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Recovery of service charges and ground rent

Recovery of service charges and ground rent

Postby victoriana » Sat Aug 05, 2017 8:46 am

There is a provision that unpaid service charges and ground rent are recovered as rent in arrears. Which part of the statutory limitation would apply to this provision when ground rent has never been charged.
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Re: Recovery of service charges and ground rent

Postby victoriana » Sat Aug 05, 2017 10:24 am

There are two separate provisions not one as I have written above. Which limitation applies to each provision?
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Re: Recovery of service charges and ground rent

Postby theycantdothat » Sat Aug 05, 2017 12:00 pm

First, there is section 8 of the Limitation Act 1980:

(1) An action upon a specialty shall not be brought after the expiration of twelve years from the date on which the cause of action accrued.

(2) Subsection (1) above shall not affect any action for which a shorter period of limitation is prescribed by any other provision of this Act.


A lease executed as a deed is a specialty. Subsection (2) comes into play with respect to rent because section 19 of the Act says:

No action shall be brought, [not applicable], to recover arrears of rent, or damages in respect of arrears of rent, after the expiration of six years from the date on which the arrears became due.

Accordingly, the period of limitation applicable to rent is six years. If any sum other than ground or rack rent is reserved as rent then it is rent and the limitation period is six years. The reason for making other sums payable as rent is because the remedies available for unpaid rent are wider, or perhaps I should say were wider given the abolition of the right to levy distress for non-payment of rent. Anyway, the point is that if the landlord wants the service charge to be rent for a purpose which suits him it is also rent for a purpose which does not suit him.

If not reserved as rent, the period of limitation applicable to service charges is twelve years because section 8(2) does not apply.

There is some doubt as to when the period of limitation begins - see this thread: viewtopic.php?f=7&t=5218
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Re: Recovery of service charges and ground rent

Postby atticus » Sat Aug 05, 2017 12:13 pm

But the limitation act won't prevent the freeholder refusing consent to a sale of the lease (if his consent is required) if there are arrears of rent or other sums payable as rent.
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Re: Recovery of service charges and ground rent

Postby victoriana » Sat Aug 05, 2017 12:57 pm

That is interesting. At least the freeholder has some authority left.

Are the definitions in the Particulars rigid or can they be open to interpretation? The Particulars define rent as nothing other than ground rent and yet the main body of the lease states that unpaid service charges may be recovered as rent in arrear although there is no mention of reserving.
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Re: Recovery of service charges and ground rent

Postby atticus » Sat Aug 05, 2017 3:28 pm

The particulars are at best a quick summary.

The covenants in the lease prevail. They say what the parties agree to do.
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Re: Recovery of service charges and ground rent

Postby theycantdothat » Sat Aug 05, 2017 5:29 pm

Without there being a hard and fast distinction between them, in a lease "Particulars" usually covers the matters which may vary from lease to lease such as the parties, the property, the premium, the rent payable and the service charge percentage. "Definitions" will set out the meaning of certain words such as "exterior" or "service media" so it is known what the word or phrase includes and/or excludes. Some leases may put both the particulars and the definitions in a single clause.

Where a lease defines rent in terms such as "the yearly sum of fifty pounds" it does not necessarily mean that the rent so defined is the only rent payable. The place to look to see what is reserved as rent is the section technically known as the reddendum which usually (at least in a traditionally worded lease) begins with the words "Yielding and paying". If there is a definition of rent and the reddendum says: "Yielding and paying the Rent" and nothing else, then the rent is what is defined as rent. However, if it says: "Yielding and paying the Rent and by way of further rent the Service Charge" then the service charge is rent.

Where the service charge is not expressly or by reference covered by the reddendum, but the lease later declares that the service charge is recoverable as rent, that raises the question of whether "recoverable as rent" is the same as "reserved as rent". It seems they are not. Googling uncovered this page: http://www.lawandlease.co.uk/2014/09/01 ... t-0322-lc/ from which I quote:

"The tenant covenanted to pay the “insurance rent”, but the reddendum (the part of the lease reserving rent) did not reserve anything other than the ground rent as rent.

In Martin Rodger QC’s view, this meant that the cost of insurance was not technically rent. It was a variable service charge."

It is not precisely the same point, but it seems to be saying that for something to be rent it must be reserved as rent. The only question is whether there is a subsequent decision of a superior tribunal overruling the decison.

So, how exactly is rent defined in the particulars and what exactly does the reddendum say?
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Re: Recovery of service charges and ground rent

Postby victoriana » Sat Aug 05, 2017 9:48 pm

The definition of rent in the particulars refers to only ground rent, the amount payable and the dates on which it is paid.

Further in the lease, I found the following extract containing the expression you you mentioned.
Attachments
reddendum.jpg
reddendum.jpg (102.99 KiB) Viewed 111 times
Last edited by victoriana on Sat Aug 05, 2017 9:59 pm, edited 1 time in total.
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Re: Recovery of service charges and ground rent

Postby theycantdothat » Sat Aug 05, 2017 9:58 pm

And the rent stated in the particulars is definitely the the ground rent only?
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Re: Recovery of service charges and ground rent

Postby victoriana » Sat Aug 05, 2017 10:00 pm

Here is an upload of the definition of rent under the particulars which refers to just the ground rent.
Attachments
particulars of rent.jpg
particulars of rent.jpg (85.44 KiB) Viewed 111 times
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