Absent Owner and Nonpayment of Management Fees?

Absent Owner and Nonpayment of Management Fees?

8:09 AM, 18th July 2022, About a month ago 16

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The owner of a flat in a development where I also own a property has not paid any fees or ground rent for at least four years and current arrears are approaching £5000.

I understand the flat, which was inherited by the current owner at that time, is in a poor state of repair and unliveable. He has been contacted by letter and email several times by the managing agents, but there has been no response. They now wish to use a solicitor to review the case and write to the owners.

This apparently will cost around £800 and if again, there is no response, will cost considerably more to then take it to the small claims court, which would be the next step.

I feel that this could be the top of a very costly slippery slope. I have suggested that an effort to speak to the owner and perhaps persuade him to sell the flat would be an alternative first step. However, I have been told by the agents that this is outside their remit.

As a director of the owners/residents assn., I have been asked for consent for the agents to proceed with solicitors, hence my involvement.

I would love to have other members’ advice or comments.

Anne



Comments

Graham Bowcock View Profile

9:30 AM, 18th July 2022, About a month ago

Sadly I don't think you have any other option. If the agent has exhausted their attempts to get the money then going legal is the only way. This does mean that the others share the cost of the legal action.

The agent ought to load the costs to the offending property so they ultimately bear all costs due to their intransigence, but in cash terms the others will need to pay in the first instance and hope recovery can follow down the line.

Nikki Palmer

9:39 AM, 18th July 2022, About a month ago

Why not write a letter yourself (as part of the residents association) saying exactly the same as a solicitor would say and that if payment is not received a claim will be made through the small claims court?
At the most it will cost a stamp and may prove successful.
In my experience if someone isn't planning on paying then who the letter comes from doesn't make any difference so you may just save yourselves £800. A small claims application is very straightforward.
Your local council should also have an Empty Property Officer and they may be able to intervene to get the property habitable or sold

CYRIL STALEY

9:40 AM, 18th July 2022, About a month ago

Anne
Stay completely out of it.
It is entirely a matter between the head lease holder, the management company and the flat owner.
Any involvement by you could be
critised by other residents and lead to bad relations within your community. From a voice of experience.
Don't even respond!

Blodwyn

11:09 AM, 18th July 2022, About 4 weeks ago

Anne
I am a retired solicitor and suggest that Cyril is right. It may be remote but you may expose yourself to a risk of been seen to 'meddle' where you don't strictly belong. This could have costs implications. It is for the Head Leaseholder or Freeholder to go through the procedures that ought to be laid down in the documents common to the parties to instruct the Agent to instruct their solicitor to do the job.

NewYorkie View Profile

11:12 AM, 18th July 2022, About 4 weeks ago

Reply to the comment left by CYRIL STALEY at 18/07/2022 - 09:40
I've been Co.Sec. of a share of freehold management company, and we often had payment problems, usually resolved face-to-face, but sometimes with a solicitor's letter. We never did apply for repossession.

The leaseholder has consistently broken the terms of their lease by not paying the Ground Rent and Service Charges... for 4 years, despite regular payment demands. Don't get involved! This is one of those situations where the freeholder should threaten forfeiture, and all costs which have been loaded onto the other leaseholders should be repaid from the sale of the repossessed flat.

Where is the flat and how much is the annual GR?

The freeholder can start taking court action if the leaseholder is three or more years in arrears with Ground Rent, and owes £350 or more in Ground Rent, SC and administration charges. But... if the GR is more than £250 (or £1,000 in Greater London) the freeholder does not have to follow that process and can apply for possession in the same way as if the leaseholder was a renter owing at least three months of GR for three months or more.

BernieW View Profile

14:27 PM, 18th July 2022, About 4 weeks ago

Anne - The starting place, as always, is RTBL ... Read The Bl**dy Lease. The "Residents' Association" has no authority here - and any Residents Management Company or Right to Manage Company are not in a position to repossess that which they have not previous possessed. Only the landlord can go down the forfeiture route and, perhaps, force a sale.

So, who are the managing agents working for?

To whom are the service charges and ground rent owed?

In any event, depending upon the wording of the lease, the costs of pursuing the debt should be charged to and recovered from the offending leaseholder.

Freda Blogs

15:44 PM, 18th July 2022, About 4 weeks ago

If there's a mortgage on the property (may not be in these circumstances, but you can find out via Land Reg), you or the agents could write to them.

Mortgage companies usually take a dim view of leaseholders who do not comply with their obligations and place their security at risk. Has been a successful tactic for me in the past.

Anne B

17:41 PM, 18th July 2022, About 4 weeks ago

Reply to the comment left by CYRIL STALEY at 18/07/2022 - 09:40
Cyril thank you so much for your advice. Both you and Blodwyn are in like minds and in fact, it’s not our residents’ association that has provided the unpaid service charges, so I don’t see that we have a legal claim for payment of them.

Anne B

17:47 PM, 18th July 2022, About 4 weeks ago

Reply to the comment left by Blodwyn at 18/07/2022 - 11:09
Cyril and Blodwyn, thank you so much for your advice. Both of you are in like minds and in fact, it’s not our residents’ association that has raised the unpaid service charges, so I don’t see that we have a legal claim for payment of them.

I’d like to thank everyone who has responded. It’s so helpful to be able to call on the experience of others. This is the second time I’ve needed help and once again, the response has been great and immediate.

And furthermore, in future, I will always remember to RTBL!!

CMS View Profile

7:31 AM, 24th July 2022, About 3 weeks ago

Hi, first i would check if there was a mortgage on the property. If there is, get the MA to contact them and advise them of impending Court action in respect of arrears. They will 9/10 times pay.

If no mortgage, MA have to take Court action and get a CCJ and try and take forfeiture proceedings. Judges dont like forfeiting long leases. Alternative may be to get the CCJ seek a charging order and then an order for sale if debt not paid. May be easier for a judge to swallow on the basis that the owner will receive most of the sale proceeds. I have never dealt with SC arrears viw this second option so haven't yet thought it right through but in principle it sees to work.

PM me if you need further help. Best, Charles

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