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Fri 20th November 2009
Property company was entitled to charge for deed of variation

The cost of entering into a deed of variation does not constitute an administration charge under the Commonhold and Leasehold Reform Act 2002.

That was the ruling of the Upper Tribunal (Lands Chamber) in the case of Mehson Property Co Ltd and the lessee of one of its properties.

The lessee decided that she wanted to sell her property but was concerned about some of the terms in the lease relating to repairs to the foundations and also to the right to require the lessor to enforce covenants against other lessees on the estate.

She wrote to Mehson Property asking for a note of the costs involved if she asked for a deed of variation to rectify the problems. The company replied that it would cost £350 for the maintenance clause, £350 for the enforceability clause and £350 (plus VAT) for legal fees.

The reply also stated that the company would accept a reduced fee of £500 for a deed of variation dealing with both issues. This reduced sum, totalling £911.25 including legal fees and VAT, was agreed and a deed of variation was executed to deal with both points.

However, the lessee then applied to the Leasehold Valuation Tribunal (LVT) to have the fee reduced on the basis that it constituted an administration charge. The LVT agreed and ordered that she should receive a refund of £500.

However, that decision has now been overturned by the Upper Tribunal (Lands Chamber). His Honour Judge Huskinson said: "In my judgment a charge for entering into a deed of variation does not constitute an administration charge."

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