A woman in east London had her £165,000 flat forfeited over what began as £290 owed in ground rents.
The property had no mortgage, so the massive financial loss is entirely borne by her.
The woman added to her problems by then failing to pay £3,140 in service charge arrears, which with interest added up to £4,056 by the time the matter came to court in April last year.
The freeholder’s legal fees added another £5,491, so she owed £9,547 at the point that the flat was forfeited.
Forfeiture is the nuclear weapon in a freeholder’s arsenal and can result – as here – in a massive cash windfall for the freeholder when dealing with a leaseholder who for some reason or other falls through the system.
We covered in depth the forfeiture of Dennis Jackson’s £800,000 Battersea flat, over debts which arose from a Leasehold Valuation Tribunal action that he substantially won.
The Leasehold Knowledge Partnership, which won a press award for its coverage – little consolation though that was to Mr Jackson – managed to overturn the forfeiture on the 27th day of the 28-days before forfeiture became absolute. More here
Worse, the judiciary considered this case in a closed court from which the public were excluded.
This forfeiture has been submitted by LKP to the Competition and Markets Authority as en example of the excessive and unjustifiable power of forfeiture.
Obviously, there will be occasions when leaseholders simply refuse to pay their share of the communal charges of a flat.
In these cases, it is blindingly obvious that repossession, with the restitution of those monies not required to pay outstanding debts, would be fairer.
Why do our political leaders and regulators allow this massive power of forfeiture to be deployed by lawyers on behalf of some of the worse spivs making a living out of residential property?
Related posts:
Wideboy freeholder cuts £4,000 demand for leasehold flat refurb to £2,000
Long Harbour hits reverse on forfeiture to £800,000 flat over £400 ground rent … and JB Leitch halves its legal bill
Woman signs up to doubling ground rent to extend lease on £70,000 flat. Is it now sellable at all?
LKP helps cut Hyde Group £600 ground rent demand to £50
Moskovitz forfeits £400k Camden flat from 24-year-old woman ‘whose brother did not forward correspondence for two years’
LKP submission to CMA leasehold inquiry
On one occasion where my clients ( a freehold owning RMC) had to resort to forfeiture, on my advice they agreed to do just that, take costs, sell the flat and pass the proceeds to the defendant.
Bizarrely though they were a little unwell mentally and alone in the world, that they had what was considered a windfall in train, social services declined to help further!
In the end they were given a life tenancy @ £ 1 a year rent, ( the same day) rather than see them homeless especially as they were vulnerable, and the proceeds put in trust to defer the service charge.
Sad to say that a few flat owners were furious that the windfall was not taken and distributed but there are bad pennies everywhere.
What is also upsetting is that there are so many free legal advice centres nearby like Bromley By Bow, that the poor lady could have gone to. 🙁
This is an unusual case, in that an application for forfit cannot be made unless the amount owing for ground rent exceeds £350 or has been owing for more than 3 years.
Unlike service charges, ground rent disputes are really limited to “lack of service” or failure to demand ground rent in the prescribed manner. In practice, ground rent should always be paid to safegurd a lease. In the case of court action (as is the case with service charge disputes) you must insist te dispute is separate from the costs.. Often freeholders inflate legal costs (in the hope that a combined judgement will not leave them open to scrutiny.. In many cases the freeholders will settle for a vastly reduced amount of costs, rather than expose them before a judge.
“rather than expose them before a judge” -rarely a good idea 🙂