If you run a Residents Management Company you will understand the importance of securing swift payment of your service charge demands. In this latest Brady Solicitors blog we explain how you can reduce excuses for non-payment by ensuring demands are issued correctly.
Service charge contributions are the lifeblood of all Resident Management Companies. Without leaseholders paying their service charge demands, the RMC cannot function. It is vital therefore that these demands are served correctly. Incorrect demands can allow leaseholders to create a defence for non-payment and can also leave the RMC or Landlord liable for legal costs. Brady Solicitors’ service charge specialists set out some key rules below to help you make sure that your service charge demands are issued correctly:
1. What does the lease say?
It is essential to check the lease and act in accordance with what it sets out. The lease may state demands are to be served by first class post or recorded delivery, along with stipulating how the demands are to be addressed.
If you strictly follow the lease then the demand will be deemed correctly served, and the leaseholder will be contractually liable to pay their service charge. As ruled in CA Webber (Transport) Ltd v Railtrack , the leaseholder cannot claim a defence of not having received the demand so long as it was served precisely in accordance with the lease. More of this below.
2. What does the legislation say?
Often a lease will not expressly state how the demand is to be served but will instead make reference to a statutory requirement. If the lease refers to section 196 Law of Property Act 1925, then you must follow these rules for service charge demands:
- Demand must be in writing.
- Demand must be sddressed to ‘the tenant’, ‘the mortgagor’ or ‘the persons interested’.
- Notice will be deemed served by either leaving or sending by recorded delivery to the last known place of abode or business in the United Kingdom.
Some leases will refer to section 23 of Landlord Tenant Act 1927 which prescribes that:
- Service charge demands must be in writing.
- Notice will be deemed served by personal service, registered post or left at the last known place of abode.
In the event the lease does not specify or the above legislation is not referred to, then you should rely on section 7 of Interpretation Act 1978. Where postal service is approved, the demand is deemed served by being correctly addressed and posted: the onus therefore lies with the leaseholder to prove neither of these were done.
3. What if the service charge demand contains a mistake or is not served as prescribed?
A court will not automatically rule in favour of a leaseholder who has received an incorrect or defective service charge demand. Case law indicates that so long as the demand has been received, and the mistake does not confuse nor prejudice the served party; then the demand or notice is considered to be effective. You can read more on incorrect service charge demands here.
Specialist service charge solicitors
Correct service charge demands and efficient recovery can enhance leaseholder relationships. Contact us for help with any aspect of your service charge recovery processes and we’d be pleased to share with you the Brady Solicitors expertise.