Much has been written about the conduct of E&M, however, they have left the door wide open for leaseholders to give them, the freeholders they pupport to represent and by extension our friends Peverel/Firstport some very expensive headaches.
Having received a ground rent demand from E&M on behalf of the landlord Proxima GR Properties, the demand gave instructions to pay E&M.
One intrepid leaseholder wrote to to E&M stating that he did not have any evidence that E&M were contracted to collect service charges on behalf of the freeholder.
Therefore he was making the cheque payable to Proxima GR Properties direct.
He was expecting E&M to make an issue of it, but they didn't. The payment was accepted.
This has huge implications for other leaseholders, and here is why?
As it happens, Proxima GR Properties are registered as a trading company, so they can demand and collect ground rents.
However, many of the freeholding companies are listed as dormant ie non trading.
Those companies cannot demand or collect ground rent payments.
It is believed that in somer cases ground rent collected for these non trading companies are accidentally passed to other Tchenguiz group companies that are trading.
That E&M have accepted a direct payment to the freeholder, sets the precedent that leaseholders can make ground rent payments direct to the freeholder.
The mess that would be caused if the freeholder is one of the many dormant companies can only be imagined?
The money can't be paid into the freeholders account as it is a dormant company. On the other hand E&M can't pay the money into another account (that would be fraud)
Any funds paid into a dormant company would mean they would have to register as an active company, and that means filing audited accounts at great expense to the companies. Of course those accounts would show ground rent receipts, if they don't it means the funds have not been passed to the freeholder that demanded the ground rent.
Because the leaseholder has complied with the terms of their lease, neither E&M or the freeholder can take any action against them.
