Almost 18 months on from the start of the pandemic, we are seeing varying states of delay and disarray from the county courts and the FTT when it comes to service charge cases.
Brady Solicitors’ Helen Carey assesses the situation as at the end of June 2021, and offers practical advice to managing agents and freeholders.
Going to court to recover service charge arrears is always, of course, the last resort.
In most situations, our team at Bradys will secure a settlement without the need to resort to the FTT or county court – in fact we resolve almost two-thirds of service charge arrears instructions at the ‘letter before action’ stage. However, there are always some stubborn arrears cases that unfortunately do need court action to get resolved.
How long are cases taking to resolve?
Prior to the pandemic, the best-case scenario was generally six to nine months.
At the time of writing in June 2021, this has doubled in many areas, with some service charge cases taking up to 18 months to resolve.
One of the issues we currently have is the huge nationwide variation across the court system, which makes it very difficult to give accurate reassurance as to when a judgment might be secured.
We generally prefer to see service charge cases handled in the county court rather than the FTT, as it is quicker and generally allows for a higher level of cost recovery. However, with the current lack of staff in the county court system, coupled with the sheer volume of cases, progress to a hearing is incredibly slow. The lack of judicial knowledge at county court level about service charge arrears cases is also a challenge.
These issues are intensified when leaseholders choose to represent themselves as Litigants in Person – as an increasing number do. Judges are quick to grant further time to leaseholders to comply with court directions, and often give them the benefit of the doubt to avoid any criticism by a leaseholder acting without the benefit of legal representation.
And what about the FTT?
At the FTT we can of course expect the officials to have a good understanding of property management and service charges. However, the staffing and delays situation is currently even worse than at the county court.
Our recent FTT cases have seen files being lost for three months, cases being sent erroneously to the county court before bouncing back to the FTT (only for the files to be lost again!). All of which can lead to huge delays in collecting monies that are essential for good block management.
So what should managing agents do about service charge arrears in the current climate?
Our first piece of advice is simple: do not sit on service charge arrears! Keep in dialogue with leaseholders and ensure they understand that prompt payment is required, and arrears aren’t allowed to mount up.
Secondly, if you’ve reached the end of your ability to negotiate with the leaseholder then pass it to a specialist arrears recovery firm.
At Bradys we aim to secure a sensible settlement as quickly as possible – it saves everyone time and money.
If you have a case making its way slowly through the court system, remember that you can’t issue any further service charge demands while proceedings are ongoing.
All in all, it is not a pretty picture when it comes to service charge litigation!
Working with a team such as Brady Solicitors can however help you to secure settlements before it needs to reach the court. And, if court is unavoidable, you can at least be reassured that you have a talented teamof service charge solicitors, well versed in getting great client results, in your corner.