Estate Charges

[caroldeb]

When I bought my property on a Shared Ownership scheme, my landlord did not inform me of any management company to whom I would have to pay additional charges to on a yearly basis. My lease does state that I am liable to pay a fair proportion towards the upkeep of communal areas, however, it doesnt say to whom and how much.

My monthly payment to my landlord includes rent, insurance and a service charge (over £200 a year) which they state covers administration costs. Now they say I am liable to pay an further £120+ per year.

Over a year after I purchased my share I received notification from Peverel OM that I was responsible to pay their costs. I contacted my landlord who said they had no knowledge of this company. It has since come to light that they are mentioned in a legal document dated May 1985. I am currently in the process of a professional negligence claim against the solicitors who dealt with my purchase due to their failure to properly investigate title and advise me properly.

My landlord has stated that I am to pay Peverel OM direct. I believe that they are responsible to pay them and recoup the money from me through the service charge I pay them along with my rent on a monthly basis. I have written to them accordingly and they do not agree.

Shouldn't they have informed me of the managing agents prior to my purchase, due to them being the freeholders they should have been made aware of this when they purchased the property in the first place.

My landlord has now requested a meeting with me to discuss this matter and hopefully resolve it. They have asked me for information regarding my financial situation, I believe to ascertain whether I can afford to pay the charges in full.

The main reason I bought a shared ownership property was due to being a single parent, with two children, and on a low income (employed part-time at the time of purchase).

What can I legally do about their failure to inform me of the charge payable annually, and what can I do about current and future charges.

Any advice will be greatly appreciated.

Thanks in advance

Carol

[jeffrey]

1. What (if anything) did your solicitors tell you, before you exchanged contracts, about the leasehold payment liabilities?
2. As they do seem to have been negligent, your first target must be them.
3. You are bound by the lease, now that you own it, and therefore you have to pay whatever is LAWFULLY due. We cannot tell what the lease says re L and Peverel. Perhaps this latter is only a contractor for L; perhaps it's party to lease; perhaps it owns a reversionary interest in the flats (entire block or common parts); perhaps your shared ownership property is a house, not a flat; perhaps the demanded service charge is not lawfully due, if payee has not complied with LTA 195 s.18-30. Who knows?

[caroldeb]

All the solicitor told me was that I had to pay rent to my Landlord for their 50% share of the house which included a small amount towards buildings insurance.

On researching the title I have found a restrictive covenant that mentions Peverel's interest in the property. Peverel's invoices are addressed to my Landlord but sent to my property. All my lease states is that I am responsible for costs in relation to the communal areas, I was never given any information in relation to these costs, i.e. what they were for, who they were payable to etc.

When I first contacted the Landlord enquiring about Peverel they denied any knowledge of them. As there has been a restrictive covenant on the property, relating to Peverel OM's interest, since the first registration of the property my landlord should have had knowledge of Peverel, and following this they should have notified any shared owner of the existance of Peverel and the responsibility to pay these charges.

I have spoken to the Housing Department of the Welsh Assembly and they state that the Housing Association (Landlord) has an obligation to set out all charges payable by me and if any service charge is payable they must provide a breakdown of costs and give specific details to whom this is payable, what it is for etc. No service charge was mentioned at the time of my purchase. There is no separate clause in the lease relating to service charges. However, in a breakdown of costs I pay to the Housing Association it shows an amount for service charges which the Housing Association say is for administration. This was mentioned to the gentleman at the Welsh Assembly who says I should not have to pay service charges if they were not mentioned at the time of my purchase, and I should definitely not have to pay two service charges.

Any advice on what I can do now would be appreciated.

[jeffrey]

"...mentioned at the time of my purchase..."
That's not the issue. Whether or not anyone mentioned them, they're payable if (but only if) the Lease or other title documentation so states.

[caroldeb]

The lease doesn't mention payments to Peverel, or set out anything about service charges. The Notice of Transfer dated May 1985 says restrictive covenant transfers to owners of the freehold title (my landlord).

[jeffrey]

The lease doesn't mention payments to Peverel, or set out anything about service charges. The Notice of Transfer dated May 1985 says restrictive covenant transfers to owners of the freehold title (my landlord).
OK. If the Lease does not reserve the payments, and assuming that no other Deeds do, they are not payable. QED.

[LongsufferingLeaseholder]

The lease doesn't mention payments to Peverel, or set out anything about service charges. The Notice of Transfer dated May 1985 says restrictive covenant transfers to owners of the freehold title (my landlord).

It seems clear Peverel must only be entitled to make charges to your landlord/freeholder for any obligation under the covenants the landlord has to them. However the landlord may perhaps then be able to pass the costs on to you as part of his service charge (since the components of that do not seem to be entirely well defined). However any payments you make should only be to the landlord.

You may want to talk to the government's free leaseholder advisory service using legally qualified advisers (www.lease-advice.org.uk) to see if they think the clauses in your lease regarding service charges are inadequate or defective as they may well be. If they turn out to be defective you can make an application to the Leasehold Valuation Tribunal (see www.rpts.gov.uk for more info) to have the lease varied to more satisfactorily clarify your responsibility to pay these charges.

[caroldeb]

I have written to my Landlord stating the advice I have received from three different parties, my employer (solicitors), Leasehold Advisory Service and this forum, that my obligation is to pay my landlord and that it is their obligation to pay the managing agents and re-charge to me. I am still awaiting a response. Now a letter has arrived addressed to my landlords to my property stating "final notice before legal proceedings".

My landlord owns the freehold and their solicitors wrote to me saying that: "each successive owner of the freehold interest being required to enter into a Deed of Covenant" in relation to the restrictive covenant with the managing agents and also "clause 3(4a) and 3(4b) of the shared ownership lease make clear that the leaseholder is to be responsible for all costs associated with the communal areas".

My lease actually states:

3 (4) "to pay a fair proportion to be assessed from time to time by the
landlord of:-

3 (4)(a) the reasonable cost of repairing maintaining renewing and cleaning as the case may be of any boundary walls fences hedges an of any access roadways and footpaths and of any communal gardens or facilities shared by the Leaseholder with others (hereinafter together referred to as "the communal facilities")

3(4)(b) the reasonable fees charges and expenses of any surveyor accountant or other person whom the Landlord may from time to time reasonably employ in connection with the management and maintenance of the communal facilities including the computation and the collection of rent and the computation and collection of other monies due from the Leaseholder hereunder and if any such work shall be undertaken by an employee of the Landlord a reasonable allowance for such work

3(4)(c) For the avoidance of doubt it is hereby agreed and declared that the provisions of Section 18 to 30 Landlord and Tenant Act 1985 (as amended) apply to this Lease.

What is my next course of action, do I pay these charges direct, do I go to a Leasehold Valuation Tribunal, what do I do?????

Was it unreasonable of me to ask my landlords to settle the invoices direct and re-charge them to me? Is this what should have been done anyway and this could all have been avoided. I am getting really stressed over this and don't know where else to turn.

Any help would be gratefully accepted.

Thanks

Carol

[jeffrey]

...in relation to the restrictive covenant with the managing agents
But where is this mysterious covenant?

[LongsufferingLeaseholder]

What is my next course of action, do I pay these charges direct, do I go to a Leasehold Valuation Tribunal, what do I do?????[/

Was it unreasonable of me to ask my landlords to settle the invoices direct and re-charge them to me? Is this what should have been done anyway and this could all have been avoided. I am getting really stressed over this and don't know where else to turn.

Carol,

This sounds to me like a case that may well end up at the LVT unless there is just some kind of simple misunderstanding with your landlord. Has the freeholder appointed the landlord to act in his stead in respect of service charge collection and administration but if so where was this agreed and does the lease allow it? Also can you remind me of the history in terms of whether the landlord is trying to depart from the previous status quo?

Can you ask for a formal meeting with both the freeholder and the managing agent in the same room to get them to explain what is going on and why they think you should pay the managing agent.

If they won't do this you might want to consider approaching the LVT about their formal mediation service that they definitely now have in London and possibly in their other areas as an alternative to an LVT case. This then gets you and the landlord and/or managing agent in a room with their mediator to try to iron out the issues informally with it being obvious if this does not happen an LVT hearing will then ensue. This lets the landlord and managing agent know you are serious and the issue will not go away. Going to the full LVT is a lot of paperwork so having been there I would try the mediation route first to see if you can then get your landlord and the managing agent to take you seriously.

Also has the government Leaseholder Advisory Service properly advised you on the detailed terms of your lease in relation to this as several of the frontline advisers on the phone are really quite lazy and try to do the minimum but one of their senior advisers is very good and will read your lease properly and advise you in detail on it. It would not be fair of me to name him here so I will send you a PM with his details.

[caroldeb]

But where is this mysterious covenant?

In the Transfer dated 1985 between Barratt Homes and the first owners of the property, who then sold it to the housing association, who in turn made it a shared ownership property with the person who sold her share to me. No-one told me about it and the housing association solicitors deny any knowledge of it when they purchased the property in 1994.

[LongsufferingLeaseholder]

In the Transfer dated 1985 between Barratt Homes and the first owners of the property, who then sold it to the housing association, who in turn made it a shared ownership property with the person who sold her share to me. No-one told me about it and the housing association solicitors deny any knowledge of it when they purchased the property in 1994.

Did your solicitor not turn this up when you bought the property though? If not perhaps you can sue them or take a complaint to the new solicitors regulation body if the covenant exists and they did not find it?

[caroldeb]

Have taken that route and they passed my complaint to their professional negligence insurers, who have argued that the claim is out of time, because I bought the house in 2000, these charges came to light in 2001, but was still not advised that I would be liable for them. I got a copy of my file in August last year and found that the solicitors signed a Notice of Transfer and paid the fee "on my behalf" without my knowledge (more professional negligence on their part) and the insurers have now invited me to take it to court, which will cost me. I am now in the process of putting a complaint against them with the Legal Complaints Service.

My main concern now is the impending legal action, and my liability. I do not deny that my lease says that I am responsible for charges in relation to the communal areas, I do not believe that I am liable to pay anything to anyone other than my landlord as stated in my lease. I work for a firm of solicitors and on inspection of my lease they have advised me that my only obligation is to my landlord. I have passed this information on to my landlord but am still awaiting a response. In the meantime, the managing agents have sent a final notice before legal proceedings.

BTW - thank you for the pm. I will take this information on board.

[LongsufferingLeaseholder]

In the meantime, the managing agents have sent a final notice before legal proceedings.

It probably doesn't mean very much, especially if it is just from them and not their solicitors. Just a double bluff to try and get you to pay up I would suggest.

I had letters suggesting legal action against me over three years ago and in the end I was the one who had to take them to the LVT as they were only bluffing and in fact hoping to extract their revised service charge percentages by refusing to release my share in the management company to a new owner when I came to sell (as I didn't give in to their bluffing solicitor's letter). As I anticipated this would be their game I have instead taken matters to the LVT to bring things to a head but due to an incompetent LVT Chairman being unfamiliar with the changes made by the Commonhold and Leasehold Reform Act 2002 I have now had to take matters on appeal to the Lands Tribunal.........

However the LVT is messy and protracted and unpredictable in terms of outcome (Tribunal members are as poorly skilled as many members of a magistrates bench and they have no magistrates clerk to keep them in order in terms of following the law correctly) I am still puzzled as to why exactly it matters to your landlord whether you pay them or pay the managing agent so long as the total sum owed is the same? On the other hand you clearly feel you only want to pay the money to the party the lease says it is owed to. I wonder if your lease is defective in the light of the existence of this covenant and if you need to make an application to the LVT to vary the lease so that it also accords with the terms of the covenant in respect of service charges? As there are not many parties to your lease perhaps this would not be so tricky to come to an agreement on.

[caroldeb]

Will consider that tomorrow. I know that there is no fee for an application to the LVT in respect of service charges/estate charges. I will contact them tomorrow. Thanks

[LongsufferingLeaseholder]

Will consider that tomorrow. I know that there is no fee for an application to the LVT in respect of service charges/estate charges. I will contact them tomorrow. Thanks

There is a fee for Service Charge applications and these are detailed on the www.rpts.gov.uk website The precise fee depends on the number of properties covered by the lease. I don't see any mention of a fee for estate charges but only a very narrow range of matters are considered estate charges. Are you sure therefore that these are not service charges rather than estate charges?

Again the gentleman I mentioned at the government's Leaseholder Advisory Service would tend to know about this kind of thing once he had read the relevant sections of your lease.

[caroldeb]

They are estate charges. I own 50% of a house, not a flat. All residents on the estate have to pay these charges. Charges invoiced to house owners relate to grass cutting and looking after the general communal area.

Contacted the housing association today and informed them of the impending legal action and it was arranged that we would meet at lunchtime. Meeting took place and they have backed down and have agreed to pay the estate charges and will recharge to me, I have to pay 12 monthly payments in addition to my rent. At least I got somewhere. Thank you for all your help, I quoted what I had been advised, especially that I only have an obligation to my landlord and not to managing agents.

Thanks again

Carol

[jeffrey]

Well done:
a. caroldeb on standing firm, returning fire with fire; and
b. LZ members on providing her with the ammunition!