Obtaining Possession Orders against long leaseholders for unpaid service charges is a ‘legal minefield’ and landlords need to tread carefully to avoid procedural traps.
The starting point is to check the terms of the lease, to determine the contractual extent of the obligation to pay the service charge, how the charge is calculated and the notice requirements.
The following matters also need to be considered:-
- The Landlord and Tenant Act 1985 makes provision for consultation with tenants in relation to service charges and imposes a requirement that work being the subject of a service charge must be carried out to a reasonable standard. The service charge must not be set at an unreasonable level and tenants are entitled to see accounts, receipts and invoices.
- Written demands served by landlords for service charges must state the name and address of the landlord, otherwise the service charge claimed remains irrecoverable. It is not sufficient to provide an address for a managing agent for the property. Demands must also be accompanied by a note in prescribed form explaining the tenant’s rights and obligations.
- Forfeiture of a long lease is only possible if the debt exceeds £350 and landlords cannot exercise a right of re-entry or forfeiture for failure to pay service charge unless the tenant has admitted the amount payable or the amount has been determined by a court or tribunal. Forfeiture is a draconian remedy and the availability of relief from forfeiture on application by a tenant needs to be taken into consideration.
It is very important for landlords to take legal advice at the earliest possible opportunity in any case involving unpaid service charges to avoid potential problems in obtaining an appropriate remedy.
Ross Burkitt | Solicitor
Litigation Department, Kerseys