Business tenants and commercial service charge accounts

The most frequent question I am asked by new clients when I first take on a service charge instruction is “Should I pay this invoice or withhold payment of it?”

Business tenants are often faced with this dilemma for the first time when the commercial service charge on their property suddenly rises.

To pay or not to pay? That is the question.

Withholding payment of commercial service charge accounts is not to be taken lightly.  Non-payment could result in the landlord taking one of the following nasty measures:commercial service charge accounts business tenants

• Forfeiture of the lease

• Issuing proceedings

• Statutory demand

Each one of the above will likely result in costs being recovered via the lease from the Tenant and can result in the loss of the business premises or the business itself.

So what is my advice to a new client faced with an increased service charge? Well, as always it depends on the specifics of the situation facing the tenant.

A tenants strategy for dealing with a large invoice and whether “to pay or not to pay” has to take into consideration not only what the landlord can do but also what the landlord is likely to do given the specific circumstances.

The course of action a landlord or their agent chooses to pursue will depend on a number of things not limited to the following:

 1) Terms of the lease.

2) Age of demand.

3) Size of demand.

4) Landlord relationship with the tenant.

5) Strength of the tenant.

6) Landlord objectives or strategy for the particular premises.

7) Who the landlord is.

8) Landlord obligations to other parties.

9) The situation in the building, on the estate or in the area.

10) The specific circumstances surrounding the demand and their confidence in the validity of the charges.

 Only after the above is analysed can a comprehensive and well thought out strategy be built and implemented for dealing with the issue.

Simply not paying without taking steps to protect yourself is never a good idea.

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