Hi all
My first post in MN for some time - I didn't even know it HAD a Legal Matters area! Not sure whether or how much anyone one on here will be able to help but nothing ventured etc etc....
I bought a BTL flat in a block of 13 in Cornwall in 2009 and the original owners of the freehold had their own management company. We paid monthly for them to do the regular cleaning / maintenance of the common parts they were supposed to do and all was well. But in 2010 the original owners sold the freehold to a faceless bunch of money-grubbing sharks (Moreland Estates aka MW Freeholds in case anyone's heard of them). Moreland supposedly have an in-house property management division and, as freeholders, they replaced the original Cornish management company with this team (Moreland Estate Management).
As you can probably guess, the service charge promptly ballooned and the quality of service did the opposite. London-based Moreland had no Cornish connections whatsoever and repeatedly we the leaseholders asked Moreland to show how these service charges were calculated and why they had suddenly shot up, when conversely the services that a management co would normally do had stopped the moment Moreland took over. Our requests were met only with a deafening silence from Moreland (but still accompanied by regular demands for ££).
Eventually we 13 leaseholders exercised our Right To Manage (RTM) which took effect in June 2016. This involved getting rid of Moreland Estate Management in favour of a management co of our choosing and everything has been good since.
Good, that is, except for the fact that Moreland Estate Management has continually, between 2016 and now, been chasing the leaseholders for management fees supposedly owed for the period between when we gave notice to Moreland Estate Management that we were changing to another management co, and the date this took effect a few months later; because they never answered any requests for clarification of how these service charges were calculated some of us, like me, withheld some or all of our monthly service charge payments to Moreland and, at the time the RTM took effect, I had withheld approx £400. Every month, they send each of us an 'Application For Payment' with these management fees PLUS various 'late fees' / 'admin charges' and so on. Once they tried suing one of us for unpaid management fees and, tellingly, the action got struck out when the County Court asked Moreland to show how these fees were calculated and Moreland did not do so. I have duly continued paying the ground rent yearly to the freeholders MW Freeholds.
One way or another it appeared that the situation was effectively a stable 'frozen conflict' inasmuch as Moreland Estate Management haven't sued any other leaseholders but CAN get them to pay up by MW Freeholds refusing to give freeholder's consent if they want to sell a flat; irritatingly, when some of the leaseholders have tried selling their flats over the years and the conveyancers acting for the incoming buyers have discovered these supposedly outstanding management fees, they have insisted that these fees be settled before the sale could proceed. Result? The outgoing leaseholders have had no choice but to pay Moreland what Moreland say they are owed.
On the face of it this should not be happening because these supposedly outstanding management fees date from 2014 ie a period well over 6 years. However it has been suggested that, because Moreland has been chasing the fees since before the 6 years expired, the 6 years limit does not apply and the alleged debt remains legally enforceable. Is this true?
Furthermore I have been talking to others who seem to be saying that because Leases are generally executed as a deed, section 8 of the Limitation Act applies to service charge debts and makes the limitation period 12 years and not the 6 in section 5 in any case - again, is THIS true?
Last month I arrived back in London after 2 ½ weeks away and found these 2 letters waiting for me - they have called in Property Debt Collection Ltd. And see how they’re a week apart with different amounts (and when the latest ‘Application for Payment’ dated 23 Feb had said £1084.18)
I also spoke to Thompsons Solicitors - as part of my UNISON membership I get a free 30 minute legal advice call.
So - this is what they said.
- The 12 year time limit because it's a service charge arising from a lease is correct
- The admin fees are enforceable if the original debt is enforceable and this would need to be decided by a court / tribunal / ombudsman.
- I should contact the Trading Standards dept of the local council for Moreland's area and complain that I am being harassed for a debt that's in dispute - the dispute should be resolved by a court / tribunal / ombudsman before debt collectors being called in.
- Unreasonable for Moreland to keep adding these £75 admin charges without taking legal action (something I maybe should have mentioned earlier but didn't is that every monthly 'Application For Payment' has a different number of lines on it for these £75 admin charges - sometimes the total amount they say is due is as little as £900-odd, others it's as high as £1100 and various figures in between)
- I should book in my appointment with the LAS (do you have any experience of whether they are likely to be quicker / more forthcoming if I click on the 'seek written advice' option?)
- I should do likewise with the Property Ombudsman.
- With PDC I should contact them and say 'I have today had legal advice and have been advised to contact the Property Ombudsman and the LAS and their earliest appointment is not till 14 April' - this would make PDC look unreasonable if they start instructing solicitors / any debt collection proceedings before 14 April. I did this and PDC acknowledged my communication.
On 14 April I spoke to the LAS. The conversation was limited to 15 mins and I had difficulty understanding the person. However I (think I) gleaned the following:
- Look in lease for whether it's got provision for levy of interest / admin charges / costs incidental to chasing unpaid admin fees (I did and it hasn't got any (!)
- S158 of the Commonhold & Leasehold Reform Act 2002 provides that a charge can be made but has to be reasonable (with no definition of reasonable)
- That I should pay stating that it's under protest and then challenge them at the 1st Tier Property Tribunal for a definition of reasonable.
- Some leases are drafted as a contract and consequently the limitation period is 6 years; if drafted as a Deed it becomes 12 years. If it says 'agreement' not 'deed' then it's a contract (my lease calls itself a lease but says on the back page 'signed as a deed')
PDC have today emailed me asking how I wish to proceed.
Looking forward to hearing any thoughts anyone may have on this.
Cheers
R