Threat of Court Action after withholding service charges

[Elemy]

I wonder if someone can help me. We have received a demand for ground rent and service charges on a 'statement' from our new managing agents. The ground rent has not been formally demanded as per the legislation, and they have not included the summary of rights and obligations for the service charges (actually, they gave us an extremely edited version of only 5 points!). We wrote to them and requested a formal demand for ground rent and the appropriate summary for the service charges. They have refused to do so (seems odd - they are a very suspicious company!). We then said that we would withhold the ground rent and service charges, as is our right I understand, until we receive the correct documentation. They are now threatening to start litigation and take us to court. I assume this is simply a threat - but can they?! I'm terrified! I thought I read somewhere that if this did go to court then the judge would throw is out though - is that true? And could we then get our costs back as they have incorrectly taken us to court? Any help would be much apreciated! I really need to know what to say to them!

[Poppy]

It’s an empty threat. They may try and they’ll waste their money. I expect they'll shape up soon enough.

Is the freeholder aware of the managing agent’s incorrect demands?

Stand your ground. Make sure you have the money ready when properly demanded. Good to know that you are aware of the laws.

[Elemy]

Thank you for the reassurance... but it is so very scary! The freeholder is fully aware - I copied him into some of the correspondence where I requested the ground rent to be requested formally as per the legislation, and where I requested the Summary of rights and obligations re service charges. Sadly I assume that the freeholder and the managing agent are related somehow.

I think the managing agents will continue to threat and hope that some of the owners/leaseholders pay up - I'm trying to encourage them to stay firm as I believe we are acting 100% correctly in withholding.

I just wish we had some way to respond now - I assume the leasehold valuation tribunal might be the way to go.

thanks again though!

[dominic]

We are here ready to help for whenever the threatened litigation actually starts, which I doubt it will.

You don;t have much to fear, and in the worst case, you always have the option simply to pay up (but that would be giving in to bullying).

[blckbrd]

Technically, you are not withholding anything as nothing has been demanded. I'd say you are ignoring as one might with a small child who has neglected his Ps and Qs.

If you are taken to court, make sure the MAs don't try to land you with their costs surreptitiously through the service charges.

[Elemy]

Thank you again - and lovely to know I can come back to you if and when any actual litigation starts.

I shall hold tight and hope that it doesn't - thank you all for the encouragement that I am doing the right thing.

I will also keep an eye on court costs, thank you very much for that warning!

[animal]

Also, if the MA is a member of RICS or ARMA, make a complaint against them...

[Elemy]

I only wish they were... they are total cowboys and part of no association at all. I suppose that is why they think they can get away with it - and probably normally do get away with it.

In fact, the firm is actually a 'debt collection' agency that prides itself on getting all your debts paid without going to court.... one can only assume their agressive and heavy-handed tactics come from this background.

I might try trading standards when the dust has settled.

But we have definitely ensured that the new management company that is taking over for our RTM is a member!

[dominic]

Bear in mind that unless the MA are a party to your lease, any suit against you would have to be in freeholder's name (i.e. the MA have no direct contractual relationship with the leaseholders).

[Elemy]

Dear Dominic

That is interesting - do I understand you correctly in that you are saying that any suit against us for the recovery of the ground rents must be from/in the name of the freeholder?

And if I've understood correctly, is this the same for the service charges?

thank you all!!!

[jeffrey]

Dear Dominic

That is interesting - do I understand you correctly in that you are saying that any suit against us for the recovery of the ground rents must be from/in the name of the freeholder?

And if I've understood correctly, is this the same for the service charges?

thank you all!!!
Yes. There are two distinct contractual relationships. These are between:
a. L and you (lease); or
b. L and Mgt. Agent (Agency Agreement).
Your debts arise under 'a' only- hence only L can enforce them against you.

[dominic]

Yes, but unless:

a. the MA are a party to the lease (or a previous MA was a party whom the current MA is the successor); or

b. the freeholder has assigned/subrogated its rights to the MA (in which case you woud have been notified for this to be effecive).

[jeffrey]

Yes, but unless:

a. the MA are a party to the lease (or a previous MA was a party whom the current MA is the successor); or

b. the freeholder has assigned/subrogated its rights to the MA (in which case you woud have been notified for this to be effecive).
On point 'a', there might be a degree of confusion.

1. If lease is tripartite:
a. what we're calling 'Management Agent' (MA) is better called 'Management Company' (MC)- acts as much more than an agent; but
b. MA/MC's powers are non-assignable, esp. as lessee will have no contractual relationship with its assignee (and neither MA/MC nor assignee usually has any estate or legal interest in any part of the block).

2. If lease is bipartite, MA is only ever an outside contractor for L. In that case, T will have no contractual relationship with MA.

[andydd]

Dear Dominic

That is interesting - do I understand you correctly in that you are saying that any suit against us for the recovery of the ground rents must be from/in the name of the freeholder?

And if I've understood correctly, is this the same for the service charges?

thank you all!!!

I think im right in saying that would be correct, if you look at your lease you should see that it is a 'contract' between you and the freeholder, the MA is normally employed by the freeholder to take over the management and maintainence side of things, in my case the MA is in reality the same people as the freeholders, its just an excuse to squeeze some more money out of me.

Andu

[Elemy]

Dear Dominic and Jeffrey

Our MA was taken on by the L to look after our building. Most definitely they are not part of the lease. The L wrote to us and informed us that management of the building had been handed over to them and all future correspondence should be sent to them.

I assume that therefore I can conclude that this is effectively 'b' and any action must be taken by the L and not the MA.

Although I suppose the MA could start action in the name of the L?. My understanding is that the MA is actually first and foremost a debt collection agency and so they might know how to get around this? They certainly know the tricks of threatening behaviour which is so awful!

Saying all that, they still do not have a case though (right?) as we are within our rights to withhold our ground rents and service charges until we receive the appropriate forms?

Thanks again though!

[Gordon999]

What is the name of your freeholder and MA - Debt Collection company ?

CPM ( Hoddesdon) also used a debt collection company to collect ground rent areas and which imposed a collection charge of 148 pds on their victims . See www.cpm-asset-management.co.uk

[jeffrey]

Our MA was taken on by the L to look after our building. Most definitely they are not part of the lease. The L wrote to us and informed us that management of the building had been handed over to them and all future correspondence should be sent to them.

I assume that therefore I can conclude that this is effectively 'b' and any action must be taken by the L and not the MA.

Although I suppose the MA could start action in the name of the L?
Any action must be taken by L and in the name of L, even if it nominates MA to represent it.

[Sad Sam]

From what I understand, is that even if you make a stand, by not giving into the bullies,you could still face a crippling legal bill.

I was of the believe that the looser paid the winners legal bill.

Recently I have been informed that is not the case.

This is proposterious.

It does all seem riduculous.

Gilje nulifies any protection of 18 month rule.

So frustrating

[hollyhead]

Sad Sam, Do you relise that you are commenting on a post that is nearly 2 years old!:(snooze):

[leaseholdanswers]

Sad Sam, Do you relise that you are commenting on a post that is nearly 2 years old!:(snooze):

how time flies when you are having fun eh?!