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Everything You Always Wanted to Know About Service Charges During Coronavirus* (*But Were Afraid to Ask)

14th October 2020

We are now officially 6 months into this interesting period that is 2020. We are all adorning face masks to leave the house, anti bac spray is now a staple in most bags or pockets, we give a wide berth to people walking toward us down the street and we haven’t shaken anyone’s hand for what seems like an eternity. Some of us haven’t seen the office or workplace for the past 6 months either, so how are we all doing?

From our regular conversations with landlords and professional property managers over the past 6 months, it appears that you all seem to be coping very well. Aside from seeing some property owners making interesting and somewhat excessive requests, well beyond the possible liability of the landlord or their agent, most property owners are compliant with the leases/transfer obligations and either paying their service charges on time or actively agreeing and maintaining payment plans. Generally, those managers with whom we have spoken have not seen any sizable increase in arrears during the lockdown and post lockdown period.

The above is obviously great news but there remain, and always will, those property owners who cannot, or, despite the opportunity to do so, will not, pay their service charge or comply with agreements reached for clearance of the same.

We have advised previously in our Legal Updates sent out around the March and June quarter days of this year what the correct picture is, in respect of enforcement of unpaid service charges and other breaches over the lockdown and the ensuing period. We provided that information then because from our discussions with defaulting property owners it was clear that there was a lot of misunderstanding, with many defaulters of the clear impression that no action could or should be taken. Plainly, that impression was incorrect and, whilst we still hear it from defaulters with whom we are in contact, the level of misunderstanding appears to be no worse.

So what can you do where a property owner is in breach?

The short answer is that you can and should enforce in exactly the same way as you would have done pre Covid-19.

Demands and notices should still be sent out, reminders should still be provided in default of payment or compliance and, where the property owner still fails to remedy an issue, you can instruct lawyers to pursue action where action is required.

It remains that in cases relating to arrears, where you are contacted by a property owner whom you accept cannot pay monies due in full now, but is willing to agree terms (acceptable to your client) that enable the arrears to be addressed in a reasonable manner, then such an agreement should ideally be allowed to run first in order to avoid legal action. However, you and your clients need to be happy that such an arrangement is both necessary and affordable for your client and the property owner needs to comply fully with the payment terms agreed.

As we previously advised, where the property owner holds the property subject to a mortgage then we are able to extract payment from the property owner’s mortgagee, in many cases at relatively minimal cost to the property owner. Such an outcome is a potentially easy solution for the property owner who can’t pay and for the landlord against a property owner who is less than cooperative regarding payment.

The Courts are still open and functioning

Whilst it is fair to say that the Courts’ processing of claims is a little slower than perhaps they were prior to March of this year, the Court system is working and working well. We are obtaining judgments against defaulting owners and we are moving forward with matters that need to run to a trial. In some cases the Court is enabling parties to conduct interim hearings virtually over Skype (or similar) or by telephone hearings.

The Tribunal is also still open and again, whilst also running slightly slower than before, matters are progressing and delay is not something that should deter a landlord or RMC from enforcing where enforcement action is required.

Mortgagees are still paying

Whilst we hear on the news that it might be more difficult for first time buyers to obtain a mortgage without an unfathomably large deposit currently, mortgage companies are otherwise still functioning normally and they are paying up if we present them with a determination of arrears. We are receiving large sums of money weekly from mortgagees for property owners who cannot or who have failed to pay charges due.

The moral of the story……

… that nothing much has changed since prior to March of this year in terms of recovery of service charges. Whilst you may take a slightly more flexible view than you did prior to March of this year with property owners who are proactive and willing to play ball on sensible terms, you should, and importantly can, pursue exactly as you would have before any property owner who is unable or unwilling to comply with terms of the lease or transfer applicable to their property.

There is little to obstruct any landlord, RMC or RTM company obtaining from property owners full resolution of a breach within a reasonable period of time, so there is no reason to unnecessarily delay taking action where action is required.

If we can be of any assistance then do let us know. In the meantime, keep safe.


This legal update is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of KDL Law or by KDL Law as a whole.

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