Ground Rent Arrears
Following default by the tenant/leaseholders we can recover arrears of ground rent (up to six years after it first fell due).
We are able to act in many cases on a no recovery no fee basis and recover our fees from the leaseholder for Ground Rent Arrears.
Ground rent is a valuable income stream especially now in the current climate. So it is crucial that there is a constant review of credit control issues and quick recovery of outstanding arrears of ground rent. Without adequate controls freeholders and management companies can find the arrears getting out of hand.
This can be avoided if the services of specialized solicitors are engaged to ensure recoveries are collected promptly. SLC Solicitors is able to provide a fast and efficient collection of arrears of ground rents on a no recovery no fee basis with absolutely no upfront charges to our clients (see Charges page for more details).
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Who pays for our service?
Dependent upon the terms of the lease it is generally the case that we are able to recover our fees directly from the leaseholder. It is because of this that our clients are rarely required to pay any monies to us in respect of the instructions we carry out on their behalf.
It is commonplace within a modern lease to allow for late payment interest to be charged against any overdue rents.
Typically the interest we are able to recover due to late payment ranges from 4% above Bank of England base rate up to 12% fixed.
If the lease does allow for interest recovery we ensure that the late paying leaseholder is made aware of this and must pay interest to the date of settlement unless our client confirms otherwise. In relation to those cases where arrears have been outstanding for substantial periods of time the accrual of interest can be significant – and recoverable.
SLC Solicitors are able to offer a no recovery no fee option with absolutely no upfront charges to all our clients to minimise our clients’ exposure to legal costs subject to the following criteria being met:
- the leasehold title is registered
- the property is mortgaged to a financial institution such as a bank or building society
- there is a forfeiture clause present in the lease
- the lease allows for the recovery of professional legal fees
- no genuine dispute exists
- the amount owing exceeds £350 or is over 3 years overdue
It is usual for all these criteria to be met and when we do act on such a basis all fees are paid by the leaseholders thereby easing any demands on the freeholder or resident management companies to fund recovery actions commenced by solicitor agents.
A word of caution: Outsourcing landlord and tenant debt recovery related instructions to debt collection agencies is a practice that could create some foreseeable issues for a client when account is taken of the fact that it is only solicitors’ costs that are recoverable pursuant to the relevant cost recovery clauses held in the lease i.e. the contract between the landlord and tenant. Organisations who are not law firms do not fall under the definitions of regulated legal representatives.
Typical example of costs clause:
“To pay to the Landlord or the Management Company on an indemnity basis all costs charges and expenses including legal costs and disbursements which may be incurred by the Landlord in the enforcement of any of the Tenant’s covenants herein.”
The clause above refers to “legal costs”. Costs can only be claimed by a “legal representative” which is defined under Paragraph 2.3 of the Civil Procedure Rules as:
*Manager of a body recognised under Section 9 of the Administration of Justice Act 1895; or
**A person who, for the purposes of the Legal Services Act 2007, is an authorised person in relation to an activity which constitutes the conduct of Litigation.
*= a body which has been recognised by the Law Society as being suitable to undertake the provision of any solicitor services or other relevant legal services.
(Court and Land Registry charges)
On occasions we will need to undertake searches at the Land Registry to confirm ownership of the leasehold property and to establish whether there is an existing mortgage/charge registered against a property.
The cost of a Land Registry search is relatively minor and in any event these costs are ordinarily recoverable from the late paying leaseholders. When it is necessary to undertake searches at the Land Registry we will usually ensure that these costs are included within our fees which will be recoverable from the leaseholder.
Some mortgagees with existing charges registered against properties will on occasions insist that the landlord or resident management company must obtain a court order, or court declaration in accordance with section 81 of the Housing Act 1996, before considering whether as the chargeholder it will make a payment to settle any outstanding arrears on behalf of its mortgage account holder.
In the event it is necessary to issue court proceedings we pay the court issue fees on our clients’ behalf to ensure the process is relatively quick and seamless and does not overload you with requests for money. When a claim is successfully pleaded and the court grants the appropriate order it is usual that the order will require the court issue fee to be paid by the late paying leaseholder along with the arrears, late payment interest, our clients’ administration charges and our legal charges to date.