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Buachaill, Barrister
Category: Law
Satisfied Customers: 10944
Experience:  Barrister 17 years experience
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We have a service charge from our property management which

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Hi, we have a service charge from our property management which we are disputing. They have stated that they will charge interest on the amount while its dispute. Is this allowed?
1. A management company can only charge interest on amounts overdue and in dispute if the governing management agreement for all flats permits the management company to do so. There is no power given at common law to charge interest. So there must be a specific provision allowing the charging of interest in the flat complex management agreement for the management company to be able to charge interest. So you need to check the governing management agreement for the flat complex to see if an interest-charging provision is included which benefits the management company.
Customer: replied 2 years ago.
Thanks that's really helpful. Unfortunately it doesn't feel that straightforward. We own a freehold property with a small amount of leasehold land on the development (driveways, lighting, grass etc.). The original management company was taken over by an RTM and our deeds still reflect the old management company and agreement. The RTM company has setup a new set of service charges for the leasehold parts and was originally trying to charge us for one thing, which we disputed, then renamed the charge to "General Maintenance" with no detail, and as we continued to dispute it they now want to charge interest.The RTM itself has been a mess and it's difficult to know where we stand legally.The actual amount itself is trivial but I don't want to set a precedent with the RTM that we will just pay charges without a clear and transparent reason for the charge.
2. The RTM company would have to vote through a series of changes to the management agreement at a general meeting of the company for them to be valid. So, unless there have been a series of new charges voted through by the RTM, the original ones apply. However, if the RTM company has been done properly in accordance with law, there will be new management agreements in place and it is from this that they would be deriving their power to levy charges. So you should query whoever is the company secretary of the RTM Company, as to what has been passed.
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