Freeholders, managing agents, and management companies often ask how far back they can recover service charge arrears. Jack Turner, service charge specialist in Brady Solicitors’ litigation team explains.
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 that 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.
Recovering older service charge arrears
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
And 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.
For help or advice with tackling service charge arrears – old or new – please do get in touch.