Q&As

Where a tenant pays service charge quarterly (and the service charge includes the tenant’s proportion of the insurance premium), but the landlord is required to pay the insurance premium in a single payment, can the landlord recover the whole of the tenant’s proportion of the premium in the first quarterly service charge instalment or must it be spread across the quarterly payment dates?

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Produced in partnership with Desmond Kilcoyne
Published on LexisPSL on 29/05/2018

The following Property Disputes Q&A produced in partnership with Desmond Kilcoyne provides comprehensive and up to date legal information covering:

  • Where a tenant pays service charge quarterly (and the service charge includes the tenant’s proportion of the insurance premium), but the landlord is required to pay the insurance premium in a single payment, can the landlord recover the whole of the tenant’s proportion of the premium in the first quarterly service charge instalment or must it be spread across the quarterly payment dates?

As a very general rule, the services provided by a landlord (or a management body) to leaseholders over the course of a service charge year are usually paid in arrears. Accordingly, assuming a relatively even distribution of services over the year, the expenditure for any given year will tend to come later in the year. For this reason, service charge clauses invariably will require a leaseholder to make interim payments of service charge in advance. Such schemes will therefore, more or less, provide a landlord with sufficient funds to pay the cost of services during the year as they fall due.

Although there may be others, one cost which does not always fit conveniently into such a scheme is that for insurance. Insurance premiums are invariably paid in full at the start of the relevant insurance year. Accordingly, if the premium has to be paid near the start of the relevant service charge year, it represents a substantial expense which must be paid from those funds which have been collected from the first advance payment of service charge.

Ideally, therefore, the f

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