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Service charges and insurance (general)

This page deals with the following points in relation to service charges and insurance
  • The ability to charge a management fee where there is no express clause providing for such payments.
  • Insurance rent - requirement to pay where no formal demand
  • The importance of the landlord accurately using the procedure in the lease.
  • The difference between reserve and sinking funds.
  • What happens to unused money at the end of the term?
For a more detailed looked at service charges in the context of residential leases go to "Long leases" in the Update Library.


Management charges

St Modwen Developments (Edmonton) Ltd v Tesco Stores Ltd
[2006] EWHC 3177 (Ch)

Introduction

There were in fact three points in this case, which demonstrates the importance of paying careful attention to the drafting of service charge clauses; and on the need carefully to check those clauses on assignment of the lease, or as in this case, the reversion. There is a useful discussion of the position where there is no express clause permitting the landlord to recover a management charge.

Borough Treasurer's certificate

Tesco was the tenant of premises in Edmonton Green shopping centre under the terms of a 99 year lease dated 18 June 1974. The lease was originally granted to Enfield London Borough Council and it provides that the tenant shall pay service charge by way of further rent subject to:
    "The amount of the service charge [being] ascertained and certified annually by a certificate signed by the Council's Borough Treasurer"
The landlord's interest passed to the claimant in this case (St Modwen Developments). The lease contained an extended definition of "tenant" to include successors in title but there was no similar extended definition of landlord. It was common ground between the parties that references to "the Council" in the lease take effect as though they were references to St Modwen. However, the tenant argued that references to the "Council's Borough Treasurer" could not be construed as references to St Modwen's equivalent financial officer, namely the financial director. The court (Toulson J) placed great emphasis on the fact that the "Council's Borough Treasurer" was "somebody of known a ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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