Claims for service charges, ground rents and administration charges are subject to statutory limitation periods.
- For service charges recoverable as rent AND ground rent the limitation period for a claim being issued at court is six years from the date the sums are properly due under the terms of the lease.
- Where the service charge is not recoverable as rent AND where the tenancy/lease is granted by a deed the limitation period is 12 years from the date that the payment fell due.
- Where the tenancy is not created by deed then the limitation period is six years irrespective of whether or not the service charges are recoverable as rent.
However there are additional considerations such as
- The 18th Month Rule
- Whether the leaseholder has acknowledged the debt.
For freeholders, managing agents and RMCs limitation periods are an important point to consider. Arrears can easily be left to accumulate (especially if each demand is for a low value) and when it subsequently comes to making a claim it may be found that earlier arrears fall outside the limitation period.
It is, therefore, good practice to keep a proper account of all payments being received as well as those which are outstanding together with correspondence with leaseholders in addition to setting up a system to alert if arrears are approaching near the six (or 12) year deadline.
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