How to Recover Ground Rent?
MARK QUINN >
SolicitorWed 8 July 2020
Landlords can face a plethora of problems if faced with difficult tenants. A very common issue is the failure of tenants to pay their ground rent. If a leaseholder has not paid their ground rent in line with the lease, there are very specific steps that a landlord must take to recover the debt.
It may be a term of the lease but unless you demand the rent properly (as per the legislation), the tenant does not have to pay the ground rent.
What are the Ground Rent Demand Notice Requirements?
Section 166 of the Commonhold and Leasehold Reform Act 2002 covers the requirements for a landlord in demanding the ground rent.
The first step for the landlord is to send the leaseholder a notice often referred to as a Ground Rent Demand Notice.
The legislation is very specific on what is required in this notice. In order to be valid and enforceable, the Ground Rent Demand Notice must include the following:
- Name of the leaseholder (tenant).
- Name and address of the freeholder (landlord).
- Name and address of the person or company the ground rent should be paid to.
- The amount of ground rent due.
- The due date for the payment (see below for time limits).
- The date that the payment was due under the lease (this should be included if it is different from the date above).
Dates are Essential
First of all, you can only backdate demands for unpaid ground rent for up to six years.
Secondly, the due date for payment cannot be less than 30 days after the day the notice is given (or more than 60).
Finally, your due date in the demand notice cannot be before the payment date contained in the lease.
What are the Next Steps?
Failure to pay after the Ground Rent Demand Notice has been sent can lead to forfeiture of the lease. It is important to seek advice on what the next steps are if the ground rent still has not been paid.
Forfeiture and possession are generally considered as the nuclear options and a prudent landlord may, in the first instance, look to:
- contact the leaseholder’s mortgage provider;
- issue a standard debt claim; or
- register a charge on the property.
Before proceeding with any of these options, it is crucial that the Demand Notice is compliant.
It should be noted with caution that a defective Ground Rent Demand Notice could result in the tenant escaping liability. Therefore, it is imperative that you ensure you are following the correct legal procedure for obtaining ground rent.
Should you require further advice on any of the content within this article, or for assistance in drafting the demand notice in line with the legislation, please get in touch.
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