QUESTION
Our Managing agent has been charging us twice the amount of service charge on the basis of unit cost as per flat.
The lease says 0.226% and they have been charging 0.496%.
They even went to court to demand the unpaid service charges and legal costs which were paid. The Solicitors never managed to pickup the unit costs that was charged and we had to pay expensive Solicitors fees. Now we have noticed and demanded the refund after employing a different Solicitors who wrote and now have confirmed as per lease.
These matters also cost me heavy fees to get the Managing agents to correct the unit costs as per lease. They have refused to confirm, however have now adjusted the service charges but only from 2007 - it should be from 2004.
We have the right to get the full refund from 2004. What about the legal costs and also the legal costs that I had to pay in order to get them to adjust the service charges.
Do we have the right to demand legal costs and interest?
ANSWER
Unfortunately, this is all-too-common a problem. Managing agents often demand service charges based on historic demands and / or their clients’ instructions and this can result in events such as those you describe because, to quote my colleague, Bernie Wales, everyone forgets to ‘read the bloody lease’ . . . #rtbl
You may be entitled to have your service charge contributions recalculated as far back as 2004 at the correct pro rata percentage of 0.226% and to receive a refund of the difference but with regards to the legal costs and your Solicitors’ fees in relation to the claim against you for non-payment of service charges, the extent of your liability may turn on how you dealt with the situation; i.e., did you accept liability for 0.226% and pay that on demand or did you withhold all service charge payments? Also, if the amount demanded was an ‘on account’ payment, it could be argued that you should have paid it because the overpayment could have been dealt with when actual expenditure was known at the end of the relevant financial period. That said, you appear to have been badly advised and therefore, you might have recourse against your Solicitors, at least for their fees, if not the other side’s costs.
I suspect that the ‘heavy fees’ charged to you for the ‘Managing agents to correct the unit costs as per lease’ should not have been passed to you and you should be refunded in full by the managing agent. You ought to consider referring this matter to the appropriate regulatory body (RICS or ARMA, if applicable) or redress scheme (e.g. The Property Ombudsman).
I would say that your building appears to be badly managed and that you might want to consider an application to the First-tier Tribunal for the appointment of a manager.
Shmuli Simon LLB (Hons), MIRPM, AssocRICS, Director of Legal Services at Integrity Property Management
