01 — Resolving disputes in a severely neglected development

Case-Studies-feature, property case studies, resolving disputes, service charge refund, property manager, working with a property lawyer, benefits of working with professional solicitors

Background

Longstanding Freeholder client took over management of a large residential building of over 200 residents. The development had been severely neglected in terms of maintenance and service charge arrears stood at 70%.

In addition – many of the leasehold owners (and actually the majority of the debtors list) were investor owners and had rented their properties out to tenants whilst they themselves were based outside of the UK.

Many of the leasehold owners (and actually the majority of the debtors list) were investor owners and had rented their properties out to tenants.

Project Info

Client

Freeholder

Services

Arrears Collection

Outcome

Reduction in arrears levels

ACTION

This required a different approach to arrears collection:

  1. Our client had some sympathy with the leaseholders who hadn’t paid due to previous poor maintenance – although withholding service charges is not the correct action or allowed legally – regardless of the circumstances.
  2. We needed to track down the absent owners and also follow an out of jurisdiction procedure for serving letters and documents on them.
  3. We had to work closely with the client and create bespoke letters and process in order to protect and build relationships with the leaseholders whilst ensuring we could collect the arrears in as quickly as possible.
  4. We needed to advise the client about strict liabilities and obligations under the terms of the lease and by legislation whilst he had limited funds to carry out works at the development until we were able to start collecting some of the arrears to replenish the service charge account.

Conclusion

We developed different offerings about ways to pay for leaseholders.

  • We minimised any extra charges i.e. legal fees, interest and administration fees in order to promote early payment
  • We did most of our work and investigation upfront so as to avoid need for any court proceedings where possible.
  • We dedicated specific team members to only deal with this development so that they had full knowledge of the scenario in order to make and receive leaseholder calls and deal quickly and efficiently with any correspondence and issues raised.

We have now worked through 6 service charge cycles and arrears levels are under 20%.

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