If you are the owner of a leasehold property, you will likely have to pay service charges to your landlord associated with the repair and maintenance of the property.
Under the terms of your lease, the payment of service charges is a contractual obligation, and failure to do so would constitute a breach of your lease. Failure to pay your service charges will lead to you falling into arrears which could result in severe consequences, such as losing your home, no matter how small the arrears are.
Paying Service Charges as a Leaseholder: Your Legal Obligations
Whilst there are rights afforded to leaseholders in respect of challenging the reasonableness and payability of service charges, it is vital that you continue paying service charges should you wish to avoid the risk of forfeiture.
There are rights afforded to landlords for the recovery of sums due under the lease if a leaseholder has failed to make payment upon receipt of a compliant service charge demand.
What Happens If You Stop Paying Service Charges?
It is not uncommon for residential property leases to contain a forfeiture clause, allowing the landlord to re-enter your property due to your breach of the lease by failing to pay service charges. This would entitle the landlord to forfeit your lease should service charges remain unpaid for a certain period.
However, it is worth noting that forfeiture is often viewed as a last resort, and before a landlord can exercise this right, court involvement is required.
Court Proceedings and Forfeiture for Unpaid Service Charges
This would involve your landlord issuing proceedings against you and having the court or tribunal determine that the sums due are payable. If the sums due remain outstanding, forfeiture proceedings can be commenced by the service of a Section 146 Notice pursuant to the Law of Property Act 1925, and this will afford you the opportunity to remedy the breach which may result in the court granting relief from forfeiture.
If you fail to remedy the breach, your landlord may issue possession proceedings against you, and if successful, a possession order will be granted ordering you to vacate the property. Failure to do so could result in bailiffs being instructed to remove you.
Legal Costs, Arrears and the Importance of Paying Service Charges Promptly
Furthermore, it could very well be that case that your lease contains a provision allowing your landlord to recover their legal costs, and these will likely be added to the arrears that you must pay to the landlord.
Therefore, it is crucial that you pay your share of service charges as even small arrears like £50 could lead to legal action. Not only could your lease be forfeited, but you could end up having to pay a significant amount more than the arrears themselves if your lease contains a provision for the recovery of legal costs.
Get Legal Advice on Paying Service Charges
If you are experiencing any issues in relation to your service charges, or if you are a landlord whose tenants are in arrears, please do not hesitate in contacting our specialist Real Estate Litigation team. Call us on 0800 118 1500 or complete our form below.
Disclaimer
The contents of this blog or any other published by Talbots Law cannot be considered as legal advice. You should take no action without prior consultation with a qualified solicitor or legal professional. The contents of this blog refers to the process in England and Wales.
This blog was written by Will Breakwell, Paralegal, in our Dispute Resolution Team.