What is the Debt Recovery Policy?
This can be a rather sensitive and emotive subject to deal with, and we would advise that the 3 following points are noted, which unfortunately we find on some occasions are indeed overlooked.
- At the time you purchase your property, your solicitor should have informed you that your property is located within a private development and therefore you will be agreeing to become either a shareholder or member of a limited management company, and as part of your legal formalities, you will be requested to sign an agreement to meet the financial obligations of the limited company by way of service charges.
- The collection of service charges is vital to the day-to-day running and maintenance of land or buildings located within your management company. Service charges contributions finance vital service provisions, for example, street lighting, (where applicable), cleaning, gardening, repairs and insurances.
- Should service charge funds not be available, it would be illegal for a managing agent to knowingly instruct a contractor to carry out any works in the knowledge that there are insufficient funds to meet the contractor's invoice.
Merlin Estates Ltd appreciates that paying bills can sometimes leave us all a little financially embarrassed when experiencing difficult times, and therefore every attempt is made to approach the resident Directors to allow us to collect the service charge contributions via ten monthly instalments.
This is the entire service charge demand spread over 10 months with the first payment being made at the commencement of the financial year. For example, If your Service Charge Demand equates to £1200 per year then this figure is to be divided by 10 providing the monthly payment of £120. You can of course pay the amount in full should you wish to.
In our experience, most property owners pay this automatically via a standing order which requires to be set up every year. Your standing order form can be downloaded here direct from this web site. If we do not receive any payments from you we will write to you advising that there may have been a problem with your standing order or perhaps an over sight on your behalf. There is no administration charge for the first reminder letter.
If we do not receive any acknowledgement to our initial letter, we will write to you a second time advising you that we have still not had any payments or correspondence. This can sometimes happen if the property owner is suffering from any long term illness or may be working abroad with the armed forces etc. If you are working abroad we strongly advise you to update us with a current correspondence address, since we are now applying an administration charge of £25 for the second reminder letters. You will be provided with 10 working days to respond to the second letter.
If a response has still not been received, we will write to you with a third and final letter advising you that if monies or correspondence within 5 working days from the date of the letter, we will be left with no alternative but to outsource your account to an independent and licenced Debt Recovery Company. There will be an administration charge of £30 for the third and final reminder letter.
Once the account has been passed to the debt collection company, no further correspondence by Merlin Estates will be entered into. The debt recovery company will automatically add a referral fee and any necessary search fees to the outstanding balance.
Their role is to collect all outstanding monies from the property owner and if unsuccessful will then commence court proceedings against the property owner on behalf of the Management Company. This process will incur additional fees and charges.
It is human nature to sometimes put things off or adopt the "I'll do it later" mind set. Some might even say it is burying ones head in the sand, but we strongly advise you against allowing it to let it get to these late stages, since in the long run it will cost you more and can affect you financial credit rating.
It is the last alternative for Merlin Estates Ltd to send a resident to debt recovery, however, we must ensure that the other property owners are not affected by a cash flow in operating funds or worse still, risk the financial stability of your management company.
In some cases, if we are made aware of extenuating circumstances in the early stages, we are able to assist by presenting a payment plan to the board of directors. Any financial payment plans presented must however, be authorised by the directors of your management company before it can be implemented. It is prudent to say that Merlin Estates Ltd cannot guarantee they will authorise any repayment plan presented. If, however, one is authorised and the agreement is broken via non-payment, we will have no option but to immediately outsource the account to the debt collection company.