Landord overcharging tenant by service charge and management fees.

Landlord Incorrectly Charging Tenant!

Friday, March 26th, 2010

As part of the package of services to industry SMART provide, one area often in contention between tenants and landlords (commercial properties), is service charges and related management fees.

I received a call from a potential client (tenant) with this problem in mind. We met and they explained what they were allegedly paying for, and that they were not receiving what had been detailed.

With many years of experience in this particular area, I immediately set to work on the tenants instruction. It took almost three days to unearth everything relating to their concerns, and much I had to find for myself as no-one was available to assist me. A further two days was spent disseminating the information – and comparing the costings against what the tenant was paying for.

The deeper I delved the more I uncovered. As a consequence, we have written to the landlord and insisted on a refund for the last three years S/C & M/F amounting to almost £21,000. this figure represents the overpayment my client has made during a three year occupancy period. It is likely of course that this will go back and forth for some considerable period of time (and attract further penalties by way of interest payments?.

This one is an extremely blatant one, and clearly demonstrates how carefully a tenant should examine the audited accounts annually. The upshot of this particular audit has revealed that what the tenant was being charged for was not provided, nor were proportional figures in the slightest bit accurate or realistic to the occupied footprint.

The tenant will almost certainly need to take this through a court of law if the landlord does not see reason, and make the necessary refund of overpayments during the thirty-six month period in question (since occupation).

The landlord will almost certainly come back with one reason after another why it is accurate. I will in that case recommend a further independent audit for final arbitration. At that juncture the landlord will have two alternatives. Refund the overcharge – or go to court to argue the toss.

Having worked on both sides of the fence in recent years I know only too well how certain things can slip through the net.

SMART can either make a charge for my time spent, or agree a percentage payment based on what they find is genuinely owed to the tenant or work to a performance fee based on the amount of recovery.

Frequently I know the wrong percentage has been used for the client’s demise, and it has been said that up to 50% of service charge statements are inaccurate. In this particular case I found that charges had been made to the tenant that were solely those of the landlord, and in addition they were paying on a square metre basis which accounted for some 28% more that they occupied. There was more of course; these though were the rather more obvious ones I came across.