Like all disputes, ground rent claims are subject to strict limitation periods, which, if missed, result in claims being time-barred irrespective of their other merits.
As onerous ground rent clauses first became prevalent in the late 90s/early 2000s, an increasing number of claimants will have claims that will already or will shortly fall outside of the limitation periods for bringing a claim. These are:
- For primary limitation, six years from the date of breach/loss; and
- For secondary limitation, three years from the date of knowledge.
Primary limitation
If possible, a claimant should seek to bring a claim within the primary limitation period.
For ground rent claims, this runs from the date of exchange as that was when purchasers become legally tied into the transaction.
This may be the same date as completion (when the property is acquired). However, it can be earlier, and often is with new build properties.
If you have a potential claim it is therefore important to establish when the exchange took place, and if that is within the past six years to take steps to protect the claim.
Secondary limitation
If the primary limitation has expired, so at the date of writing [14 February 2022], if the exchange took place on or before 14 February 2016, a claim may still be brought, provided it is done so within three years of the ‘date of knowledge.’
The date of knowledge is a complicated principle. It does not mean that a claimant knew that their solicitor/conveyancer had been negligent. It is instead, very simplistically, when they ought to have had a reasonable suspicion that the advice they were given in respect of the ground rent was defective. That could be significantly earlier.
This is highly fact-sensitive and requires careful consideration. In relation to ground rent cases, it could be for example:
- When a claimant was charged a higher ground rent than they had anticipated;
- When they were contacted by the freeholder about varying their ground rent; or
- When they became aware of the ground rent scandal more generally.
There is also a longstop date for all claims of 15 years. Therefore, irrespective of the date of knowledge, claims cannot be brought in respect of breaches/losses incurred 15 years ago or more.
Protecting limitation
The limitation only stops running when a claim has been issued with the Court. Although, it can be suspended – temporarily paused – should the parties agree to a standstill agreement.
Issuing a claim with the Court carries a substantial fee (usually 5% of the damages claimed), and according to the Civil Procedure Rules, should be a last resort.
Therefore, it is usually in the interests of both parties to resolve matters prior to issuing through pre-action correspondence.
Consequently, even should a claim not be approaching the expiry of the applicable limitation period, it is advisable to obtain advice as to the merits of a potential claim as soon as possible, to give adequate time for pre-action correspondence to take place.
In any event, claimants who sit on potential claims – perhaps waiting for Government reforms or action by the CMA which may not remove the need for litigation – risk those claims becoming time-barred.
How can we help
If you have any questions in relation to the above article or any related subjects, please contact a member of our expert Dispute Resolution team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online form.
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