How Forfeiture Works in The UK
Marcel Sulc purchased the freeholds of 4 Pelham Crescent and 11 Pelham Crescent at auction.
Within a week he had issued demands for money against the tenants of both properties. In the case of 4 Pelham Crescent he broke into four flats, emptied them of the leaseholders property and relocked the flats with a sign pinned to the front doors informing the leaseholders that the flats had been forfeitured for non payment of the money demanded.
In total he demanded £20,000 from each of the eight leaseholders in the premises making a total of £160,000.
Karen Quigley was the owner of one of the flats forfeitured in this way.
Sulc had written to the Nationwide demanding that it pay him the £20,000 by adding it to Karen Quigley's mortgage. Failing this the Nationwide must return the lease which it held as collateral against the loan it had given to Quigley.
The Nationwide returned the lease to Sulc and demanded the return of the mortgage money from Quigley. It threatened to recover the mortgage money from other assets she might own.
Sulc's demand for £160,000 was contested at the Leaseholders Valuation Tribunal by leaseholders in the premises who had not fallen victim to forfeiture.
All leases for the premises stipulated that service charges could only be demanded on production of an audit by the landlord. No such audit was in existence which meant that the maximum Sulc should be paid was the £15,000 he had demanded as emergency work. The LVT “used its experience” to grant him £48,895.08p in total.
This meant that Karen Quigley did not owe him £20,000. The maximum she owed him was £6,111.89p. But by then Sulc had created a new lease for her flat and had sold it.
Karen Quigley tried to obtain legal aid to help her recover her flat but she was refused. Sulc repeated this process dozens of time and neither the police nor Hastings Borough Council Housing Department lifted a finger.
Did Sulc invent forfeiture? No but his methods of physical intimidation brought it to national prominence. For years retired people have sold their houses in London and bought a flat in Hastings at a lower price so that they could enjoy their retirement. The would then find demand after demand for money until they just gave in and the flat was quietly forfeitured. Their lives were made a hell.
Transcript of Nationwide's letter to Quigley
Mrs K I Quigley
1 Pinders Road
Dear Mrs Quigley
Mortgage Account No 099 - 4-99318628-08
Following our earlier conversations and letter, I am now in a position to explain what happened to the above property. I understand that the property has been vacated and that arrears of repayments and ground rent/service charge had accrued.
The Society received a demand for approximately £20,000 from the mortgage agents of Upfront UK Ltd in respect of major works following the second charge holder taking possession of the property. The Society was notified of this on 3rd January 2001.
If this remained unresolved then Upfront UK Limited would take legal action to forfeit the lease.
If the Society had met the demand then the balance outstanding would have significantly increased. In the circumstances and the absence of forwarding/correspondence address for you the Society closed your mortgage account down.
However the debt id still required to be repaid and I would be grateful if you could advise me of your financial situation and your proposals.
How forfeiture works in other countries.
Forfeiture is a necessary tool to remove flat owners who are misbehaving and making the lives of others living in a premises worse than they might reasonably expect them to be.
Not paying service charges or running a brothel or making noise are all reasons for flat owners to take action to force the offending flat owner to forfeit his right to live in the premises or to even continue to own the flat.
This means that you force him to move out of the premises or to sell his interest in the flat.
But, he keeps the value of the his flat after the forfeiture action.
The right to this type of forfeiture should be invested in right to manage companies and any majority of leaseholders in a premises who act together.
In allowing forfeiture in its present form to continue after the Commonhold & Leasehold Reform Act 2002, the government blundered.