legal costs
📖 What is legal costs? Meaning and definition
Legal costs are the financial outlays a party faces when involved in legal proceedings, particularly in the context of UK tenancy law. These costs can arise from various actions, such as a landlord enforcing the terms of a lease against a tenant, or an applicant seeking a lease extension. The First-tier Tribunal (Property Chamber) often determines the reasonableness of these costs, especially when there's a dispute over the amount payable.
In some situations, a lease might specify that legal costs incurred by a landlord can be recovered from leaseholders as part of a service charge. However, there can be disputes over whether such costs are indeed recoverable, particularly if the leaseholders were not directly involved in the proceedings that led to the costs. The Tribunal may be asked to interpret the lease to decide on the recoverability and reasonableness of these charges.
Furthermore, an application can be made to the Tribunal under specific sections of housing acts to determine if certain legal costs should be excluded from being taken into account when calculating service charges. This is particularly relevant for self-represented litigants who might challenge the inclusion of such costs, especially if they believe it would be unjust and equitable to make them pay.
It's important to note that the Tribunal's decision on legal costs can specify the exact amount payable, as seen in cases involving lease extensions where the reasonable legal costs of one party are determined as payable by the other.
📋 Requirements
- The costs must be incurred in relation to a legal matter, such as enforcing lease terms or a lease extension.
- The lease may specify that legal costs are recoverable, often as part of a service charge.
- The reasonableness of the legal costs may need to be determined by a Tribunal.
- The party from whom costs are sought must have a legal obligation to pay them, either by agreement or Tribunal order.
📝 Procedure
- An application is made to the Tribunal for a determination of costs.
- The Tribunal may interpret the lease to decide if costs are recoverable.
- The Tribunal assesses the reasonableness of the incurred legal costs.
- The Tribunal issues a decision on the amount of legal costs payable or whether they can be recovered.
💡 Examples
- A landlord incurred £7,981.34 in legal costs trying to enforce a covenant against one tenant, and then tried to recover 25% of this (£1,972.86) from other tenants via a service charge.
- The Tribunal determined that the reasonable legal costs for a lease extension, payable by the applicant, were £3,588.00 including VAT.
- A tenant applied to the Tribunal to exclude the landlord's legal costs from their service charge, arguing it would be unjust and inequitable to include them.
- The Tribunal had to decide if legal costs incurred by a landlord against one tenant could be recovered from other tenants who were not involved in those proceedings.
📚 Legal basis
- Leasehold Reform and Urban Development Act 1993
- Leasehold Reform, Housing and Urban Development Act 1993
- Section 20C of the 1985 Act
❓ Frequently asked questions
What are 'legal costs' in a tenancy dispute?
Legal costs are the expenses a party incurs when involved in legal proceedings related to their tenancy, such as when a landlord enforces lease terms or a tenant seeks a lease extension.
Can my landlord make me pay their legal costs?
Sometimes, yes. Your lease might state that the landlord can recover their legal costs through your service charge. However, the Tribunal can assess if these costs are reasonable and if they should be included.
What if I wasn't involved in the legal case that caused the costs?
The Tribunal may need to interpret your lease to determine if costs incurred against one tenant can be recovered from others not involved. You can also apply to the Tribunal to exclude such costs from your service charge if it would be unjust.
How does the Tribunal decide if legal costs are reasonable?
The Tribunal will review the details of the costs incurred and the circumstances of the case to determine what amount is fair and reasonable for the specific legal action, such as a lease extension.
Can I challenge legal costs included in my service charge?
Yes, you can apply to the First-tier Tribunal (Property Chamber) to challenge the recoverability and reasonableness of legal costs included in your service charge, especially under Section 20C of the 1985 Act.
What is Section 20C of the 1985 Act?
Section 20C of the 1985 Act allows a Tribunal to make an order that a landlord's legal costs should not be considered relevant costs when determining the amount of any service charge payable by an applicant, if it would be just and equitable to do so.