Service charge dispute?
Benjamin Franklin said, ‘Two certainties in life are death and taxes.’ We would like to add service charge disputes to that list. There are not many scenarios that Emma, Director of EVC Property Management LTD, has not come across in 20+ years of property management.
Even the leaseholders with no current objections to their service charge may have one at some point. It is useful to know what to do if you ever find yourself in that position. It is also helpful for the Managing Agent to know how to handle these disputes. This will hopefully resolve issues quickly and amicably.
With the current cost of living crisis, there is a genuine dilemma for leaseholders. It is perhaps not impossible for some leaseholders to be facing the choice of heating, eating or paying service charges. We know full well that those are not equal options if push came to shove! Below, we look each side of the argument that may be.
First off
It is always worth making sure you are right before starting any dispute. (Not just in property I might add!) Check your lease. For managing agents, the advice is, don’t just check the blanket lease for every property on the estate or in the block. Each property will have a personalised lease that contains information only pertinent to that specific property. You should check all the documentation you have regarding service charges, ensuring you have the hard copy to back up your claim. ‘He said’ ‘She said’ is not a substantial enough argument.
Think and list
If you have given it some serious thought, checked the facts and acquire the evidence, write down item by item what you are disputing. Go through the charges and what they relate to. What do you agree with in the charges? What do you disagree with in the charges? This could be anything from cleaning of the communal hallway to having major works carried out on your property. Importantly, write down what specifically you have the objection too. Is it the quality of work, lack of work, price of work etc? Remember to be specific and use your evidence that we discussed earlier, if you have a complaint about a shabby piece of work, provide a photo of the work and state why it was not up to standard. Don’t assume it is obvious to everyone. It may not be that simple.
If you are an agent, you should be doing much the same. It shouldn’t be a stretch to imagine most property managers keep meticulous records on works completed at properties in their portfolio. It is highly likely they could produce an invoice or an email from anytime if they are worth their salt. A property manager needs to consider the leaseholders position and their circumstance in these situations. Has the leaseholder mentioned these disputes before? Have you perhaps had an opportunity to change this course before it got to this point? Do you know of any circumstance for the leaseholder which may be causing this problem? In this day and age redundancy is not so farfetched. These are questions that you should have in your mind, even if you don’t yet have the answer.
Communicate calmly
One common saying is ‘you catch more flies with sugar than vinegar.’ Whichever side of the dispute you are on, it is important to keep a cool head and communicate properly. Stick to the point. Be business like. A large business would not tell you that one of their staff in the legal department is struggling financially at the moment and a customer wouldn’t tell the business their nephew hit his head. Keep on track about this issue. Make sure you make your point concisely and in a way that can be understood. Don’t fill your argument with jargon or words you looked up in a thesaurus. Once you have drafted your communication, sleep on it. Read it again the next day or have someone else read it and decide if that is really what you want to say. Sometimes, when we write things in the heat of the moment, we don’t even realise we have diverted from the point. Change it if you need to.
Open a dialogue
Whoever receives the communication should take time to digest it. Whether you are the leaseholder or the managing agent, it is worth making sure you understand the communication. Only when you are satisfied that you have appropriately interpreted the communication are you in a position to progress. You should go through the communication methodically, take notes and think about your response. It is important to try to understand each point of an opposing argument as not all disputes are black and white. You can now discuss the points in a calm and collected manor. Do not try to communicate when you are upset or angry as this will not resolve any problem. Make sure you are in the right frame of mind to communicate.
What do you agree with?
Not often would a leaseholder disagree with everything in a service charge. In fact, more often than not, a leaseholder would agree with more than they disagree with. It is the sections that are not agreeable that cause these disputes. It should be clarified what is agreeable and what is not agreeable. You can calculate in monetary value what is agreeable. In this case, that amount should be paid. There is no advantage to anyone if a leaseholder withholds all payments for something they are happy with to gain leverage on something they are not happy with. This will just make things more difficult.
Once you have clarified what the disagreements are, try to agree a way forward together. Agree what is going to be done and in what time frame it is going to be done. Remember, nothing is set in stone. Things change, and the best laid plans of mice and men often go awry. Don’t make promises you cannot keep and don’t make promises which rely upon others. As you do make your way down the amicably agreed road to end the dispute, be sure to communicate each step. If necessary, provide an updated time frame. This works both ways between leaseholder and managing agent and each should communicate as appropriate.
Alongside the above, think about payments. Perhaps part payments or monthly payments. Think about what is affordable and manageable. Think about a time frame in which works can be done and payments can be made so that everyone can get back to a conflict free relationship. Often these disputes become less of a problem given some time heading in the right direction from all parties.
The last resort
Occasionally, there is a genuine service charge dispute which cannot be agreed using the above actions. In these unlikely scenarios, you may need to apply to the First Tier Tribunal (Property Chamber) for a determination. Do not take this lightly. A tribunal will expect you to have narrowed the argument and to have agreed what could be agreed. The tribunal will ask you to go to mediation before progressing the case. Mediation will cover much of the ground that we have already discussed in this document. So, it is to everyone’s benefit to try and resolve issues this way before raising the bar to a legal dispute.
In conclusion
- Read your lease
- Pay what is agreeable
- Check your facts and communicate them clearly
- Be professional, keep on point and don’t confuse issues with personal feelings/hardships
- Do what you say you are going to do, when you said you would do it
- Keep records and confirm things in writing either through email or letters
- Keep communicating at every point
- Be reasonable and open minded
Disputes are not an incitement to war! Think how many wars may have been avoided with an open line of communication, if all parties communicated in the right way and people didn’t make promises that they couldn’t or didn’t keep.
