HELP! Mortgage company suing for ground rent/service charges

[swift49]

Hi, I have an urgent problem that I would like some advice about because I really have no idea where to start. Please bear with me, there’s quite a bit of history but here goes...

 

I have recently been summons for a court appearance for areas on my mortgage account. I do have arrears on my mortgage account (1 month) but have an agreement in place with my mortgage provider (GMAC RFC now Paratus AMC) to repay the arrears owing which we have kept up to date with (I pay £50 a month towards the areas + my normal mortgage repayment amount). This arrangement is all up-to-date.

 

On questioning the mortgage provider about this they have said that the particulars in the summons was a mistake and the real reason for the summons is due to outstanding ground rent and service charges owing to the company managing the property (they say a company called News service). They have now decided to change the particulars of the summons and will be contacting the court to make the amendment.

 

They say that they have been contacted by the managing companies solicitors (Altermans Landlord and Tenants Solicitor’s ) and told that we were in areas with our ground rent and service charges totalling just under £2000. They (the mortgage provider) are also in the process of preparing a cheque to be sent out to the managing company for the amount that they say is outstanding and plan on suing us for the amount that they are going to pay them. They have also said that they were contacted before by the management company a few years ago and issued a cheque out to them for £11000!! This, they say was for the same reasons, ground rent/service charges and this amount has been added to our mortgage account!!

 

We have had problems with the management company for our property ever since we moved in which was about 5 years ago. The first company (Chattams I believe) went into administration about 6 months after we moved in. We didn’t hear anything from any company after that for a couple of years. We then had a letter through the post saying that management of the property had been taken over by News Service mentioned above. Since that letter we have received no further contact from them, no requests for payment of ground rent (it should be £300 PA according to our original mortgage agreement) or any breakdown of service charges etc.

 

Also during this time there has been no servicing of the communal areas in our flat. There is no lighting in the hall ways, the fire alarms do not work and all the communal areas are in disrepair.

 

Now to add to all of this we have recently received a letter from another management company, Salter Rex saying that they have now been appointed to manage our property by BDO Stoy Hayward who are currently handling the administration of News Service!!!

 

The letter from Salter Rex stated that they are the management company appointed by BDO Stoy Hayward to maintain the communal areas of the property. It stated that they have no keys to the communal areas of the property and asked if they can obtain a copy. This was received January this year.

 

I called Salter Rex up today, attempting to explain the situation to them and at least get a break down of their costs and a schedule of what they would be charging us for services and details for when we should pay the ground rent. They then told me that they were the ones who appointed Alterman’s to pursue land rent and service charges for our property and that they had been managing our property since 2008!!!

 

I’m really confused now and I’m not sure how to deal with this. We have our mortgage company suing us for service charges and ground rent arrears, who have already added £11000 to our mortgage account for the same reason. Our ground rent is £300 PA so over the 4 year period which we have been out of contact with any management company we should have owed £1200 in ground rent. So the management company who haven’t stepped foot in the apartment have managed to get our mortgage provider to pay out £9800 in services charges! This management company seem to believe they have been managing the property since 2008, however they are only now asking for the keys to the property in January 2011!!

 

Could anybody please advise me on what to do next? The mortgage company has stated that they will not cancel action until they get written confirmation that we have come to an agreement with the management company. The management company has said that we need to consult with their solicitors. The Solicitors have said that we need to sent them an email.

 

I feel as though we have been totally [problem]med am am very worried that this could result in up losing our property. Any advise that anyone can give would be greatly appreciated. L

[Ubiquitious]

This will require solicitor advice.

 

Ask the management company for a break down of all items relating to the service charges and projections for this years budget. There should be a record of all expenditure from their client account. You are allowed access to this information so do not get fobbed off.

 

What is the yearly ground rent without service charge?

 

How many tenants are in your block?

 

Is the service charge divided equally between tenants?

 

If they have not done any of the work claimed, it is of poor quality or the cost seems excessive you may need a chartered surveyor to provide an expert witness report.

 

With regard to the mortgage company paying and adding it to your account and suing you, you will need legal advice.

 

 

Edit:

 

Just to add the client account runs with the building. So even the new agents should have all the details relating to it.

 

In their projections they should also have an idea of any large items that may be required in the medium term (such as re-roofing). Good agents should add this to the service charge so leaseholders do not have a shock large one off expenditure.

 

Check that the management fees charged by the agents is reasonable and competitive.

Edited March 24, 2011 by Ubiquitious

[swift49]

Thanks for your advise Ubiquitious. It's really helped me to get a clear view of what I should do next.

 

The ground rent on the property is £300 pa. There are three other tennants in the property. The total number of flats in the block is 5 so 1 flat is currently vacant.

 

I'll get on to the management companies solicitors ASAP to get a full breakdown of all the charges in relation to the property. I've also sent a letter to the mortgage provider to stop any cheques going out to the management company as we are disputing their charges. I'm still waiting for the ammended summons that they are sending out.

 

In the mean time I'll get some legal advise.

 

I'll let you know how I get on. Thanks again for the advise.

 

 

 

 

 

 

 

This will require solicitor advice.

 

Ask the management company for a break down of all items relating to the service charges and projections for this years budget. There should be a record of all expenditure from their client account. You are allowed access to this information so do not get fobbed off.

 

What is the yearly ground rent without service charge?

 

How many tenants are in your block?

 

Is the service charge divided equally between tenants?

 

If they have not done any of the work claimed, it is of poor quality or the cost seems excessive you may need a chartered surveyor to provide an expert witness report.

 

With regard to the mortgage company paying and adding it to your account and suing you, you will need legal advice.

 

 

Edit:

 

Just to add the client account runs with the building. So even the new agents should have all the details relating to it.

 

In their projections they should also have an idea of any large items that may be required in the medium term (such as re-roofing). Good agents should add this to the service charge so leaseholders do not have a shock large one off expenditure.

 

Check that the management fees charged by the agents is reasonable and competitive.

[Ubiquitious]

Terrible spelling of advise by me!

 

After seeing the break down of costs etc, if anything does seem irregular you could ask the other tenants in the block if they are willing to join you and share costs (such as professional fees) with regard to the service charge.

 

Also if monies have gone missing (esp if a previous agent has gone bankrupt) check if the firm was regulated or the staff were members of RICS. They will almost certainly have insurance. I am not implying any theft has happened, just dont be too careful.

 

From my experience odd things can happen to service charge money!

Edited March 25, 2011 by Ubiquitious

[swift49]

LOL, my fault.

 

There was a period of time when we were the only ones living in the block. This was only for about 8 months. They could be trying to charge us for service changes during this period for the whole property as nobody else was living there during this time.

 

Even if this is the case, there has been no servicing of the apartment. The fact that they’ve asked for the keys to the property only now suggests that they haven’t performed any maintenance to the property (internally at least).

 

If they do start giving me the run around regarding the servicing history, is there any way I can force them to provide this information?

[Ubiquitious]

There are generally two ways of checking managing agents / landlords use and levy of service charge.

 

The first and easiest is under the Landlord and Tenant Act 1985 sections 21 and 22.

 

Section 21 allows you to ask for a summary of service charges. This must be put in writing to the landlord or their agent. You can only ask for the last 12 months or so of service charge (though feel free to ask for a longer time scale). Section 22 allows the tenant (or leaseholder) to view all documents, receipts etc relating to the service charge. You must have requested a summary under section 21 before requesting more detail under section 22.

 

There is another way, however you will need the majority of tenants to agree. This is called a management audit which is availiable under some Act and is usually carried out by a chartered surveyor and is extreme and potentially costly way forward.

 

The obligations of the landlord and how the service charge is levied will be contained in the lease. Cross check everything with this. It may be worth taking photos of the state of the building as it is at the moment.

[Ubiquitious]

Check how the landlord is allowed to levy service charge in your lease.

 

It may be that you are only ever liable for a 5th of any charge. If that is the case then the landlord could be responsible for empty units.

 

This sort of point needs checking ideally by a solicitor. Leases are complex contracts.

[swift49]

Once again, thank you for all your help Ubiquitious.

 

I've sent a request off to the management companies solicitors to provide me with a breakdown of the service charges. I'll also seek legal advice regarding the summons the mortgage company has issued me with. I'll let you know what happens.

[bossy]

I think you should dispute the payment with your mortgage company. Your mortgage company is not suppose to pay the money unless it has been determined by the leasehold valuation tribunal that you are liable to pay the cost. You should ask your mortgage company for a determination under section 155 (27A) of Commonhold and Leasehold Reform Act 2002. If your landlord want the money, he should go to leasehold valuation to determine your liability to pay.

If you did not receive any demand from your landlord regarding the costs, you should use this case LON/OOAD/LSC/2009/0039 for failure to complies with s.152 of the 2002 Act and the court of appeal judgment on Leonora Investment Company Limited vs. Mott Macdonald ltd Neutral Citation Number: [2008] EWCA Civ 857 and London Borough of Southwark vs. Jean-Paul LON/00BE/LSC/2009/0082. I hope this help. Below is s.155 of 2002 Act

s.155(27A) of Commonhold and Leasehold Reform Act, 2002

 

155 Liability to pay service charges: jurisdiction

(1)After section 27 of the 1985 Act insert—

“27A Liability to pay service charges: jurisdiction

(1)An application may be made to a leasehold valuation tribunal for a determination whether a service charge is payable and, if it is, as to—

(a)the person by whom it is payable,

(b)the person to whom it is payable,

©the amount which is payable,

(d)the date at or by which it is payable, and

(e)the manner in which it is payable.

(2)Subsection (1) applies whether or not any payment has been made.

(3)An application may also be made to a leasehold valuation tribunal for a determination whether, if costs were incurred for services, repairs, maintenance, improvements, insurance or management of any specified description, a service charge would be payable for the costs and, if it would, as to—

(a)the person by whom it would be payable,

(b)the person to whom it would be payable,

©the amount which would be payable,

(d)the date at or by which it would be payable, and

(e)the manner in which it would be payable.

(4)No application under subsection (1) or (3) may be made in respect of a matter which—

(a)has been agreed or admitted by the tenant,

(b)has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which the tenant is a party,

©has been the subject of determination by a court, or

(d)has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement.

(5)But the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment.

(6)An agreement by the tenant of a dwelling (other than a post-dispute arbitration agreement) is void in so far as it purports to provide for a determination—

(a)in a particular manner, or

(b)on particular evidence,of any question which may be the subject of an application under subsection (1) or (3).

(7)The jurisdiction conferred on a leasehold valuation tribunal in respect of any matter by virtue of this section is in addition to any jurisdiction of a court in respect of the matter.”

I hope this help.

[londonlondon]

Hello,

 

I am not sure if I am addressing this question to the right place - perhaps you could direct me or help me find out who might be the right specialist to assist me with my problem.

 

We have been suspecting for a while that the service charges and other various charges demanded by the management company of the building we live in are rather excessive, but we only recently discovered that their financial records contain strange and obscure entries. For example administrative fees for over £4,000. We also discovered that one of our payments had been omitted from their records until we pointed it out.

 

The company are pressurising us to pay the amount they say we owe in full and immediately, including all these unexplained charges, for which they have no comment. Our numerous attempts to obtain a clear break down of all charges are either ignored completely or answered with disorganised print outs that fail to explain what the money we have paid has been spent on. They refuse to discuss the amount with us, and use the tactic of giving a deadline, after which they add more charges, legal fees and admin fees.

 

We feel that we need a specialist to make sure that the bullying tactics of this management company do not prevent us from clarifying what we actually owe and how we can defend or protect ourselves from this pressure.

 

Thank you very much in advance,

 

Awaiting your replies