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Thu 31 May 2012
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Landlord allowed to recover old liabilities via service charge
Wed 08 Feb 2012
A landlord who used service charges to recoup the amount he paid in gas supplier fees was entitled to do so, according to the Upper Tribunal (Lands Chamber).
The OM Property Management Ltd v Burr dispute arose as a result of service charge demands not including gas costs for the period between 2001 and 2007 until 2008.
The Upper Tribunal had to determine when a cost is ‘incurred’ for the purpose of deciding whether they have been recharged via the service charge in time.
Since the landlord was not to blame for the delay in the gas supplier issuing their invoice for the supply or aware of this mistake, the Upper Tribunal ruled that he had not breached the Landlord and Tenant Act 1985, which places a time limit on the recovery of costs via the service charges based on the date they are ‘incurred’.
Mark Vinall, a partner at Winckworth Sherwood Solicitors specialising in enfranchisement and leasehold property matters, commented: "Landlords are prevented from recovering items of expenditure from flat owners via the service charge machinery contained in their leases if they do not raise a service charge demand (or notify flat owners that it will be charged in that way in future and provide certain information in that regard) within 18 months of a given cost being ‘incurred’.
"This can be an expensive trap for unwary landlords. In this case the Tribunal has taken a sensible line to avoid landlords being left out of pocket in respect of items of expenditure by treating the date a cost is ‘incurred’ as the date a supplier raises an invoice for the item of expense in certain circumstnnaccs as opposed to the earlier date on which the supply was made (in this case gas)."
