All too often managing agents and RMCs are taking legal action to recover unpaid service charges, without first checking that the demands have been issued correctly and in accordance with the lease. Brady Solicitors’ head of service charge recovery, Annette Frost, explains the importance of a lease review and which clauses to look for.
It sounds obvious, but issuing service charge demands in accordance with the lease is one of the most important procedures for managing agents and RMCs to get right when collecting service charges and recovering unpaid debts from leaseholders. Despite this, failure to issue demands correctly is one of the most common mistakes made, which can result in leaseholders withholding payment.
It is therefore essential that you know and fully understand your leases, and the clauses contained within them, for each development that you manage. Conducting a lease review will undoubtedly help to ensure that your demands are issued correctly – something which is particularly important if you have taken over the management of a new block.
What to look for in a lease review
During a lease review, there are three key clauses to look out for and understand before referring a case to your legal team:
- Right to issue service charge demands – states what is owed, when service charges are payable and how demands should be made.
- Right to forfeiture – this gives you the right to commence proceedings to forfeit the lease, if the leaseholder has breached the clause above.
- Right to costs – depending on the wording, a costs clause can entitle you to recover the associated legal costs of recovering service charges.
The absence of any of these will affect the service charge recovery process, particularly your ability to recover arrears on a no win, no fee basis.
Our advice
At Brady Solicitors we are firm believers in taking preventative measures for ensuring the service charge collection process runs as smoothly as possible. It is therefore a worthwhile exercise to review the leases for all of your managed developments to ensure that you are issuing demands accordingly, being transparent with your leaseholders and putting yourself in the best position if you do need to take legal action.
At the very least, we would encourage you to review individual leases before referring a case to your legal team.
Brady’s lease review service
If you would prefer to get your leases checked by the experts, we offer a fast and efficient lease review service. Click here for more information or contact the office on 0115 985 3450. You can also email us at enquiries@bradysolicitors.com.
