Residential service charges — landlords beware, there are stings in this tale...
Service charge disputes are common in the landlord and tenant relationship, whatever the nature of the property being leased. This is due to the tension between the landlord needing to use the service charge in order to comply with his or her repairing obligations and the landlord’s objective of keeping the premises in the best condition possible, versus the tenant needing to ensure that the landlord only uses the service charge to the extent specifically provided for under the lease, i.e. ensuring that the tenant does not have to pay towards long-term improvement of the premises not envisaged under the service charge provisions.
To avoid potentially costly and time-consuming disputes, service charge provisions should be carefully and clearly drafted from the outset, having given specific consideration to what the landlord’s foreseeable costs will be during the term of the lease from a repairing perspective (for example, does the landlord wish to specifically be able to recover for replacement as well as repair, rather than only being entitled to replace if repair is no longer possible?). Clearly what is ultimately agreed will depend on the respective negotiating positions of the parties…
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