What do you do about service charge collection if a new leaseholder in your block didn’t sign their deed of covenant when they bought their flat?

Brady Solicitors’ Michael Young has recently resolved a tricky case where there was no signed deed of covenant and service charge arrears had mounted to well over £5000.

When the leaseholder bought the flat, his conveyancing solicitor failed to ensure he signed a deed of covenant. The managing agent – quite rightly – recognised that this constituted a breach of the lease and so refused to accept payment of either the service charge or the ground rent.

As most readers will be aware, if the agent had accepted payment, the landlord would have waived the right to enforce the covenants in the lease.

The agent focused on persuading the leaseholder to sign the deed of covenant. The leaseholder refused, and so the service charge arrears continued to build up.

This went on for several years until the agent decided to appoint Brady Solicitors, and Michael began work on the case.

Reviewing the lease, Michael confirmed that the entire title registration was indeed flawed without a signed deed of covenant. In line with the Brady approach, Michael then began open communications with the leaseholder to explain the situation and encourage them to sign the covenant AND settle the service charge arrears.

After much negotiation and persistence, the leaseholder finally agreed to sign the deed of covenant and pay all the service charge arrears and legal costs, with the settlement being made directly by the mortgage lender.

All this was completed without the need to go to court.

Michael commented:

“The agent had struggled with this particular leaseholder for well over four years; we were able to rectify the situation relatively quickly and ensure all arrears were recovered and the deed signed, to help prevent future arrears from building up.

“This case highlighted the importance of reacting quickly if you do face a situation where a leaseholder hasn’t signed their deed of covenant. Unfortunately it’s a situation that’s surprisingly common, particularly where leaseholders opt for the cheapest conveyancing quote.”

No deed of covenant? No problem. So long as you have Brady Solicitors in your corner of course…

For expert legal advice on any service charge or block management matter, please contact Brady Solicitors on 0115 985 3450 or click here to send us an email.

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