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Property Debt Collection

Service Charges & Ground Rents

We act for any number of Housing Associations, Landlords, Managing Agents and ‘Right to Manage’ Companies in the collection of service charge arrears and have developed a real expertise within that area which is beneficial to our clients.


Ordinarily our fees are largely geared to being charged only on the collection of the debt and therefore we have every incentive to ensure that the debt is recovered.

More importantly please note that our fees would only be chargeable in cases where the leaseholders do not have Mortgagors, from whom the debt, interest and costs are ordinarily recovered on an indemnity basis.

Over 96% of all debt recoveries are concluded on this basis  - at no effective cost to our clients.

In cases involving the recovery of Ground Rent and/or Service Charges we try to ensure wherever possible that your legal costs are recovered on a full indemnity basis from such mortgagors. We also include within the claim sums of up to £150+ vat to represent your own administrative costs in providing us with instructions to collect the debt and being up-dated through the litigation process.

We render our invoices on a monthly basis inviting your interim payments. In addition at the outset we invite the release of an on account payment, representing the Court issue fees. As we are sure you will appreciate our Property Debt Collection Department are handling hundreds of actions at any one time and as a consequence the firm is unable to finance such significant Court disbursements en masse. For example where a debt is between £3000- £5000 the Court will charge a fee of £120

Payment and Charging Order

On the successful completion of this action any disbursements incurred should have been recovered from the debtor in any event.

Under S81 of the Housing Act 1996 the Debtor’s Mortgage Company do not need to discharge their customer’s debt unless a County Court judgment has first been   obtained.  They would be aware that we could not proceed to forfeit the lease and

repossess the premises via the service of a S146 Law of Property Act 1925 Notice until judgment had been obtained. We would therefore intend to issue the standard court action, obtain judgment and then serve the S146 Notice on the bank and the debtor.

Thereafter in the vast majority of instances payment is received via the debtor’s Bank/Building Society as they are anxious not to lose their security over the property. As such in an uncontested action final payment is ordinarily collected within 3-4 months.

If the debtor or their bank fail to make payment voluntarily, matters can be escalated to Forfeiture proceedings. This involves an application to the court to forfeit the lease and evict the tenant. All of the sale proceeds are retained by the Landlord, regardless of any sums owed under the service charge account or any mortgage secured over the property. Providing the court is satisfied that the debt sums are outstanding, the only way the debtor or any secured mortgage company can avoid the cataclysmic effects of the forfeiture process, is to repay all sums claimed under the action – again including your legal costs.

In some cases a debtor/leaseholder may not have a mortgage enabling us to proceed via the preferred usual route. In those cases in the absence of payment we may therefore have to proceed via the securing of any Court judgment by way of a Charging Order over the property. Once secured in this fashion, we could if financially viable issue a fresh action to apply for a Sale Order over the property.

The likely costs in first getting to the Charging order stage are likely to be in the region of £300-£400 in an undefended action. (This is inclusive of the current fixed court costs and fees awarded under the exercise of £264).

Order of Sale

The costs of the subsequent action when obtaining an order for sale would be in the region of £1500. In both instances the costs of the actions would be added to the final debt and thus be repayable to you on completion of the sale. (In the same manner both the Estate Agent’s commission and the conveyancing costs on the sale would be discharged from the proceeds of sale).

Sometimes an Order for Sale application may not be a viable option as there is insufficient equity in the property to clear all of the associated costs incurred in the exercise. We can however review tactics as circumstances dictate.

The vast majority of properties are still subject to a mortgage and as such it is anticipated that we will proceed to judgment and the S146 Notice in the usual way.

Should you choose to pass us your valued instructions in the future we would be grateful if you could release copies of any formal Service charge demands/invoices for the material period, together with copies of the tenant’s Lease etc. as these will need to be annexed to the Court proceedings.

Should you wish to discuss property debt collection matters by telephone or at this office at any stage in the future, please do not hesitate to contact us.