Chasing of service charges and solicitor action procedure

The lease imposes an obligation on the Leaseholder to pay the proper service charge and failure to do so is a breach of the lease.

When Service Charge Accounts become overdue, our accounting software, Xero, will show when the Service Charge demand was issued, when it was due for payment, how long overdue the amount is, and the amount that is payable. Xero will send 2 automatic reminders, if nothing is received at this time, either payment or contact, the Leaseholder is then to be contacted by a phone call to see why payment has not been made and kindly asked to bring the account up to date. If no answer, another reminder email is sent and a further call 2 days later. If no contact or payment is made after 4 weeks, a final reminder will be sent out.

If payment is still not made Horizon Management will then take steps to recover this amount through our solicitors. A late payment fee of £50 is added to the balance, along with any other fees incurred for the recovery of the debt.

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When chasing overdue Service Charges we need to investigate whether there have been any changes in ownership that we have not been made aware of. To do this you need to check the Land Registry:

We would buy a Title Register. The fee for this is £3 which would be added to the Leaseholder’s account.
If all the details are the same as what we have on file then we contact solicitors.

If the Service Charge remains unpaid after the deadline given on the Final Reminder we would give the leaseholder one final call advising them that unless payment is made by close of play the next day, then a £50 late payment charge will be added to their account and the account will also be passed to our solicitors for recovery of the overdue balance and all associated costs.

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We would start by sending an email to our solicitors advising that we have an account that needs recovery. They will ask for the following information:
1. The relevant blocks Share Certificate
2. The Lease Plan relating the apartment we are recovering Service Charges for (this is basically a floor plan for the apartment)
3. Invoice(s) that we are recovering monies for

The solicitors will firstly put a Client File together and put in for a Lease Review, so they can out together a Lease Report. Once this is finished they will send this across to us outlining the most important clauses in the lease. This can take approximately 1 week.

Once this is completed they will then send us the following documents:
1. Standard Lease Report
2. Terms of Engagement
3. Terms of Business

Once we have given them our approval by email they will then send the first letter to the Leaseholder.
As per the lease, interest is to be claimed at 4% ABR.

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