One of the biggest jobs for managing agents and management companies is issuing service charge demands and securing prompt payment. This latest Brady Solicitors blog sets out a checklist of seven key points to help you make sure your service charge demands are correct.
As you will be aware, leaseholders may be able to withhold payment if their service charge demand is incorrect. Particularly in smaller developments, slow payment of a service charge from just one or two leaseholders can quickly impact on the standard of management or halt necessary works.
In our experience at Brady Solicitors, one of the main reasons for non-payment is an incorrect or non-compliant service charge demand, yet this is something that can be easily fixed.
Our property management lawyers work closely with management companies and managing agents to help them to perfect their service charge processes and support prompt payment.
The Brady Solicitors service charge demand checklist:
- Include the full name and address details of the landlord (freeholder) and state your address as well if you are collecting on their behalf.
- Ensure you include the name of the leaseholder and the address to which the invoice is served.
- Include a Summary of the Tenant’s Rights and Obligations Notice for service charges. There is also a separate set of Rights and Obligations for administration charges. (We often advocate combining them into a double-sided document to avoid sending out the wrong Summary.) Remember to use the latest version if the property is in Wales.
- Ensure you are sending the service charge invoice in accordance with what it says in the lease, for example if the payment is due in advance or arrears.
- Include an address for leaseholders to serve notices or complaints.
- If required by the lease, ensure the service charge accounts are certified by the correct person.
- Make sure the demand has been served within 18 months of the actual costs being incurred. If not, has the leaseholder been notified that these costs have been incurred and that they will be subsequently required to pay them?
Alongside getting the regulatory aspects correct, we would always advocate providing leaseholders with a clear and transparent breakdown of costs, so they can understand where their service charge contributions are going. This will help to reduce the number of queries and – importantly – the number of slow payers.