Freeholders, managing agents, and management companies often ask how far back they can recover service charge arrears. What is the service charge arrears time limit? Below, our service charge specialists at Brady Solicitors explain the recovery process.
This question should not be confused with the ‘18-month rule’. Further information on which can be found here. To know how far back we can recover service charge arrears, we must turn to the Limitation Act 1980.
This states that legal action based on a contract must be brought within six years of the date that the sums are properly due under the terms of the contract.
So, when you find yourself taking action against a leaseholder who owes service charges that date back longer than six years, do you have any options?
The good news is that where the lease was executed as a deed rather than a contract, and the service charge is not recoverable as rent, then the limitation period for service charge recovery extends to 12 years. For a lease to have been executed as a deed, it must have been sealed and witnessed at the point of completion.
If you are not sure if your lease is a deed or a contract, please get in touch and we can help to clarify it for you.
Service Charge Arrears Recovery
So, providing that these four conditions below are met, you will be able to recover service charge arrears accrued up to 12 years ago:
- The long residential lease was executed as a deed, not a contract
- The service charge is not recoverable as rent
- The original service charge demands were issued correctly and in accordance with the lease, and
- The demands were made within 18 months of the costs being incurred
What about ground rent arrears?
Note that the limitation period for ground rent arrears always remains at six years, which means you will not be able to recover unpaid ground rent dating back any further than this.
Changes to ground rent and lease extensions come into force on 30th June 2022, find out more about the impact of this in our blog post here.
Need Service Charge Arrears Advice?
For help or advice with your service charge arrears – old or new – please complete the form below to get in touch.
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