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Frequently Asked Questions

FAQ groups:

20 frequently asked questions in Service Charges, Reserve Funds, Ground Rent, Direct Debits, Credit Control:

Do Leaseholders receive interest on service charges paid or paid into Client Accounts?
The Client bank account for the site will receive any interest the bank pays. We credit interest to the lessee's fund as it rightly belongs to them and reflects the credit balance held in the private bank account for the particular site.
Do I get a service charge or reserve fund refund if I sell my property?
When a lessee sells their property service charges are not refunded to the individual selling but held in the service charge pot as a benefit to the incoming purchaser.
How quickly does a direct debit post to a service charge payer's account?
72 hours after collection.
How can Ringley prove what service charge demands have been sent to a lessee?
Ringley's accounting system propersys keeps an audit trail of what system generated demands, reminders, final notices, letters before action sent to lessees.
What is the procedure at Ringley for dealing with unpaid service charges
We are appointed to uphold the covenants in the lease. Unpaid service charge is a breach of lease. If the lease requires payment within 21 days, then a lessee is in breach if service charge is not paid by this date.
There are 4 stages of pursuing money before court action is contemplated
  1. Demand
  2. Polite reminder
  3. Final Notice
  4. Letter of Claim
Anybody who faces court action would have been asked for the money a minimum of 4 times before court action is instructed. No-one is taken to court without being first given a letter prior to proceedings to comply with the civil proceedings rules.
Any Client/Group of Directors appointing Ringley will have agreed to the staged methodology is in the following extract from our Terms of Engagement for Management (Schedule 2.6):
2.6 To operate strict credit control and enforce the highest possible standards of all rent and service charge collection which may include
  1. applying interest to arrears as stated in the lease
  2. sending polite and final payment requests
  3. carrying out a Land Registry search to verify ownership prior to stages (d) or (e)
  4. instructing Ringley Legal Services to write to the Tenant advising on the implications of non-payment, the cost of which must initially be borne by the Client but will be charged to the defaulting Tenant's account
  5. applying to the County Court for a money judgement, the court fee being initially borne by the Client but will be charged to the defaulting Tenant's account
  6. in the unlikely event that a case cannot be determined by allocation questionnaires and specific court attendance is necessary Ringley will either (a) represent the Client at Court (in the presence of the Client) or (b) instruct legal representation using the direct access to representation route
  7. applying to the County Court for an attachment to earnings order
  8. applying to the Country Court for permission to enter the judgement on the charges register against the property
  9. lodging a charge against the property title to prevent it being possible to sell the property without discharging the debt
  10. writing to the defaulting Tenant's place of employment to seek enforcement of an attachment to earnings order
Can I pay by standing order
Ringley do not support standing order payments for service charges or ground rent because
  • if you pay on standing order say the 1st of month we don't get Bank statement until the end of the month,
  • we then have to reconcile perhaps 500 statements a month. You could therefore appear to be in arrears incorrectly and we may start taking credit control action against you as we work on a 90 day credit control cycle and action has to be taken during the month before the bank statements are received
    • We operate individual client accounts for each and every site and we do not have the resources within the fee we receive to phone banks every day or check on-line to see who has paid into the bank or what standing orders have been received prior to the month end reconciliation
We do offer direct debit facilities which ensure the funds are electronically posted to your ledger within 72 hours.
Can I have your Bank account number as I want to pay over the internet
Ringley do not internet bank transfers for service charges or ground rent because
  • we will not see your payment until we get Bank statement until the end of the month,
  • we then have to reconcile perhaps 500 statements a month. You could therefore appear to be in arrears incorrectly and we may start taking credit control action against you as we work on a 90 day credit control cycle and action has to be taken during the month before the bank statements are received
    • We operate individual client accounts for each and every site and we do not have the resources within the fee we receive to phone banks every day or check on-line to see who has paid into the bank or what standing orders have been received prior to the month end reconciliation
We do offer direct debit facilities which ensure the funds are electronically posted to your ledger within 72 hours.
Can't pay - I've just lost my tenant please I'll pay up by the end of the month
Ringley staff
  • should "Put a memo on the account" with name & initials & date.
  • Politely remind client that lease requires payment within 21 days of the due date
Can't pay - can I set up a direct debit to clear my arrears
To ensure we abide by what the lease states direct debits cannot be set up to clear service charge arrears, please pay by cheque or credit card to clear the arrears first.
Why have I got 2 direct debits I only asked for 1
On the direct debit mandate you authorised us to collect current estimated service charges.
The service charge budget includes both a day to day service charge and a reserve fund. There are two direct debits because the reserve fund is protected and held in a separate ledger to the day to day service charge.
Can you explain why I have got 2 items called service charge on my account
This would indicate bad group names set up by Ringley's finance team in the “P” “D” menu of propersys. There may be a service charge collected for the “estate” a separate service charge for “lifts” and a separate service charge for “flats”. To answer the question you need to refer to the service charge budget and get finance to rename the service charge groups in a meaningful fashion.
Can't pay - I'm not in arrears as I pay by direct debit/standing order. Can you explain the demand I just received?
We are obliged to send you a demand whatever your payment method in accordance with your lease.
This also serves as a check for you that your balance is decreasing to show that the DD is working.
Service charges - I'm in credit can I have a refund?
Yes of course, you can.
Service charges - I dispute the legal fees on my account, can you remove them?
In settling any dispute the benchmark will be the payment provisions set out in the lease and which states that payments must be made in 21 days of the due date, and provides for interest to be charged on all service charges in arrears. If at no point were you in arrears more than 21 days after the due date a manager can authorise a refund of legal charges.
Service Charges - service charge deposits on completion what does this mean?
A service charge completion may comprise a days based apportionment from the date you bought your flat up until the next due date, or it could be a service charge deposit. A service charge deposit represents is a pre-payment to put the service charge fund in credit to begin to make payments on behalf of residents and is not used towards your future service charge bill. If you wish to recover a service charge deposit you should do so when you are selling by charging the incoming purchaser a similar service charge deposit.
Service charges - year 1 accounting
At the end of the first from accounting year the residents have been in occupation for a reasonable length of time. It is the external auditors' job to carry out a days in occupation basis apportionment of all funds collected, and then at this time credits will be made to parties who have in effect paid more service charges on completion than is truly representative of their days in occupation and additional bills will be levied on Leaseholders where they have under-paid.
This is the normal accounting convention for all new build properties where funds are needed early on and where not all properties are sold simultaneously.
Service charges - why is the reserve fund separate on my bill?
The reserve fund forms part of the service charge budget, which is distributed at the beginning of each accounting year. In accordance with the code of practice for the residential managing agents we are now directed to split the entire service charge budget to show as service charge and reserve funds respectively. The reserve fund is in fact a provision for future cyclical works (internal and external), and is held in interest bearing client accounts for the benefit of current future Leaseholders.
Service charges - Arrears belong to the previous owner
The liability for service charges runs with the lease and it is for the purchasers and vendors' solicitors during the conveyancing process to agree any apportionment between the parties.
You will therefore need to instruct your solicitors to contact the vendor's solicitors should you feel that they should have paid off any arrears on your account prior to you purchasing the property.
Service charges - Accounts, year end deficit belongs to the previous owner
The liability for service charges runs with the lease and it is for the purchasers and vendors' solicitors during the conveyancing process to agree any apportionment between the parties. As part of the recommended Law Society's pre-contract Leasehold Enquiries usually a Solicitor will obtain copies of service charge accounts and if he/she is concerned should make a retention from the completion monies in respect of any perceived service charge deficits.
You will therefore need to instruct your solicitors to contact the vendor's solicitors should you feel that they should pay any deficit relating to an accounting year prior to your purchase.
The developer said they were going to pay my 1st years service charge?
Regrettably we cannot indemnity you from action/credit control or court proceedings whilst your service charge account remains in arrears. Because, we do not yet appear to have received any funds from the developer therefore the amount remains outstanding on your account. You will need to take this up with the developer and until we receive a cheque the Freeholder or management company may continue to take arrears action against you.

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