Commercial Property Service Charge Disputes

Commercial Property Service Charge Disputes

Many commercial leases (particularly leases of part of a building) require the landlord to provide certain services, and for the tenants to pay the landlord for those services through a property service charge. This will often include the costs of maintenance of common areas, refuse collection, security and utilities.

The lease will normally set out the services that the landlord must provide, the cost that each tenant is required to pay, and the procedure that the landlord must follow to budget and report costs and to claim the service charge from the tenants.

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The Risk of Dispute

Every property service charge is tailored to the building to which it relates. Different leases will require different services and will set out different procedures which the landlord must follow. This can make applying service charges difficult. Disagreements will often arise about how the service charge should be applied.

Some common service charge disputes include:

• failure to provide services
• entitlement to recover the costs of a service provided
• the cost of services provided
• allocation of service charge between tenants
• failure to follow the service charge procedure set out in the lease
• failure to pay the service charge

A landlord who doesn’t comply with the service charge provisions in the lease may find itself unable to recover the cost of services it has provided, or compelled to provide services which it has failed to provide. A tenant who doesn't comply with service charge provisions may not receive necessary services, or may risk court action or forfeiture of its lease for non-payment of service charge costs.

How Can We Help?

We regularly advise landlords and tenants on commercial service charge disputes.

For landlords, we can:

• advise on the proper procedure for recovering the property service charge
• advise on services which must be provided, and services which are at the landlord's discretion
• advise on allocation of service charge between multiple tenants
• bring claims for service charge arrears or take other action to compel payment
• defend claims by tenants about the services provided

For tenants, we can:

• advise on procedure which the landlord is required to follow before payment is due
• advise on the services which the landlord should provide, and on the quality and cost of those services
• advise on allocation of service charge between multiple tenants
• bring claims for failure to provide proper services
• defend claims by landlords for service charge arrears

If you are a landlord or tenant and would like legal support with property service charge disputes, please contact Michelle Bendall on 07940 933 587 who will be able to provide you with a fee estimate.