefore contained

 

. This would appear to be the only clause related to non-payment but it doesnt say they can add extra charges just they can enter the property (but I doubt this is legal without soem extra court action).

 

Ultimately though, this is a tripartie leases, meaning it involves 3 parties, you, Freeholder and management Company and can be complex, you really need a reply from early correspondence and find out under which clause they believe they can charge extra admin fees for late payment and/or breach of lease, I cant see an obvious one.

 

Not forgetting of course that without the demand for the extra admin charge being sent accompanied with this > http://www.lease-advice.org/publications/documents/document.asp?item=89 then nothing is payable (but dont flag this upto them yet).

[andydd]

Hi Pete.

 

Yours is such a common problem..and once again its Simarc !

 

Please start a new thread and Ill try and help.

 

There are all sorts of laws to comply with before the admin fee is payable, and often Simarc do not comply.

 

Andy

[andydd]

Reply from Simarc.....

 

I am in receipt of your e-mail communication with Beejal of this office and I note the contents.

 

Firstly, please be advised that your ground rent is £150.00 per annum payable yearly in advance on the 25th March each year and this is stated clearly in your Lease. It is clear from your Lease that the onus on paying the ground rent on the due date is the responsibility of the Leaseholder.

 

Please note our fees are determined by the time spent and work undertaken on each separate file. We are not obliged to go into any further details with regards to arrears file preparation as this is work undertaken by Simarc on behalf of the Freeholders.

 

Please be aware that as the leaseholder of the above property it is your responsibility to ensure that ground rent is paid on the due date or before with accordance to the lease. As you are no doubt aware you have failed to comply with the terms of your lease and as a result the Freeholders, Wallace Estates Limited have incurred charges due to late payment and a breach of lease.

 

Our rent demands are fully in line with statutory requirements and contain all statutory wording as required by law.

 

We wish to inform you that yourself and the Landlord are in a binding contractual relationship. Your failure to pay ground rent is a breach of contract. Any party breaching a contract is liable for the resultant costs incurred by the innocent party. This includes the administration costs in seeking to recover the amount now overdue. As you will no doubt appreciate from our point of view, payment of your ground rent is overdue and additional administration costs have been incurred in attempting to resolve this matter.

 

We are entitled to charge an arrears fee for late payment of ground rent; however, as a gesture of goodwill, I have taken the necessary steps to have the arrears fee reduced to £54.00 inclusive of VAT. The sum required to bring this matter to a conclusion is now £354.00 this includes ground rent in the sum of £300.00 and a reduced late payment charge of £54.00. This is to be received in our office within 14 days from the date of this email.

 

So read the reply below and it doesn’t seem like much has changed, I re-read the CAG post and my last replies are still relevant,.

 

To summarize:-

 

1. Ground Rent is payable if requested in line with s166 of Commonhold & LH Reform act 2002 and it lines up with dates in lease, Its INCORRECT to say onus is on LH, it MUST be demanded first.

 

2. Admin fees for non-payment are only due IF the lease makes it clear they are payable, the LVT case they refer to, http://www.residential-property.judiciary.gov.uk/Files/2013/June/CAM_00KG_LVA_2013_1_12_Jun_2013_14_21_42.htm makes this clear as the lease in question does allow the charges, without a specific clause then admin charges are NOT payable, (this is settled case law and many FTT/LVT decisions say this)

 

3. Admin Fees are also only payable IF demanded with exact Admin Charges – Summary as per here > http://www.lease-advice.org/publications/documents/document.asp?item=89

 

Now they seem to be arguing that the above doesn’t apply and that you have broken a contract and therefore they can claim extra costs, there is some truth in this..effectively what they are saying is that they are claiming damages BUT to be payable this would first have to be proved at court AND most importantly they have a poor grasp of the law, they would have to show that by not paying GR they have suffered some loss (above the GR amount), but what ?, they have simply not got the GR, it hasn’t effected anyone else, nothing has happened to the company, it hasn’t caused them extra expense…what they would LIKE to say is that it caused them, to chase you and incur extra expense, this is true BUT if they wanted to recover these losses then the lease MUST allow it..as many do..but it appears yours does not.

 

Another good example, I sued my FH for damages for not repairing driveway, I won..but the Judge said I hadn’t really suffered any loss (prob true to be fair), and just awarded me £100 nominal, now IF as a result of breaking the contract (FH not repairing) someone had tripped up and broken his neck..he could sue the FH for damages of maybne millions, compare this to your case, how does you not paying the GR cause them any loss at all ??