Not upheld: mortgage lender obligations regarding ground rent and service charges complaint against Topaz Finance Limited trading as Rosinca Mortgages

Decision detail

Summary

Mr and Mrs B complained that Rosinca Mortgages failed to pay ground rent and service charges on two buy-to-let properties, resulting in CCJs being issued against them. Mr B had sent outstanding demands to Rosinca but did not provide express written instructions to pay. The ombudsman found that responsibility for paying ground rent and service charges lies with the lessee (Mr and Mrs B), not the lender, and that it would be unfair for Rosinca to pay disputed charges without a CCJ or tribunal decision. The ombudsman noted that Rosinca appropriately paid the outstanding amounts on one property only after receiving the CCJ. The complaint was not upheld, with the ombudsman clarifying that Mr and Mrs B's responsibility for these charges did not automatically transfer to Rosinca simply by forwarding statements to it.

The Ombudsman's reasoning

The ombudsman applied the general principle that lessees (Mr and Mrs B) bear responsibility for paying ground rent and service charges. The ombudsman noted that it would be unfair for a lender to pay such charges without a CCJ or tribunal decision, as this would involve the lender paying disputed amounts. However, once a CCJ is obtained, it is reasonable for the lender to pay to protect its security. The ombudsman found that without express written instructions from Mr and Mrs B or a CCJ/tribunal decision, Rosinca had no obligation to unilaterally pay the charges. The ombudsman emphasised that these were buy-to-let mortgages for investment purposes, making it Mr and Mrs B's responsibility to manage their investment, including payment of such charges. The ombudsman also clarified that LPA Receivers act for Mr and Mrs B, not Rosinca, and are outside the FOS remit.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website