Pursued by debt collection agency for service charges paid to letting agent

[Dave45]

Hi there, here's a challenging tale for you experts to comment on: -

 

I received a note from my building society saying they had been served notice of collection by a debt collecting agency over unpaid ground rents on a flat I own. As I knew nothing of this I contacted the letting agents who said there was no ground rent debt due. This was corroborated by the ground landlord. I then asked the building society to tell me who the debt collection agency was and who were they working for? The next reponse was a letter from the building society saying they had paid over 1700 pounds out from my mortgage account to the debt collection agency and that I am now in arrears on that account.

 

I again contacted the letting agents who feigned ignorance. I then contacted the buildings management company (Peverel) who said that the lettings company had been slow in paying them service charges so they had set a debt collection agency after the money. Peverel however said monies had been due in Oct last year and April this year, but since the debt agency had been set the task the lettings agents had paid the Oct bill.

 

I went back to the letting agents (who by the way had already deducted the cost of the due service fees from rental income paid to me) asking for an explanation. They now say they have been having trouble getting invoices from Peverel who have been sending them to the wrong place and they asked me to direct Peverel to their correct address as Peverel would not now take instructions from them.

 

I have asked the debt collection agency why they presented the issue as non-payment of ground rent when it was a management service charge issue. They have not responded of course, but I believe they were misleading to my building society with that.

 

No-one is taking ownership of the problem and I appear to have paid twice for service charges (once by rental income deduction and now by payment by my building society) and now have an arrears tag on my mortgage account through no fault or actions of mine.

 

My questions are as follows: -

1. I am told the building society should have given me 28 days to respond to their notice about the debt collection agency. They did not and paid out within 20 days of first writing to me, ignoring my letter asking them not to pay until I had investigated the matter. Are they at fault?

2. As Peverel had received 50% of the owed service fee prior to the debt collection agency taking monies from my building society was there even a legal claim?

3. Is it perfectly legal in this country for a debt collection agency to go straight to a mortgage holders building society claiming monies without making any attempt to first contact the mortgage holder? Is it also legal for the building society to pay out monies without questioning the validity of the claim or awaiting a response from the account holder?

4. The debt collection agency are not responding to requests for information. Can I force them to?

5. Peverel are not responding to requests for information. Can I force them to?

6. Who should I set my solicitor on first if I get no satisfaction from all parties - my letting agents who deducted fees but didn't pay the service charges; Peverel who sent in a dubious claim of debt; or my building society who gave me no chance to respond properly before they paid out???

 

I await everyones thoughts. Cheers

[MrShed]

Hang on - so the DCA have gone after the building society, they have paid, and are then charging you???? Is that right?

[Dave45]

The DCA levied the charge on my building society, who then wrote out a cheque to them without waiting for my response (to their letter informing me of the DCA collection request). The building society have now applied the charge on my mortgage account (for the alleged debt plus the DCA fees and their own fees in servicing this matter).

[Dave45]

Maybe I should make clear that I believe I have already paid these service fees as my letting agent had deducted the cost of them (as they have done so for the last five years) from rental income statements, once in November last year and once in June of this year. Now however when taken to task on the subject the letting agents say that they had paid the October bill to Peverel but had only 'accrued' monies for the April bill pending receipt of a correctly addressed and itemised bill from Peverel. However the net effect to me is that I have paid out money once to the letting agents (by deduction of rental income) and again through the DCA charge on my building society account for the same thing!

 

The DCA has not pursued me directly, in fact they made absolutely no attempt to contact me directly prefering instead to go to my building society with the claim of 'unpaid ground rent'! Interestingly the building society has a department dealing with ground rents and they say they have to pay out charges for those when they come in - they don't say anything about 'fees for building maintenance', which makes me think the DCA were also masking the claim as something it wasn't in order to get a quick payout from the building society!

[MrShed]

I fail to see what basis the building society has for levying these charges on you - they have no right to do so!

[Dave45]

The building society argue that for some reason they were obliged to pay the collection request by the DCA as the charge was levied on the property they had loaned on - this apparently without reference to myself for comment!

[MrShed]

They cannot be judge and jury. The building society can pay by all means, but they cannot enforce this onto you unless they can prove the money was owed for the reason given!

[Dave45]

Thanks. Helpful comments. I'll let you know how this works out. I've also been checking OFT guidelines and its looks like Peverel and the DCA both broke rules by not first contacting me about the debt instead going straight to the building society. As my letting agents are my appointed representatives, it seems they should have gone to them first, which they didn't!

[worzelGummage]

write a complaint to your bank stating that the debt was misrepresented and that they should have given you time to respond and pay it yourself. You can also state that the money was put aside for these charges but the mamagement company had not invoiced you for it, and that is the only reason it hadn't been paid. You should ask they put you back in the position as if they hadn't paid the "Debt"

 

If you are unhappy with their final response you can complain to the financial ombudsman service.

 

Also I would deal with the managment company yourself rather than via the letting agent. After all if the LA went out of business you'd still have to find the money to pay the service charge and ground rent and then hope to get your money back from the LA.

[MrShed]

The problem here is that far from finding someone to blame, it would appear that ALL parties have behaved wrongly, and all could in many respects be found liable!!

[worzelGummage]

Agree but Building society is easiest to hold to account.

[Dave45]

I think I'm up to the FSA point already with the building society. I did write and tell them firstly I knew nothing of the debt and secondly that if they paid then 'all costs and responsibility for the recovery of funds will have to be borne by' them as I was not recognising the debt as mine. Their response to that was to pay the collection invoice and then send me details of the DCA. I have written again asking why they paid out when I asked them not to and instructing them to recover the funds and reinstate my account. Still waiting on the response to that.

 

I also believe they should have waited longer for my first response before they paid out - I have been told they had to give me 28 days notice of their having received the collection notice before they paid, yet they did not, paying within 20 days. I think I've got them on several counts...???

[MrShed]

Agree but Building society is easiest to hold to account.

 

Agreed

[Dave45]

Thanks guys. i'll let you know how this works out!

[Dave45]

A quick update - Peverel were the first to blink! They have offered a refund of funds debited from the building society, DCA fees and interest. I am still awaiting a response from the building society to the charge that they breached FSA regs. Thanks guys.

[MrShed]

Excellent result - well done.