Service charge: deed of variation

[Ian_R]

I bought a flat last year with the right to extend the lease. The lease dates from 1982 and quotes a service charge of 20%. In 2001, the then owners agreed a deed of variation with the managing freeholders to reduce this to 15%. I have this deed signed by the existing management, because the mortgage company will not store the deeds nowadays. I also have three years worth of summaries of bills up to August 2007, which management sent to the vendor’s solicitors in preparation for sale. These show my flat paying 15%. Together with proportional payment from the other flats, all adds up to 100%. I am the third owner of the flat since the deed date; no solicitor or mortgage company is on record as querying this document.

The lease extension is progressing, but we have fallen out over costs. Management and their solicitor are now stating that I must pay the 20% service charge of the original lease. They have billed me twice at this rate. I haven’t yet paid. Management deny all knowledge of the deed, despite their signatures on it! They say the 15% charge for the previous owner was a mistake.

Is it possible that the deed was never registered with Land Registry and therefore not active? Even if that were the case it would mean that management has been overcharging some poor tenant for years. For the 2008 bill, they have missed off including the percentage charge for the other flats, so I cannot see if they are claiming 105%!

My inclination is to continue to offer to pay 15% (the terms on which I bought the flat) and challenge management to take it to LEASE if they want.

Anyone have any thoughts on this?

[jeffrey]

Contact LR Online. For £3, you can buy a copy of your registered leasehold title, to see if the Deed of Varaiation has been registered.

If it hasn't, you (or your own solicitor) can register it now against your title AND the f/r title. The form to use is AP1; the LR fee is £40.

[Ian_R]

Thanks Jeffrey, but the new lease (actually a Deed of Surrender & Renewal) will quote the 15% service charge, as it is acknowledged that the 20% figure is wrong. The reason for the original change was a reconfiguration of the flats. My flat is identical to the others already paying the 15% rate.

It was clearly the intention to charge at 15%, as has actually happened for 7 years up to 2007. I don’t know whose job it was to lodge this deed with the registry all those years ago, but for management to deny knowledge of it when they have signed it seems vexatious behaviour to me. I will let them lodge the deed or take me to the LVT.

Finally, one presumes that by trying to enact the 20% charge management will be claiming service charges at 105% of the actual costs,. I can’t believe this is permissible under the legislation?

[Ian_R]

Who is responsible for lodging a deed of variation for a lease with the Land Registry?

The 2001 deed I have for a change in the service charge proportion is signed in ink by the secretary and a director of the freeholders’ company.

The section which states “SIGNED AS A DEED by the said NAME OF THEN OWNER in the presence of, Witness...” is not completed. I can only presume that the incompetent freeholders’ company never got the then owner to sign the document and never sent it off to the Registry.

Can I send it off, or would it need the signatures of the then owner on it? Thanks

[TomMerralls]

Whoever acted on your behalf in relation to the Deed should have registered it. You ought to revert back to them and point out the error. It is not for the freeholder to register the Deed, they simply retain a Counter Part Deed (or deny its existence!).

Tom

[TomMerralls]

I just replied to your other post Ian.

However, if it appears the original Deed that you have in your possession has not been signed, you cannot submit this to the Land Registry. They will simply reject it.

As I mentioned before the onus is on you to register the Deed. I assume when you state "..THE THEN OWNER" that you were not party to the original Deed in the first place? When you bought the property, was it part of the deal i.e. that you would get a new Deed as part of the sale? If so, you may have a claim against your vendor, but not much else :-(

Tom

[Ian_R]

Thanks, the owner whose name, but no signature appears on the deed sold the property to the next owner in 2001. That owner then sold it to me last year. The deed is recorded with the lease in various inventories, but four lots of conveyancing solicitors never realised that it was not fully signed & lodged at the Land Registry! Despite their current denial, the freeholders must have known of the deed, which they signed and assumed was registered, for the service charge proportion was adjusted from 20% to 15% dating from 2000.

I am hoping that it doesn’t matter too much, because I am going ahead with a lease extension that will acknowledge the 15% proportion. It was the act of extension, which uncovered this bag of worms. Although the freeholders have tried to claim 20% on the 2008 service charge, I don’t believe they can enforce this, because all the other lessees together have paid 85% of the bills leaving me with just 15%. It would be an unreasonable to charge me an extra 5% for expenditures not incurred by the freeholders. Or so my argument goes. Am I right?

[jeffrey]

The deed is recorded with the lease in various inventories, but four lots of conveyancing solicitors never realised that it was not fully signed & lodged at the Land Registry! Despite their current denial, the freeholders must have known of the deed, which they signed
If f/r owner signed it, try registering it against both titles (f/r and leasehold). Perhaps HMLR will accept it, despite defects.