Arrears collection need not be complicated and dare we say that often too much emphasis is put solely on speed of collection.
Strong IT support and a modern case management system are of course useful tools to have. However, in a modern legal environment there isn’t much place for overly aggressive debt collection. Especially with regard to chasing leaseholders for non-payment of Service Charges.
Results CAN still be achieved in super quick time but with minimal fuss.
Primarily, Service Charge arrears collectors require a clear understanding of how the property management industry works. Leaseholders are our clients’ clients after all.
The relationship between a leaseholder and their management company, managing agent or landlord CAN be preserved, protected and/or built on at this stage and a dedicated professional should be the facilitator of unlocking any issues as well as securing payment.
There are normally three main reasons given by leaseholders for non-payment of service charges;
1) Demands have not been received
2) Arrears are deliberately being withheld because there is a dispute
3) Financial difficulty
Investigation and Communication
Establishing the reason for non-payment at the earliest possible stage helps an arrears specialist to decide the best way to proceed. There are several different routes to payment. One size does not fit all and Service Charge arrears collection should not robotically follow a set process for systems sake – actually this can prolong and aggravate the situation. Making actual contact with a leaseholder and engaging in two way communication at an early stage is what a service charge expert should be doing.
Court action can be needed and on the occasion possession proceedings have to be instigated. However, any steps taken in this regard should be taken securely in the knowledge that the action is necessary and reasonable in the circumstances. This can only be established if proactive steps regarding communicating with the leaseholder have been taken in advance and all avenues of communication remain open throughout.