Don’t Do Yourself A Disservice

Both landlords and tenants should always be alert to the service charge they levy or pay under the terms of their leases.

A recent case (Friends Life Management Services Limited vs. A & A Express Building Limited) was a useful reminder that a tenant's liability to pay service charge for works the landlord was proposing to do, did not extend to works where that cost would not be incurred by the landlord until after the date of termination of the lease.

Facts

The tenant had rented office and parking facilities for a 15 year term which contractually expired in March 2013. The tenant successfully exercised a break clause ending its lease in March 2010.

The lease required payment of a fair proportion of sums already incurred or anticipated during future service charge periods. There was no specific reference to a reserve or sinking fund in the lease.