Non-payment of ground rent and block insurance

[Mrs Dingle]

Has anyone had experience with long leasehold tenants(99 years)refusing to pay their annual ground rent and proportion of block insurance.I understand that they are breaking the conditions of their lease and I would like to know the best way to remedy the situation.Thanks

[SteveP]

I would suggest you read this http://www.lease-advice.org/scgrframe.htm
particularly the last parts on ground rent, forfeiture and possession.

In practice if the leasehoolder has not paid and you have served notice requiring payment then your next step will be to go to the leasehold valuation tribunal.

Once the leaseholder realises they can lose thier home of they do not pay, they will pay.

[Poppy]

Mrs Dingle please provide a bit more information.

Are you the freeholder?

Have you sent an invoice for both the ground rent and their proportion of the buildings insurance?

Have you provided proof of your expenditure for the buildings insurance?

For what period(s) is the ground rent and buildings insurance owed?

There are several measures you can try before going as far as employing solicitors or getting the Leasehold Valuation Tribunal involved. For example, if payment was not forthcoming after a written reminder, I would contact the lessee’s mortgage lender (if the property is mortgaged).

[Mrs Dingle]

Thank-you for reply.I have only just purchased the freehold and the previous landlord has told me that they owe approx. £200 in ground rent and their share of insurance.I am just about to send them an invoice for the ground rent due 01/01/06 and also for their share of the insurance that I have just taken out(05/12/05).It is early days for me at the moment as they have not as yet refused to pay me.The former landlord tells me that they dispute that they have to contribute to insurance and will arrange their own.Thus the dispute.He normally gets his solicitor to send a letter advising them of their lease requirements and they eventually pay.I was hoping to find a better way without using solicitors.Every body else in the block pays without problem.

[Poppy]

In the process of buying the freehold, did you instruct your solicitor to ask for the building’s accounts? All balances should have been resolved by your solicitor at the time of purchase.

What proof do you have that the former freeholder is owed money?

Did the former freeholder have in place buildings insurance? If so, surely that was cancelled or voided when you bought the building – in that case your lessees may be due a refund from the other landlord.

Sorry to say this Mrs Dingle, but I do not think your solicitor is using due diligence in this purchase. Did you employ a solicitor?

As things stand, can you prove that your lessees owe anybody anything at all?

With regard to your original post where you believe your lessees are breaking the conditions of the lease - you need to be sure that the money is due in the first place. You do not yet have a situation that needs to be remedied!

[Poppy]

BTW, are you the sole freeholder?

If none of the other lessees own a share in the freehold, then it is pointless in them "buying their own" buildings insurance - because it ain't their building.

[Mrs Dingle]

Yes I am the sole freeholder.It is puzzling to know why anyone would want to pursue individual insurance in this case as I,m sure it is cheaper to pay a proportion of the block.I understand that the previous landlord is pursuing the debt of the tenant through the small claims court.Yes,the insurance has been cancelled by the previous landlord(freeholder) as expected and I,m still waiting for him to refund the balance so that the money can be used to pay for re-instating the insurance.I have payed for this but cannot ask tenants for the money until they have been refunded.Thank-you for your help in these matters.We manage the property ourselves and it helps to hear comments from other people to confirm or discount information.

[P.Pilcher]

Mrs Dingle, as Poppy has said, all balances should have been resolved by your solicitor in the completion statement with the vendor's solicitor. IMHO it is most unusual for any purchaser to be waiting for moneys to be returned by a vendor after completion. When the precise amounts have to be determined by a third party after completion (such as the share of an insurance premium), it is normal for the purchaser's solicitor to withold sufficient funds to cover this and release them as appropriate when the required information becomes available. It is not normal for such action to delay the completion itself.

P.P.

[Mrs Dingle]

Yes it would seem that my solicitor has not been very protective towards my interests.I purchased other properties last year from the same freeholder and I am still waiting for rents that he had collected from shorthold tenants and didnt pass on to me.The previous landlord failed to fill in rent books correctly and issue receipts for money collected for insurance.I feel I am battling away to collect money the tenants have already paid.I am learning by my mistakes but mistakes cost money.Money that would be better spent on maintenance.I have over the past year lost faith in trusting people to do the right thing.The saving grace is that I have a wonderful bunch of tenants.So I shall see what happens in the new year and thank-you for your help.

[P.Pilcher]

May I enquire as to what your solicitor has to say when you put this to him?
I would suggest that you seriously consider using another organiastion for your conveyancing in the future.
I mentioned the contents of your posts to a couple of solicitor friends this weekend in passing, one of which does my own conveyancing. They both endorsed my previous post!

P.P.

[Mrs Dingle]

Hi,I posted a question about the problem of collecting grond rent last year.I have one tenant who always promises to pay one day and a different story the next.Last year I aggreed to allow her to pay £10 per week to pay the £75 ground rent and she didnt pay me anything until june.Then payed me £50.Refused to pay the insurance aswell.The house is parcially owned by a trust and they payed the balance of ground rent and the insurance.They said it was a "one off" and that the lady would have to budget for her bills.I have had some very un easy moments when I have called round as she is very abbusive.So this year I have sent the request for ground rent as usual.Giving her until the end of Feb to pay(as I have all the other tenants to give them more time after Christmas etc)I would like to know.Can I charge interest on unpaid bills.If so,how would be best to proceed with collection of money.Solicitor,small claims court?I even wondered whether to sell the debt to an agency as she really doesn,t want to pay.She doesn,t like paying any bills.It isn,t just me.I would also be interested in grounds for repossesion.How to initiate the process in the hope that this may push her to pay.Look forward to any replies in the hope that I can "do the right thing come March"

[jeffrey]

Hi,I posted a question about the problem of collecting grond rent last year.I have one tenant who always promises to pay one day and a different story the next.Last year I aggreed to allow her to pay £10 per week to pay the £75 ground rent and she didnt pay me anything until june.Then payed me £50.Refused to pay the insurance aswell.The house is parcially owned by a trust and they payed the balance of ground rent and the insurance.They said it was a "one off" and that the lady would have to budget for her bills.I have had some very un easy moments when I have called round as she is very abbusive.So this year I have sent the request for ground rent as usual.Giving her until the end of Feb to pay(as I have all the other tenants to give them more time after Christmas etc)I would like to know.Can I charge interest on unpaid bills.If so,how would be best to proceed with collection of money.Solicitor,small claims court?I even wondered whether to sell the debt to an agency as she really doesn,t want to pay.She doesn,t like paying any bills.It isn,t just me.I would also be interested in grounds for repossesion.How to initiate the process in the hope that this may push her to pay.Look forward to any replies in the hope that I can "do the right thing come March"

Did you use correct form? Section 166 of Commonhold and Leasehold Reform Act 2002 is mandatory- if demand does not comply, you can't treat T as in arrears!

[Mrs Dingle]

Hi,I sent a letter to each tenant dated the 11/12/06 as follows:-Dear--------The ground rent for 2007 will be due on 01/01/07.The amount is £75 and should be paid before 28/02/07.Please make cheques payable to --------.Contact me if you wish to pay by another method.A receipt will be issued for your records.Regards Two of the 6 tenants have already paid and I am confident that the others will too.Its just this one tenant.I have only been the landlady sice dec 05 so it is only the second year.The previous landlord told me he usually mentions solicitors and she pays.Usually by Dec which is 12 months late.I believe she is a persistant non-payer of all bills.I just want to do whats fair and correct.I have exhausted all the talking nicely to her and doing what I can.So I need to know what I could or should do.Regards Mrs Dingle

[jeffrey]

Hi,I sent a letter to each tenant dated the 11/12/06 as follows:-Dear--------The ground rent for 2007 will be due on 01/01/07.The amount is £75 and should be paid before 28/02/07.Please make cheques payable to --------.Contact me if you wish to pay by another method.A receipt will be issued for your records.Regards Two of the 6 tenants have already paid and I am confident that the others will too.Its just this one tenant.I have only been the landlady sice dec 05 so it is only the second year.The previous landlord told me he usually mentions solicitors and she pays.Usually by Dec which is 12 months late.I believe she is a persistant non-payer of all bills.I just want to do whats fair and correct.I have exhausted all the talking nicely to her and doing what I can.So I need to know what I could or should do.Regards Mrs Dingle

Your wording is not compliant so T does not yet have to pay. Get s.166 Notice and use it; that is not only fair and correct but also the only legal way to demand ground rent.

[Mrs Dingle]

Thank-you for your quick response.I have noted what you have said and will send the correct form.Its what happens after that that I,m not sure about.Particularly as she has not to date paid a penny towards insurance either and I don,t expect any response at all.regards Mrs Dingle

[Poppy]

I have re-read your posts. Why have you still not taken legal action against the errant lessee?

Does the difficult lessee have a mortgage on their property?

With regard to charging interest on late or unpaid bills, what does the lease state?

[jeffrey]

I have re-read your posts. Why have you still not taken legal action against the errant lessee?

Does the difficult lessee have a mortgage on their property?

With regard to charging interest on late or unpaid bills, what does the lease state?

Poppy: Mrs Dingle can't start proceedings unless/until proper s.166 Notice served and then T fails to pay for >1 month.

[Mrs Dingle]

Hi,Looking for a copy of the 166 form and have located and printed out a copy of the explanatory memorandum about 2.1 Section 166.Reading the the information,I,m not sure where my demand for ground rent doesn,t comply.Could you help me out with this>Regards Mrs Dingle

[Mrs Dingle]

Am I right in assuming that my demand for ground rent was incorrect because it was due only 20days after demand was sent although it was 79 days to the date to which I was suggesting payment(which was more than 60 days) i.e. I should have sent it 01/12/06 and demanded payment by 25/01/07.Regards Mrs Dingle

[jeffrey]

Am I right in assuming that my demand for ground rent was incorrect because it was due only 20days after demand was sent although it was 79 days to the date to which I was suggesting payment(which was more than 60 days) i.e. I should have sent it 01/12/06 and demanded payment by 25/01/07.Regards Mrs Dingle

Date of demand (Notice) can't be earlier than date on which the rent fell due.
It has to give T one month (at least) to pay.
As far as I know, it has to be in a prescribed format or words to same effect.
If explanatory memorandum says different, please let us know.

[Mrs Dingle]

Hi,As far as I can understand the wording of the memorandum.It implies that you cannot send notice demanding ground rent to be paid earlier than the date shown in the lease.It doesn,t actually say you can,t send it before that date.The date by which you want them to pay must not be earlier than 30 days from your demand and not longer than 60 days away.The date the rent was actually due(as per lease) must also be shown if different".Information for leaseholders and landlords,in the form of notes" must be shown but I haven,t a clue what that means.
The memorandum also say,s that "The regulations also prescribe the form of rent demand notices".So far, I have been unable to find any evidence,copy,example etc.of a "prescribed form".So I,m still a bit in the dark.I am keen to get this right and I thank-you for your time helping me with it.Regards Mrs Dingle

[Mrs Dingle]

Hi,I have re-read the memorandum and it seems to imply that you cannot demand payment before the due date but you can send the demand before the due date so long as it is not less than 30 days before the date payment is requested and not more than 60 days.If the date payment is requested is different from the due date then both dates must be mentioned.Like you say they must have at least 30 days to pay.My demand was dated 11/12/06 due date 01/01/07 and the date for payment was 28/02/07.So I had asked for payment in 79 days and it should have been 60.The memorandum also states that the demand should include"information for leaseholders and landlords,in the form of notes".I haven,t a clue what this means.Also that the notice must be in the "prescribed form".I have searched and as yet I have not found any copy,example,etc of this prescribed form.Thank-you for your time helping me with this.I really need to get this right.Regards Mrs Dingle.

[Mrs Dingle]

Hi,In reply to earlier question about why I haven,t taken action.The tenant does not have a mortgage but has an arrangement with a trust who will be the beneficiary to the house if the tenant dies.I approached them reluctantly in July06 to see if I could resolve the non-payment of insurance and the balance of ground rent still owed(tenant gave me £50 in June).The trust payed the money and I sent them copies of the insurance and a receipt for the ground rent.So at this point the ground rent for this year due 01/01/07 is not payable as yet.I had given a date of 28/02/07 to give tenants more time.I do not wish to charge interest on monies owed or take action which could be costly to both parties.I am keen to keep a good relationship with tenants and I have this with the other five.I just need to understand the options as I don,t expect any response.The tenant has told me that she cannot write and does not have a bank account.Although she can read!This is why I mentioned in the demand that if they wish to pay in another way to contact me.I am really flexible.The insurance isn,t due for renewal until 01/07/07 and I,m also considering the options there.Should I ask them to arrange their own insurance.Does the lease allow this if it states that it must be a block policy.Payments divided by six.Regards Mrs Dingle

[Poppy]

Taking jeffrey's advice to use the correct form, I typed "166 notice rent" into the yahoo search engine and the first result was the England notice with the explanatory notes. (Be aware that there is also a Wales version.) Here's a link to the England notice http://www.opsi.gov.uk/si/si2004/uksi_20043096_en.pdf

My understanding of these government/legal forms is that you don't have to photocopy it and fill it out, but that you produce a notice and lay it out in the same form or format (eg same heading text at the top, body text in the middle and in this case include the explanatory notes at the end).

Hope this assists.

[Mrs Dingle]

Hi,Thank-you for that information.I have printed it off and will send another demand.Mrs Dingle

[jeffrey]

Taking jeffrey's advice to use the correct form, I typed "166 notice rent" into the yahoo search engine and the first result was the England notice with the explanatory notes. (Be aware that there is also a Wales version.) Here's a link to the England notice http://www.opsi.gov.uk/si/si2004/uksi_20043096_en.pdf

My understanding of these government/legal forms is that you don't have to photocopy it and fill it out, but that you produce a notice and lay it out in the same form or format (eg same heading text at the top, body text in the middle and in this case include the explanatory notes at the end).

Hope this assists.

Poppy: thanks for locating Notice.
Section 166(5) does state that g/r demand must be in the prescribed form.

[Mrs Dingle]

Thank you so much for your help in this matter.I have downloaded the correct ground rent demand notice and typed it out exactly and have stuck to the payment date 28/02/07 (due01/01/07)as this is still ok as far as the rules allow.Meanwhile I have spoken to the tenants partner(he approached me) who told me he is going to pay next Monday.I have had such willing sugestions to pay in the past and don,t expect any payment but at least I have delivered the notice correctly.All other tenants have paid.Is it allright if I come back to this discussion after 28/02/07 when I may need guidance?Regards Mrs Dingle

[Mrs Dingle]

Hello,Some time since I posted an enquiry.I understand now that although my demand contained all the correct information.It was not in the "required form"Couldn,t dowload the right form so copy typed it out perfectly.Tenant paid in cash within 2 weeks and I gave receipt.I still have problems with this tenant.Ongoing.Not with grond rent though.So I would like to thank you for the help you have given me in this matter.I can now continue to be correct in future demands.Much obliged to your input.Regards Mrs Dingle