Ground rent arrears administration and "legal" charges

[Natterjak]

I have, through my own oversight, become in arrears with ground rent payment on my leasehold flat. However I believe my landlord (Freehold Managers (Nominees) Ltd) is now seeking to profit out of the situation with unreasonable administration and unspecified "legal" costs. I would therefore like to outline the circumstances below and ask for opinions on how to deal with the landlord.

My ground rent of £62.50 fell due on 01 Mar '09 and is in arrears. I received from Freehold Managers at the end of July a demand for the rent with a £28.75 administration fee added. No breakdown of this fee has been included. Unfortunately I omitted to give this the attention is deserved and haven't paid them.

Yesterday I have received a "Notice before action" from the Property Legal Dept of Freehold Managers Plc advising that they have been instructed by Freehold Managers (Nominees) Ltd to recover the amount due from me. They make a somewhat vague reference to "ground rent arrears including interest and legal costs" but the attached schedule lists only the overdue rent (£62.50) plus an Administration charge of £86.25. It is unclear to me how the £86.25 is calculated and what the component of interest or legal cost is. Furthermore I doubt the validity of the so called legal costs as surely Freehold Managers Plc and Freehold Managers (Nominees) Ltd are different names for the same people? It's not as if they've paid a solicitor to send me a letter.

So, I understand I am at fault and should have paid them and I wish to make amends, but equally I do not wish to submit to charges which may be unfair and I would welcome advice on how to proceed. Unfortunately I do not have a copy of my lease and cannot check what it says with regard to administration charges.

The letter I have received says in big scary block capital letters that if I do not contact them in 7 days from the date of the letter (dated 27th Aug but received yesterday!! :confused: ) then proceedings will be issued against me and I may end up with a CCJ.

How should I proceed?

[jeffrey]

1. The ground rent demand is invalid unless compliant with s.166 of the Commonhold and Leasehold Reform Act 2002.
2. Even if that demand is valid as to form, the variable Administation Fee demand is invalid unless compliant with s.158 of that Act.
3. Do not pay freehold reversioners such as yours who fail to jump through the statutory hoops; find a solicitor sufficiently able to advise you.

[Natterjak]

Thank you Jeffrey. I've read the relevant sections but find no definition of what is reasonable. Engaging the services of a solicitor over an £86 admin charge is possibly not going to be cost effective, unless said solicitor recovers his costs from Freehold Managers and I have no reason to think he could do so.

I would welcome any further advice on how to proceed, right now I'm thinking of writing them a letter asking for a breakdown of the admin charges and stating that I believe them to be unreasonable, but I'm concerned this will open me up to further charges being whacked on by Freehold Managers for each letter they send. :confused:

[jeffrey]

Why not simply tell the company that it has not complied with s.166 or s.158 (whichever is the case, if so)?

[Gordon999]

Natterjack,

1. When dealing with companies like Freehold Managers with known record of making excessive rip-off demands, you really need to get a copy of your lease and keep it for reference as long as you have your leasehold flat.
You may be able to buy a copy from land Registry.

2. Often the lease will state the charge for arrears of ground rent is calculated on payment of interest at 5% above bank rate for a certain high street Bank . So if you calculate the interest at say 5.5 % on 62.50 pds for 7.5 months arrears comes to about 2.15 pds.

So write a covering letter and send a cheque for 62.50 ground rent plus 2.15 interest for arrears ( post by recorded delivery ) . Also say that you do not agree to pay the admin charge of 86.25 until you have received a breakdown of the costs and can accept it as compliant with s.158 or will apply to LVT for judgement on its reasonableness.

[Natterjak]

But I'm not sure that they haven't? Will I not end up with a greater liability if I tell them they haven't complied with those sections and it turns out they have?

[jeffrey]

But I'm not sure that they haven't? Will I not end up with a greater liability if I tell them they haven't complied with those sections and it turns out they have?
So get sure. Never claim something's true if it isn't; that's exactly what some companies try to do, so don't be like them.

[Natterjak]

Thanks Jeffrey, I have no intention of misleading anyone, I just want to deal with them fairly and be dealt with fairly in return.


Natterjack,
<snip>
So write a covering letter and send a cheque for 62.50 ground rent plus 2.15 interest for arrears ( post by recorded delivery ) . Also say that you do not agree to pay the admin charge of 86.25 until you have received a breakdown of the costs and can accept it as compliant with s.158 or will apply to LVT for judgement on its reasonableness.

Thanks Gordon, this appears to be an appropriate way to approach the situation. I'll wait until tomorrow before I write my letter in case anyone else has something to add.

[Rallysally]

Natter

To see what your management company should have done go to:

http://www.lease-advice.org/

then click on 'Publications' - top right hand corner. Then click on 'Service charges and other issues'.

This explains the steps that they should have taken in notifying you. This is how you ‘get sure’!!

I do not think it would harm sending the amount you are not contesting in the mean time – as suggested by Gordon.

[jeffrey]

To see what your management company should have done go to:

http://www.lease-advice.org/

then click on 'Publications' - top right hand corner. Then click on 'Service charges and other issues'.

This explains the steps that they should have taken in notifying you. This is how you ‘get sure’!!

I do not think it would harm sending the amount you are not contesting in the mean time – as suggested by Gordon.
I agree; but, in making that payment, OP must explicitly reserve the right to challenge the validity of L's demands.

[Natterjak]

Natterjack,

1. When dealing with companies like Freehold Managers with known record of making excessive rip-off demands, you really need to get a copy of your lease and keep it for reference as long as you have your leasehold flat.
You may be able to buy a copy from land Registry.


Gordon, do you know if this (obtaining a copy of my lease) is something I can do via Land Registry Direct: http://www.landregistry.gov.uk/ ?

[jeffrey]

Gordon, do you know if this (obtaining a copy of my lease) is something I can do via Land Registry Direct: http://www.landregistry.gov.uk/ ?
No. HMLR does not now allow that. The reason is scammers who downloaded copies to access T's signatures, practice forgery skills, and then attempt to masquerade as T in fraudulent sales or remortgages. As a result, only solicitors and other approved key/creditaccount-holders can download leases. The rest of the world has to lodge hard-copy form OC2 applications and prove ID before obtaining copies that way.

[Natterjak]

I believe the interest rate specified in the lease is "4% above the Barclays base rate" and this rate appears to currently be 0.5% Can anyone please verify that the correct way for me to calculate the interest payable on the overdue amount (which fell due on 1st Mar 09) is as follows:

£62.50 (rent) * 4.5/100 (4.5%) * 6.5 / 12 (6.5 months out of 12 months) = £1.52

If this is correct, I propose to write them a letter stating the following:

- without a breakdown of the £86.25 they have demanded I am unable to establish that they are in compliance with s158 of the Commonhold and Leasehold reform act 2002.
- that in the absence of this information I believe their demand to be unreasonable and therefore unenforceable
- that I enclose a payment of the overdue rent including the sum of £1.52 calculated as interest payable in accordance with the terms of the lease but that this payment is not made in respect of the administration charges which I dispute at this time.
- that if I do not receive full details from them within the next 21 days of the calculation of the sum £86.25 such that I can determine whether it is reasonable I intend to apply to LVT for a determination of reasonableness.

I realise some of you sell your advice in a professional capacity but in this case the sum involved is small and I'm hoping to successfully deal with this without paying fees. I would be grateful of any further corrections to the above before I send it.

[jeffrey]

Yes, if BB base rate was 0.5% for the whole 6.5 months.

[Natterjak]

Just to update this thread, I sent FM my letter outlining a request for further details of how their administration charge is calculated and stating that if unable to determine the reasonableness of the charge I would have to apply to the leasehold valuation tribunal. I enclosed a cheque for the outstanding rent plus interest at 4% above Barclays base rate (as per the lease) and said that if I didn't hear back from them in 21 days I would assume the matter was dropped.

That was about a month ago and I've heard nothing so I'm assuming they've deleted the charge from their system, although until I get the next statement of account I won't know for sure.

[Gordon999]

Does your cheque appear on your latest bank statement to confirm payment to Freehold Managers ?

[Natterjak]

Now that I check, no - they have not banked the cheque it seems.

[poundshop]

i read this thread and i find myself in a very similar situation near enough word for word even to the tune of 90 pounds in charges, i did get a letter with a kind of breakdown, saying the there was an over due payments of 65 pounds and admin charges of 28 pounds, i remember last year asking for a contract off them for the ground rent but never recieved it, when we bought the house five years ago the lease was obtained and was for a diferent company, we then re mortgaged about two years ago, with another firm and they needed the a copy of the lease and again it was the old company, i have a asked a few of the neighbours and they all pay feehold managers, i sent them an email saying i was prepared to send payment off asap as long as the "charges " were reviewed but it took 5 days for and answer and all that was sent was we require this payment in 14 days. i know this has maybe already been answered but i have no contract to review to find out if any of this is legal?

[Poppy]

Read the lease. Only pay the ground rent amount stated on the lease and only pay if the ground rent demand complies with section 166 of the Commonhold and Leasehold Reform Act 2002.

[poundshop]

i never recieved a lease, i have tried to get one, when i asked they just chose to ignore it, i think they have set out everything they have ment to on the letter its addresed right, the dates are all on it just does not explain what the admin charges are or what the overdue 30+ or 90+ charges are, i know i am at fault for not paying on time, but 90 pounds is crazy

[Poppy]

Don’t get into a tizz about additional fees, late charges, admin charges. Please read and understand what the members have posted on this thread and many many others.

When you bought the property your solicitor should have given you a copy. Contact your solicitor and request a copy.

[poundshop]

hi, when we bought the house, the solicitor gave us a copy of the lease which was a company called hargreaves hamilton it is a local firm, that was when the problems started we were getting letters from freehold managers asking for ground rent, we asked around the neighbours and they said freehold managers has bought the leases and payment were to go to them, we paid the a whie back for the irst few years, we remotgaged a few years back and if i remember the new mortage firm wanted a copy, this again if i remember was requested and agin it was hargreaves hamilton.

[Poppy]

Don’t understand what you’re talking about now. :confused: Simply contact your solicitor and ask for a copy of your lease, that hopefully they read at the time of your purchase.

[jeffrey]

hi, when we bought the house, the solicitor gave us a copy of the lease which was a company called hargreaves hamilton it is a local firm, that was when the problems started we were getting letters from freehold managers asking for ground rent, we asked around the neighbours and they said freehold managers has bought the leases* and payment were to go to them, we paid the a whie back for the irst few years, we remotgaged a few years back and if i remember the new mortage firm wanted a copy, this again if i remember was requested and agin it was hargreaves hamilton.
*- no, that company FM bought the freehold reversion only.
1. The freehold reversioner, now FM, holds a Counterpart Lease.
2. The leaseholder, you, should hold the Lease (logically enough). Don't you? If not, where is it?

[poundshop]

hi , and thanks for the reply`s ,i think the best way for me to try to get across what i think i am tryin to say is, from talking to neighbours i believe the estate was built about 15 ish years ago and the people who collected the ground rent was the building firm hargreaves hamilton, i then believe that the leases were "sold" to freehold managers? and they started collecting the ground rent from that day forward, and now i get to the bit that i struggle with, we bought the house about five years ago, the lease aggreament that the solicitor gave us which i would assume is the right one was one from hargreaves hamilton with all the details and the amounts, a while later we started to get letters from freehold managers asking for ground rent, we refused for a while assuming it was some kind of scam or the like, we started asking the neighbours who they were and the ones we speak to said they got the leases of hargreaves hamilton and we have to pay them! anyway with we did in the end send the ground rent off. in the mean time we remortaged the house with another lender and i am sure they asked for the leasehold agreement which i think we had to pay for and it again came back with the leasehold from hargreaves hamilton from when the houses were first built, bear in mind this was only two years ago ish i am not sure if this chanes anything?

[jeffrey]

Once FM purchased the f/r, did it ever send to you:
a. letter of authority from Hargreaves Hamilton;
b. Notice under s.3 of LTA 1985; and
c. Notice under s.48 of LTA 1987?

[dominic]

To give you some background as to Jeffrey's questions:

a. Just as you are able to "buy" and "sell" the leaseholder interest in your lease, it is also possible for the original freeholder (Hargreaves) to sell their freeholder interest in the lease (i.e. the right to receive the rent and service charges etc) to a third party purchaser (who becomes the then new freeholder).

b. Subject to what I say in c. below, don't get confused by reason only of the current freeholder not being a party to the lease when it was granted by the original freeholder. This is potentially not a problem, and actually under 99+ year leases is very common as you might imagine.

c. In order for the original freeholder (or any intermediate freeholder, as the case may be), to lawfully "sell" the freehold interest to the current freeholder (Freehold Managers), the proper statutory procedure should have been followed (some of which are referenced in Jeffrey's questions above). If this has not been followed, it may be problematic for the purported current freeholder (Freehold Managers) to make/enforce any demands from you, as leaseholder.

[jeffrey]

To give you some background as to Jeffrey's questions:

a. Just as you are able to "buy" and "sell" the leaseholder interest in your lease, it is also possible for the original freeholder (Hargreaves) to sell their freeholder interest in the lease (i.e. the right to receive the rent and service charges etc) to a third party purchaser (who becomes the then new freeholder).

b. Subject to what I say in c. below, don't get confused by reason only of the current freeholder not being a party to the lease when it was granted by the original freeholder. This is potentially not a problem, and actually under 99+ year leases is very common as you might imagine.

c. In order for the original freeholder (or any intermediate freeholder*, as the case may be), to lawfully "sell" the freehold interest to the current freeholder (Freehold Managers), the proper statutory procedure should have been followed (some of which are referenced in Jeffrey's questions above). If this has not been followed, it may be problematic for the purported current freeholder (Freehold Managers) to make/enforce any demands from you, as leaseholder.
*- this should read 'leasehold reversioner'.

[poundshop]

thanks again for the replys, when the lease were passed onto freehold managers i was not living in the house so i recieved no details of this, and the leasehold details and land registry were still in hargreaves name dated 19th august 2004, which was the details given to us, the only reference i can find in any of the paperwork from buying the house was from the original solicotors letting them know the new details, ,my main problem i have is not really who owns the lease it is about crazy charges on my late ground rent, it might just be me being a little stupid but i always though for any firm to charge you like banks do they have to let you know how much the charges are and when and if you will have to pay them in some kind of contract? other wise surely it leave it open for abuse? as in thi case a bill of 60 pounds and charges of 28 in adim and 62 in overdue ? to me if i knew this i would have MADE sure i remembered! bearu=ing in mind the ground rent is for this year, even banks dont charge this month, my thinking is to sent off the ground rent i am due to pay with a coving letter stating the charges were way to much just to show i am not refusing to pay, just refusing to pay the charges they have put to me.

[dominic]

The contract you refer to in your last post is the lease. This documents should explain what charges can be made and effectively what you have agreed to pay.

Your first port of call is to find and read the lease.

[poundshop]

i have the lease and the underlease? in front of me now, it states the lease is for 700 years from july 1909 with rent of 50 pounds per annum, we are paying 62 pounds, i can not find anything that states what charges they can make to us if its late?

[Poppy]

The answer was given back in post #19. Does my post make sense to you now that you have the lease?

[andydd]

i have the lease and the underlease? in front of me now, it states the lease is for 700 years from july 1909 with rent of 50 pounds per annum, we are paying 62 pounds, i can not find anything that states what charges they can make to us if its late?

I was in similar situation, I had been paying £75 ground rent for 14 years now, being rather niave at the time I didnt question the amount untill 2003, when having aquired my lease, i noticed it said £30, a reply from my landlord stating that a Deed Of variation changed this to £75, it was (and still is unclear wether this allegded deed was made before or after my brother and I bought the property), anyway further investigation showed that the Deed Of |variation had no mention of a change in ground rent amount. Since pointing this out my landlord has become rather silent anyway.

maybe you should question why you have been paying £62 ?

Andy

[jeffrey]

i have the lease and the underlease? in front of me now, it states the lease is for 700 years from july 1909 with rent of 50 pounds per annum, we are paying 62 pounds, i can not find anything that states what charges they can make to us if its late?
Look: exactly what do you own at present? You should have official copy entries from HMLR- on the Registers, are you named as proprietor of the underleasehold interest only?

[Natterjak]

Does your cheque appear on your latest bank statement to confirm payment to Freehold Managers ?

The cheque I sent with my letter some 6 weeks ago has now been drawn. I assume the delay was while my letter sat in someone's in tray for review. I take this as confirmation that they are not going to try to enforce the charges, which tells me they know they are unenforceable.

I'm grateful to the contributors to this thread who gave me the confidence to stick up for my rights. Goodness knows how many people simply roll over and pay whatever FM demand.

[quarterday]

ask your landlord/managing agents to let you have a standing order mandate form to pay the ground rent on the due date. It's much the best way to go for all concerned, avoiding a massive paper chase irrespective of whether the landlord cannot - as the law stands - complain if the ground rent reserved by the lease has not been paid till the s166 notice is served. There will come a time you might want something from your landlord/managing agent such as a consent for alterations and its only human nature that you will get an easier ride of things if the person dealing with your enquiry sees on the ledger that the ground rent has been paid regularly as clockwork!

Most collectors of ground rent operate computerised systems. The software wasn't written with the precise requirements of a s166 notice in mind and therefore a s166 notice has to be created fully manually or the information on the estate management software database manipulated to create a fully compliant s166 notice, even though a computerised rent statement will actually tell you everything you need to know...

Believe it or not these are the instructions one specialist Property Management System supplied to a managing agent as to how to produce a s166 notice :-


COMMONHOLD AND LEASEHOLD REFORM ACT 2002, SECTION 166

NOTICE TO LONG LEASEHOLDERS OF RENT DUE

How to prepare and send S166 notices

Please note that the Section 166 Notices can only be generated by using the Microsoft Word word processor program. The procedure will enable the production of notices for all rent items within the selected date range contained in the charging schedules of the selected tenants. Should a notice not be required for one of the rent items, a check box titled “Not subject to S166 Notice” has been added to the charging schedule record, for rent items only, and a tick should be placed in this box.
One-off Procedures
1. Ensure that the Word program location is correctly set up:

a) From the Property Management Module, Open Reports / Merge / Set WP Location.

b) Press the ellipses (…) button and navigate to the folder containing the word processor program.

c) Select the word processor program and press the “Open” button.

d) Close the work processor location window.

2. Create a new Tenant Merge Report Template for the S166 Notice:

a) From the Property Management Module, open Reports / Merge / Tenant.

b) Press the “Insert” Button.

c) In the “Description” field, enter “S166 Notice”.

d) Select at least the following fields in turn from the numbered fields:

Reference

Title

Name

Address lines 1 to 5 and post code

Description

Next periodic rent amount

Next periodic rent due date

Next periodic rent period

PR address lines 1 to 5 and post code

LL Name

LL Address lines 1 to 5 and post code

e) Press the “Save” button.

3. Extract a test file to be merged into a Word document:

a) From the “Reports – Tenant Merge” window, select the “S166 Notice”.

b) Press the “Extract” button.

c) In the Tenant Reference selection fields enter references that will generate output for two or three tenants who will normally receive a S166 Notice.

d) Press the “Extract” button.

e) When the extraction process has completed, make a note of the extracted file name.
4. Minimise the Property Management Module, open Word and create a S166 Notice as a merge document, using the file created in item 2 above. Save the new merge document and close Word.


5. Associate the extract process with the S166 Word document.

a) Normalise (restore) the Property Management Module.

b) From the “Reports – Tenant Merge” window, select the “S166 Notice”.

c) Press the “Change” button.

d) Press the “Add” button to the right of the “Linked Documents” field.

e) Navigate to the folder containing the S166 Word document and select that document.

f) Press the “Save” button.
6. If you require a schedule of posting for the S166 documents, then repeat item 1 above, but in the “Description” field (1.c), enter “S166 Schedule” and include the fields that you deem necessary rather than those in 1.d above. We would recommend that at least the following fields are included:

Reference

Name

Address Lines 1 to 5 and Post Code

Next periodic rent amount

Next periodic rent due date

Next periodic rent period




Periodic Procedures
The production of S166 Notices must be performed before running the Periodic Tenant Charges routine.

Additional selection criteria have been added to the tenant merge selector window and the tenant batch updates window. These are described below.
The Periodic Tenant Charging routine and the production of Tenant Statements is unchanged, and should be carried out as normal. However, we would recommend that you add text to the tenant statements to the effect that any rent included on the statement has already been advised to the tenant on the S166 Notice which has been previously served.

Please note that when creating diary entries described in item 3 below, one diary entry will be created for each tenant. If more than one rent item falls within the selection criteria, then additional lines will be added to that diary entry. Each diary entry will include the charge narrative.
For specific information regarding the generation of S166 Notices and associated documentation, we would recommend that you obtain and read the ARMA Guidance Note 17/04
1. S166 Notices

a) From the Property Management Module, open Reports / Merge / Tenant.

b) Select the “S166 Notice” option.

c) Press the “Extract” button.

d) Make any regular selections that ensure all relevant tenants will be reported.

e) Check the “Rent Next Due” box.

f) Enter the dates from and to in the relevant fields.

g) Press the “Extract” button.

h) When the extract process is complete, ensure the S166 Notice Word document is highlighted in the Tenant Merge File Location window and press the “Open” button.

i) Once Word is open with the S166 Notice and merge data, print the document.

2. If you do not require a S166 Notice Schedule then go to item 3.

a) From the Property Management Module, open Reports / Merge / Tenant.

b) Select the “S166 Schedule” option.

c) Press the “Extract” button.

d) Enter precisely the same selection criteria as in items 1d, e and f above.

e) Press the “Extract” button.

f) When the extraction process has completed, make a note of the extracted file name.

g) Open Excel, open the extracted file, format as necessary and print the document.
3. If you wish to diarise the sending of the S166 Notices, then carry out the following procedure:

a) From the Property Management Module, open Accounts / Tenant Accounts / Tenant Batch Update window.

b) Enter the same selection criteria as far as possible as that used in items 1d, e and f above.

c) In the “New Diary Entry” section of the window, enter the required details.

d) Press the “Update” button.
4. Perform the Periodic Tenant Charging and Tenant Statement routines as normal.


Unbelievable!! but true.........

[andydd]

Huh ??

Any landlord with half a brain would just use a simple word template or mail merge application.

Personally I'd wait to receive a demand before paying ground rent or service charges.

Andy

[BlueMan]

Hi,

I have been dealing with Freehold Managers Plc, and wanted to ask some advice.

I work for a company who owns a property where FM Plc own the freehold. They charge ground rent which is two years in arrears. I found this out from an invoice they sent asking for the most recent installment, along with the outstanding overdue rent and an administration fee of £263.11. They also included a statement. Further, they wrote to our bank as they have a charge over the property.

At this point I sifted through our records to see what was going on (as it all goes back before I was working here) and found one of the first invoices that was overdue but not the remainder. It seems we never received the rest. I wrote back to them requesting copies of the invoices on our statement, as we are happy to clear the outstanding rent that is owed. However, the administration charge seems a little bit...... excessive.

So after reading this thread, in the same letter I asked them for a breakdown of the administration charges. Today I received the copy invoices, a statement where the £263.11 was listed under 'Administration Charge: Mortgage Letter' and a hand written 'With Compliments' slip informing me that 'The breakdown of administration charges are on the back of the statement'.

I looked on the back of the statement, and found the same blurb I had seen on the back of one of the invoices. It is titled 'Administration Charges - Summary of Tenant's Rights and Obligations', and doesn't go into any detail as to how the charges are calculated. All that I can see that is anywhere near relevant is:


An administration charge is an amount which may be payable by you as part of or in addition to the rent directly or indirectly -

And then lists a few reasons. Is this sufficient for them to comply with s158? It seems all they have done is list why you might have to pay such a charge, not how the charge has been made up.

We plan to pay the outstanding arrears very soon (for the ground rent) if only to keep the bank happy, but would like to hold back the administration charge. Are we in a position where we could pay the rent but send a letter stating that we continue to dispute the admin charge, and that the summary on the back of the statement goes no way to showing how the amount of the charge can be justified as reasonable? Can we ask them to either supply this information or write it off?

If we don't have the invoices it is likely we don't have any letters they have sent demanding payment, so I don't know if the charge is meant to include sending any of those as well. Still seems pretty steep even if they have!

Any help would be much appreciated.

[leaseholdanswers]

Most collectors of ground rent operate computerised systems. The software wasn't written with the precise requirements of a s166 notice in mind and therefore a s166 notice has to be created fully manually or the information on the estate management software database manipulated to create a fully compliant s166 notice, even though a computerised rent statement will actually tell you everything you need to know...


Unbelievable!! but true.........

Its entirely believable. We asked our provider, but in the meantime I and the head of accounts converted the s166 into word, added the prompts for the information from the built in mail merge and off it went.

The provider quoted almost £2.5 k for an upgrade.....

[leaseholdanswers]

Yes it is. You can look at leaseadvice.org for decision on what are reasonable charges.

If the copy invoices are properly addressed to you, then unless you can show or prove that they were not issued and sent to you, tehn its down to simply arguing over the reasonable cost.

Once again the tip is if you ever have an oblgiation to pay someone, dont "wait for the invoice" diarise when they are due and enquire if they are late; it avoids such problems and if they do arise you can show that you enquired and such fees cannot be due.

[BlueMan]

Yes it is. You can look at leaseadvice.org for decision on what are reasonable charges.

If the copy invoices are properly addressed to you, then unless you can show or prove that they were not issued and sent to you, tehn its down to simply arguing over the reasonable cost.

Once again the tip is if you ever have an oblgiation to pay someone, dont "wait for the invoice" diarise when they are due and enquire if they are late; it avoids such problems and if they do arise you can show that you enquired and such fees cannot be due.


Thanks for your reply. When you say 'Yes it is', do you mean that the brief description of what you can be charged an admin fee for satisfies the requirement of s158? Without an actual breakdown of where the figure came from? I mean they could have plucked the number right out of their, well, you know.

I don't intend to have a discussion with them regarding whether or not they sent them out to us in the first place, I agree with the ground rent invoices, I just disagree with the size of the admin charge.

Bottom line: have they done what is necessary to justify the charge, and if not what course of action can we take?

[leaseholdanswers]

Thanks for your reply. When you say 'Yes it is', do you mean that the brief description of what you can be charged an admin fee for satisfies the requirement of s158? Without an actual breakdown of where the figure came from? I mean they could have plucked the number right out of their, well, you know.

I don't intend to have a discussion with them regarding whether or not they sent them out to us in the first place, I agree with the ground rent invoices, I just disagree with the size of the admin charge.

Bottom line: have they done what is necessary to justify the charge, and if not what course of action can we take?

Whatever the charge in £s, as long as the summary is sent that is sufficient. In those rights is the one allowing you to challenge an admin costs at the LVT.

Of course if the lease is limited to legal costs in a specific fashion eg only if section 146 of the law of property act 1925 is served, such charges may not be due in any case. What is the clause in the lease? Look for " if the rent hereby reserved is unpaid..." or similar.

[BlueMan]

I have found the following in the lease:

To pay to the Lessor as arrears of rent all costs charges and expenses including solicitors' counsels' surveyors' costs and fees at any time during the said term incurred by the Lessor in or in contemplation of any proceedings in respect of this Lease under Section 146 and 147 of the Law of Property Act 1925 or any re-enactment or modification thereof including in particular all such costs charges and expenses of and incidental to the preparation and service of a notice under the said sections and of and incidental to the inspection of the Demised Premises and the drawing up of schedules of dilapidations and costs charges expenses as aforesaid to be payable notwithstanding that forfeiture is avoided otherwise than by relief granted by the Court.

I can't see anything else to the effect " if the rent hereby reserved is unpaid...".

The invoices I have been sent only detail the rent payable, not the administration charges. This only appears as a lump sum on our statement. There is no calculation of how it came about.

Where to next?

[BlueMan]

I've found a case that may be relevant, but I can't post the link until I reach 10 posts.

[BlueMan]

From what I can see in our lease, there is no mention of administration costs.

[BlueMan]

So is the company that owns the freehold able to charge them?

[BlueMan]

Or would the LVT be likely to conclude in the same way as this case if we referred it to them:

[BlueMan]

One more post...

[BlueMan]

http://www.rpts.gov.uk/Indexes/MAN_LV_ADC_00BM_2010.htm

It is the case regarding 6 Victoria Court.

:)

[jeffrey]

I have found the following in the lease:

To pay to the Lessor as arrears of rent all costs charges and expenses including solicitors' counsels' surveyors' costs and fees at any time during the said term incurred by the Lessor in or in contemplation of any proceedings in respect of this Lease under Section 146 and 147 of the Law of Property Act 1925 or any re-enactment or modification thereof including in particular all such costs charges and expenses of and incidental to the preparation and service of a notice under the said sections and of and incidental to the inspection of the Demised Premises and the drawing up of schedules of dilapidations and costs charges expenses as aforesaid to be payable notwithstanding that forfeiture is avoided otherwise than by relief granted by the Court.

I can't see anything else to the effect " if the rent hereby reserved is unpaid...".
That clause is a lessee's covenant. The proviso re unpaid rent would usually appear some time later-on, within the lease, perhaps after the lessor's covenants. Look for either 'PROVIDED THAT' or something such as 'THE Lessor and the Lessee agree that...'.

[BlueMan]

I've looked again and I can't find anything in the lease regarding unpaid rent/admin charges. The things I have found are:

The Tenant COVENANTS with the Lessor and as a separate covenant with the Company as follows:


To pay the Rent hereby reserved at the times and in the manner provided and not to exercise or to seek any right or claim to withhold rent or any right to claim to legal or equitable set off


To pay all rates taxes duties assessments charges impositions and outgoings which may now or at any time be assessed charged or imposed upon the Demised Premises or any part thereof or the owner or occupier in respect thereof

It then goes on about not performing any alterations to the premises etc. Later there is:

PROVIDED ALWAYS and this Lease is made upon condition that if the Rent reserved or the Material Charges or any part of the same respectively shall at any time be in arrear and unpaid for twenty-one days after the same shall have become due (whether or not any formal or legal demand therefore shall have been made) or if the Tenant shall at any time fail or neglect to perform or observe any of the covenants conditions or provisions herein contained and on the part o the Tenant to be performed or observed then it shall be lawful for the Lessor to re-enter upon the Demised Premises or any part thereof in the name of the whole and peaceably to hold and enjoy the Demised Premises thenceforth as if this Lease had not been made and the Term shall absolutely determine but without prejudice to any rights of action or remedy of the Lessor

Then there is a bit more on the rent being adjusted by the RPI etc, but again, nothing about non payment and charges. There is a paragraph I am unsure of with the Tenants covenants to the Lessor:

To observe and perform the covenants contained or referred to in the Charges Register of Title Number CH 358186 insofar as the same relate to or affect the Demised Premises and to indemnify and keep indemnified the Lessor against all costs claims proceedings demands and expenses arising as a result of any breach non observance or no performance thereof

[leaseholdanswers]

From what you have posted , you can respond and say that having reviewed the lease, you are only required to meet the expenses of the landlord where costs have been incurred by the lessor under the clause that you posted in #43. Sending a reminder letter to you is hardly a cost incurred, and at most if you look through the LVT decisions is about £15 - £25. Offer to pay or ask the LVT to determine.

Incurring costs writing to the mortgagee "mortgage letter" IS NOT a procedure that is recoverable under the lease, only costs relating to a "section 146 or 147" notice are. Any other cots have to be awarded by the court.

[BlueMan]

So you think that we should pay in the region of £25 for the administration charge, but nothing for a mortgagee letter? Or refer to the LVT?

What are your thoughts on the case I posted a link to? Is that in any way relevant?

I was planning to write to them (at the same time paying the ground rent arrears in full) but still contesting the admin charge. Am I in a position to ask them to write the charge off and send me an updated statement, or if they fail to do so tell them I will refer it to the LVT? Maybe if I push them on it they will back down. If I go down this route though, does it close off the option of offering to pay £25 if they say 'no'?

Also is there a specific wording I need to use in my letter as I pay the outstanding rent, so that they know I am definitely still disputing the charge?

By the way, thanks for all the help you've given so far - Jeffrey too.

[andydd]

I'd follow leaseholderanswers response above, my landlord tried to charge me £75 and then £130 for simple letters, an LVT reduced these to £25, there are other cases too where it has been reduced to this amount.

I'd pay the ground rent owing and perhaps a one-off admin charge of £25 and let them chase you for any extra money they may claim, does your lease allow them to add on legal fees outside of a S146 notice, if note, then chasing you through courts and/or LVT maybe expensive for them.

Andy

[jeffrey]

I'd follow leaseholderanswers response above, my landlord tried to charge me £75 and then £130 for simple letters, an LVT reduced these to £25, there are other cases too where it has been reduced to this amount.

I'd pay the ground rent owing and perhaps a one-off admin charge of £25 and let them chase you for any extra money they may claim, does your lease allow them to add on legal fees outside of a S146 notice, if note, then chasing you through courts and/or LVT maybe expensive for them.
Don't pay ground rent unless a s.166-compliant demand is correctly drawn/submitted.

[BlueMan]

@andydd - Should we have to pay any admin charge (even one for £25) though, if it is not in our lease? In the LVT case I linked to it doesn't seem that they were liable to pay it and I think we are in a similar position. I'm concerned that if we give in to £25 if we don't absolutely have to, they will come after us for the rest.

@ jeffrey - From looking at section 166 of the Act, it appears all the ground rent invoices conform. Moving forward, should I just pay the rent and contest the whole charge citing the LVT case I linked to, or pay the £25 as well pointing out that this is the more reasonable cost considered to be valid by the LVT. What I don't know is how many letters they claim to have sent to make up that charge (if we didn't receive some of the invoices, it is not a great stretch to think we may not have received some letters). Further, I know now that any fee for the mortgagee letter is not valid, but I don't know what proportion of the admin charge that represents.

:confused:

[leaseholdanswers]

So you think that we should pay in the region of £25 for the administration charge, but nothing for a mortgagee letter? Or refer to the LVT?

What are your thoughts on the case I posted a link to? Is that in any way relevant?

I was planning to write to them (at the same time paying the ground rent arrears in full) but still contesting the admin charge. Am I in a position to ask them to write the charge off and send me an updated statement, or if they fail to do so tell them I will refer it to the LVT? Maybe if I push them on it they will back down. If I go down this route though, does it close off the option of offering to pay £25 if they say 'no'?

Also is there a specific wording I need to use in my letter as I pay the outstanding rent, so that they know I am definitely still disputing the charge?

By the way, thanks for all the help you've given so far - Jeffrey too.

As long as the rent has been billed correctly as covered earlier and as per Jeffreys post re section 166 then I think your view is that it is due.

Did the invoice which showed the admin costs also incude a summary of rights and obligations- as it is an admin charge and subject to schedule 11 of CLRA 2002?

Explain the lease clause as to what charges may be recoverable

and pay the ground rent either with
a; without prejudice an offer of a reasonable admin fee for late payment : or,
b: refute any liability for fees a posted earlier

Show that the letter to mortgagee does not form part of proceedings which they are entitled to recover costs on, firslty as no such proceedings have been issued, secondly that proceedings for rent arrears are not through "section 146".

If there was no summary then make it clear that notwithstanding your position (either a or b) any such charge is not recoverable without the summary.

Invite them to ask the LVT to determine, and quote the case which is actually a half decent explanation.

Always bear in mind that if they decide to issue proceedings the cost of defending it and the admin effect on your company may outweigh the small admin cost they seek.

Explaining to the MD or client why proceedings have been issued is never fun, it's often easier to pay the !"$^%$" thing. As there are "sharks in the water" always be safe, in this case always diarise when bills are due.

[BlueMan]

We haven't actually got an invoice for the admin charge, it merely appears on a statement of account, with the required summary printed on the reverse. Since the some of the rent is significantly late due to no invoices being received, and based on what you have posted would a suitable response be:


Please find enclosed a remittance statement and payment for the full balance of the outstanding ground rent. In addition, we have included without prejudice an offer of £25 as a reasonable administration fee for late payment. Moving forward, I propose that you clear the remaining administration charge from our account and supply me with an updated statement to that effect. Now that I am aware we should be receiving invoices from you bi-annually, I will ensure that I chase up any that are not received when expected to avoid further complications in the future. If I do not receive a response within 21 days from the date of this letter, I will consider this matter closed.

or:


Please find enclosed a remittance statement and payment for the full balance of the outstanding ground rent. I have noted your summary of administration charges on the reverse of the statement that you sent me. Upon further examination of our lease, I can find no express provision that makes us directly responsible for administration charges relating to failure to make payments by the due date. I would like to refer you to the recent decision by the Leasehold Valuation Tribunal in the case of Mr & Mrs N Evans v Westgate Developments Ltd dated 6th April 2010 (a copy of which I have enclosed for your convenience).

As a consequence, our dispute of this charge stands. Moving forward, I propose that you clear the administration charge from our account and supply me with an updated statement to that effect. Now that I am aware we should be receiving invoices from you bi-annually, I will ensure that I chase up any that are not received when expected to avoid further complications in the future.

If you prefer to continue with your demand for this charge, then our next course of action will be to refer it to the LVT for a decision. If I do not receive a response within 21 days from the date of this letter, I will consider this matter closed.



If you think either of those responses are acceptable, then I will leave it up to the MD to decide which response he wishes to send. I guess the problem is, if we go with response no.2, there is no going back to response no.1 and it will be up to the LVT. If I send no.1, and they push for the charge moaning about the mortgagee letter, I can then respond pointing out what you said "Show that the letter to mortgagee does not form part of proceedings which they are entitled to recover costs on, firslty as no such proceedings have been issued, secondly that proceedings for rent arrears are not through "section 146".". If they come back again, it is up to the MD if he just wants to write off the charge or send it to the LVT.

What do we think? I don't think I could ever have made a solicitor! :p

[leaseholdanswers]

Well what I suggested (twice) was to write with either a or b, and thereafter the comment on summary of charges, the leases scope for costs and the referal to the LVT. The scope of the forum is to comment and I am afraid that direct advice on the letter falls outisde of it.

Yes if you choose b, then you can't go back unless they are inclined to agree. Right now the failure to invoice makes the admin charges unenforceable unless they can prove that the statement of account is also an invoice( which in some cases they have been held to be).

It comes down to deciding and writing to "FHM", bearing in mind that at present you are out £263, and it will cost you considerably more than that to fight a county court proceedings, or an LVT hearing even if you are told you pay the rent only. I doubt your company would not refer it to solicitors, knowing that FHM are less likely than many to give up on the charges, or lose an officer for a day to the LVT.

[BlueMan]

Well what I suggested (twice) was to write with either a or b, and thereafter the comment on summary of charges, the leases scope for costs and the referal to the LVT. The scope of the forum is to comment and I am afraid that direct advice on the letter falls outisde of it.

Yes if you choose b, then you can't go back unless they are inclined to agree. Right now the failure to invoice makes the admin charges unenforceable unless they can prove that the statement of account is also an invoice( which in some cases they have been held to be).

It comes down to deciding and writing to "FHM", bearing in mind that at present you are out £263, and it will cost you considerably more than that to fight a county court proceedings, or an LVT hearing even if you are told you pay the rent only. I doubt your company would not refer it to solicitors, knowing that FHM are less likely than many to give up on the charges, or lose an officer for a day to the LVT.

Thank you for your help leasehold answers. I am sorry if it seems like I am wasting your time with my questions and not fully understanding your answers. This area we are in is completely new to me, and while I understand that the forum is not here for advice, I am just trying to make sure that any response we send a) is correct, and b) makes sense when I word it.

I believe the position of the MD will be to resist paying the administration charge as far as possible. I think he would pay up to avoid County Court proceedings, but if there is any possibility to call their bluff as far as we can to see if they back down, he will want to do that. He wants me to find that out, and I don't want to give him incorrect advice.

Personally, I will be happy when I have no more to do with it.

[leaseholdanswers]

Thank you for your help leasehold answers. I am sorry if it seems like I am wasting your time with my questions and not fully understanding your answers. This area we are in is completely new to me, and while I understand that the forum is not here for advice, I am just trying to make sure that any response we send a) is correct, and b) makes sense when I word it.

I believe the position of the MD will be to resist paying the administration charge as far as possible. I think he would pay up to avoid County Court proceedings, but if there is any possibility to call their bluff as far as we can to see if they back down, he will want to do that. He wants me to find that out, and I don't want to give him incorrect advice.

Personally, I will be happy when I have no more to do with it.

Not a problem no not a waste of time if it was I would have given up!:)

The risk is that there are grounds to resist it, but with some companies they are less likely to give in, and will call your bluff sooner in that the next thing you see is the blue form from the County Court! You may have to write and ask for response within 7 days and be ready to apply to the LVT yourself to take the lower cost option of determination as per the case you quoted. If you do then be prepared for the consequences of litigation or determination in terms of cost. If you lose a day or two preparing for and asking for a written determination how much does that cost?
And that still does not stop them from suing for the rent even if you have offered it.

[BlueMan]

One again, thanks for your help leaseholdanswers.

One other question I have. You see a lot of people write 'if I don't get a response within 10 days I shall consider the matter closed' etc - is that in any way enforceable? For example if you receive a response 3 weeks later, can you ignore it as the matter is closed?

Or is it just an empty threat to try and push people to respond promptly? :confused:

[leaseholdanswers]

One again, thanks for your help leaseholdanswers.

One other question I have. You see a lot of people write 'if I don't get a response within 10 days I shall consider the matter closed' etc - is that in any way enforceable? For example if you receive a response 3 weeks later, can you ignore it as the matter is closed?

Or is it just an empty threat to try and push people to respond promptly? :confused:

It is an horrible legalese answer but it depends!

In this case I think you have to ask them to respond in a timescale and decide whether to take the inititative and have the LVT decide it or b wait until they act and defend your position.

[BlueMan]

Just to keep the thread updated:

I wrote to Freehold Managers stating that there was no provision in the lease for us to pay an admin charge, quoted the case I linked to (and sent them a copy), mentioned the mortgagee letter not being recoverable and pointed out that there was no invoice for the admin charge either.

I paid the outstanding rent arrears only in full and final settlement, and as I had received the invoice for the next ground rent sum, paid that early as a gesture of goodwill.

I said that if I heard nothing within 14 days I would consider the matter closed, and it is now day 20 with no response, but the cheque has been cashed. I will still keep an eye out but hopefully it is all finished.

:)

[jeffrey]

Good! Acceptance of a payment in full and final settlement deprives the recipient of any further rights to argue. Matter closed!

[leaseholdanswers]

Just to keep the thread updated:

I wrote to Freehold Managers stating that there was no provision in the lease for us to pay an admin charge, quoted the case I linked to (and sent them a copy), mentioned the mortgagee letter not being recoverable and pointed out that there was no invoice for the admin charge either.

I paid the outstanding rent arrears only in full and final settlement, and as I had received the invoice for the next ground rent sum, paid that early as a gesture of goodwill.

I said that if I heard nothing within 14 days I would consider the matter closed, and it is now day 20 with no response, but the cheque has been cashed. I will still keep an eye out but hopefully it is all finished.

:)

I suspect you have simply confused them. The "full and final" acceptance is not 100% reliable, but expect to hear from them again when the charges on your account show up, along with a weak response. Either:
1: Leave it until they do write to you
2: Ask for an updated statement

Be prepared for the LVT challenge though.....

[BlueMan]

Just thought I'd post an update in case anyone has been looking through here after being in a similar situation. We havereceived no further demands for admin fees or any other rubbish. All I have received is the next invoice for the ground rent payable, which was to be expected.

Goes to prove what a bunch of chancers these guys are.

[andydd]

Just thought I'd post an update in case anyone has been looking through here after being in a similar situation. We havereceived no further demands for admin fees or any other rubbish. All I have received is the next invoice for the ground rent payable, which was to be expected.

Goes to prove what a bunch of chancers these guys are.

Sounds like mine, they really have nothing to lose and try and recoup admin, legal, interest, etc charges, whether sanctioned by the lease or not, the worst that can happen is occasionally a clued up tenant applies to an LVT and they deem them not recoverable..thats all !

[maurice1]

Thanks for the info guys,
I'm having exactly the same crap from FFM