So just how can you recover factoring & common maintenance debts from owner-occupiers? A Notice of Potential Liability for Costs can assist housing associations and factors to recover money due by owner-occupiers for factoring and common maintenance debts. It was introduced in 2004 and can be used in relation to flats or houses. It does not solely relate to costs already incurred and can be lodged in relation to planned works where there is doubt regarding an owner's ability/likelihood of paying their share of the cost.
The Notice is registered over a property (not against an individual). While it will not prevent an owner from selling their property, it is highly unlikely that a purchaser would buy the property with the Notice in place as they will then become liable for the debt - usually this forces the seller to pay the money owed before he completes his sale. Once the debt is repaid, a Letter of Satisfaction is issued confirming the debt has been paid. To be able to lodge a Notice, you must be:-
- The owner of the property;
- The owner of another flat within the same tenement; or
- The factor or manager of the tenement or development.
No specific figures are required in the Notice as these are likely to fluctuate over time (whether payments are received or not), however, a list of the elements of debt must be given. The works which can be covered by a Notice can be listed under broad headings (for example, common insurance premiums, maintenance and repair costs, factoring charges etc).
It is possible to lodge one Notice covering more than one property and each Notice will last for three years before it automatically expires.
The Notice requires to be registered at least 14 days prior to the property being sold to make the purchaser liable for the debt, should the seller not clear his account.
While lodging a Notice does not guarantee an immediate payment, it proves very effective in almost all cases where a property is to be sold.
It should be remembered that lodging a Notice does not affect the law in relation to old debts - generally any debts more than five years old will not be recoverable as there are exceptions to this. If any debts are approaching the four/five year mark then it may be more appropriate consider raising a court action for recovery.
If you'd like to discuss factoring & common maintenance debts?in more detail, please contact us.
