Few things strain a residents' management company more than the leaseholder who doesn't pay. Unpaid service charges and major-works contributions force everyone else to cover the gap — and while court claims work, they take time. An alternative many boards don't know about: selling the arrears.
Can a management company sell its receivables?
Yes. The management company (or the freeholder, depending on who is owed the charges) can assign its right to collect to a third party under the general rules on assignment of debts. A board resolution approving the arrears statement and authorising a director to sign the assignment is enough.
A receivable with real backing
- Service charges are underpinned by the lease, a very solid contractual basis.
- The debtor is perfectly identified and owns a lease over the flat — a strong incentive to settle, given the ultimate (if drastic) possibility of forfeiture proceedings.
- Demands served correctly under the Landlord and Tenant Act give the claim a clear paper trail.
A receivable that is de facto secured against a property interest is among the most valued in the debt-buying market: the discounts demanded are usually smaller than for ordinary debts.
Documentation needed
The arrears statement certified by the managing agent or directors, the demands served with the statutory summaries, the relevant lease clauses and any acknowledgements from the leaseholder. With that, the debt is thoroughly evidenced.
How to list it on debtalia
Select "Community of owners" as the type of creditor when listing the debt. State the total certified arrears, the year and the available documents. The cost is £19.90 per debt (or £69.90 if you group several non-payers into a portfolio) and offers from investors arrive directly in the managing agent's or director's email.
The result
The building recovers immediate liquidity for its expenses, stops chasing the non-payer, and the problem passes to a recovery professional. All with a simple board resolution.
