Brady Solicitors issue a gentle reminder of the importance of ensuring service charge demands are served correctly during the coronavirus pandemic.

Managing Agent clients who work with Brady Solicitors seem to be getting skilled at settling into the working at home new normal. With tools such as MS Teams, Zoom and a good old daily phone catch up keeping us all connected.

However, someone forgot about the big office printer and the postman. Both are crucial in the important world of service charge demands. Most people have access to systems, but remote printing may have been missed as a priority in lock-down and is there anyone in the office to post them? The postal service has been a key part of ensuring lock-down communication stays relatively on track but face their own challenges and there are some delays creeping in.

As a support for troubled credit controllers and property managers we answer some of the lock-down questions coming in to Bradys regarding service charge demands.

Can we now send our service charge demands by email only?

The lease will dictate the requirements for service of notices, including demands, and rather than expressly set out the manner of service will instead commonly refer to Section 196 of the Law of Property Act 1925.

The demand is the basis for the liability of service charges, and it needs to be correct in format and served by post. Rights and obligations need to be issued in the correct format and one each for service charges and any admin fees.

It is a unique situation we are currently navigating – but that doesn’t change the lease nor the law.

So, the answer is ‘No’, the demand is not correctly served by email, and we are back to getting access to the big office printer.

It is understood this challenge of the postal requirement was raised by ARMA at a Government level, but this was felt to not be appropriate to be included in the recent Corona Virus Act.

If you have written authority on record of a request by the leaseholder to serve demands by email then you can of course rely on that.

Service is a complex topic and we have simplified it a little for this purpose and would always recommend you read the lease and be aware of any requirements of that service outlined

You may also want to consider the next approach though….

What about reminders and chasers by email?

If you have leaseholders email addresses then you can send your usual chasers by email. You can even phone them up which may be useful in currently if usual regular payers have stopped.

However, the question of correct service and format of service charge demands only usually arises when there is an issue of dispute or non-payment. A possible workaround could be to actually switch around the process.

Email the initial service charge demand, with rights and obligations of course. You will receive payment for the bulk of demands. The first chaser could then be posted with the now correctly served demand satisfying the requirement. With any subsequent chasers you can resend by post or use email or phone.

As always we recommend you have a means to prove sending if needed.

Stronger communication with your leaseholders will allow you to then make an accurate assessment of changing financial circumstances and decide next steps accordingly.

What if leaseholders claim the demand has not been received?

As a we outlined when dealing with service by email it is all about the lease and s.196.

The effect of sub-sections 196(3) to (5), together with the Upper Tribunal’s interpretation of both that statute and Section 7 of the Interpretation Act 1978 in Southwark v Akhtar [2017] UKUT 150 (LC), has been to find a presumption of service in favour of ‘delivery’ rather than ‘receipt’ (where Section 196 is stated in the lease) if a freeholder or ManCo can demonstrate that a demand was:

  • Properly addressed;
  • Pre-paid; and
  • Posted.

The leaseholder or recipient will then have the burden of proving otherwise and the bare denial that a demand was not received will not be enough to rebut that presumption.

This was again considered in a recent case CHG v Hyland that we covered in a recent blog here.

The Upper Tribunal reminded us that instead of ascertaining if the demand had been received by the leaseholder, the FTT should have been considering if it was delivered.

Get your service charge demands right

Don’t forget all the other important elements to well-executed service demands – including making sure they are in-line with the lease, S47 and 48 requirements, the 18 month rule and so forth. Read our practical tips on issuing a service charge demand here.

If you don’t yet have a copy of the Managing Agent Guide and Templates for COVID19 then contact propman@bradysolicitors.com. It is free and is getting excellent feedback from Managing Agents.