# LA chasing me for rates arrears (commercial lease) not paid by a previous tenant.



## Ireland.1 (19 Oct 2010)

Hi,

I am hoping somebody can help me please.

I am having problems with one of the council authorities who are hounding me for outstanding rates on a commercial lease I am the holder of. 

The monies they are chasing me for are arrears belonging to the previous tenant that was there before me and are quite substantial.   

The authorities have continued to bill me for the previous lease holders  arrears but have yet to invoice me for the present day bill that I do owe.  When I questioned this I was told that I must pay something off the previous arrears before they issue me with an invoice for the time I have been at the unit.  I do not understand their motives and when I question them they say they will invoice me when I clear part of the previous arrears.  I am totally lost for words and my heath is beginning to be effected by these games.

I have since being served with legal paperwork and am terrified of the outcome.  I have so many questions that need answering I don't know were to begin; what will the courts do with me if I cannot pay?, how long will it take to get to court?, will my lease with my landlord be terminated?

They tell me they are well in their right to chase me as there is a law that backs up their case and shows that a previous tenants debt can follow the next occupant for one or two years if unpaid.


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## Complainer (19 Oct 2010)

Don't know about the specifics, but as a first step, take you case to the relevant Director of Services at the local authority. If that doesn't work, and right is on your side, take it to the Ombudsman.


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## dereko1969 (19 Oct 2010)

What does your lease agreement state about rates?

Did your solicitor not check whether there were any outstanding rates?

What does your landlord say?

Go to your solicitor in the first instance and show them the legal papers and ask for a view.


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## Towger (19 Oct 2010)

You and/or Your solicitor should have checked for outstanding rates before you signed the lease. It only required a quck phone call to the local rates office.


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## Brendan Burgess (19 Oct 2010)

> They tell me they are well in their right to chase me as there is a law  that backs up their case and shows that a previous tenants debt can  follow the next occupant for one or two years if unpaid.


I would not have known that and would have signed a lease without checking the arrears position. 

[broken link removed]



> *Occupying a property where there are rates due*
> 
> A new occupier can be held liable for any rates due on the property. This includes the current year's rates and any arrears.
> We would advise you to check that all charges are paid before buying or leasing a property. This includes:


And from [broken link removed]



> *I am taking over a premises - What should I do about the Rates?*
> It is very important to check with the Rates Section that all rates are paid up to date.  Otherwise you will be liable for unpaid rates – this is known as “subsequent occupier” liability.
> 
> *What is Subsequent Occupier Liability?*
> A  subsequent occupier can be liable for arrears of rates for up to two  years from the making of the rate. It is up to the new occupier to  ensure that all rates, including the current year's rates, and all other  liabilities, i.e. water charges, etc. have been paid before the closing  of a sale or the assignment of a lease of any rateable property.  Information can be obtained from the Rates Section regarding outstanding  balances in respect of rates and water charges due on properties.


When you signed the lease agreement, did you consult a solicitor at the time? If there is a liability for arrears of rates, that is something the solicitor should have checked. 

Presumably you can sue the previous occupant, but that might not be worth doing.

I wonder what a landlord does if a tenant vacates the lease without paying their rates. This would mean that the landlord is effectively responsible for the arrears. 

Kinsale Town Council has a good section on the legal process for recovering rates.

Brendan


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## Ireland.1 (19 Oct 2010)

All particulars are with my solicitor who I will meet today.  I am currently the holder of a caretakers agreement lease and had been told that the previous rates would not apply to me yet I am now being legally chased for them.  My main fear at the moment is my goods being seized by the sheriff to pay off this debt.

Brendan, thank you for the links.  Yes as far as I've been lead to believe the landlord will be lumbered with the arrears if I vacate the premises and then I think he/she is legally made accountable for.  There must be a whole lot of cases of landlords being chased for liquidated companies debts.


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## onq (19 Oct 2010)

I think that's an unfair law, but equally the "caveat emptor" rule applies.

It emphasises the need to obtain competent professional advice when dealing in property.

ONQ.


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## Complainer (19 Oct 2010)

Ireland.1 said:


> had been told that the previous rates would not apply to me


Who told you this?


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## Padraigb (19 Oct 2010)

It is a long-established principle that rates are a charge on property, not on the owner or lessee of the property. The local authority is within its rights to pursue the person currently holding the property. In buying and selling property which might be subject to rates or other charges it is standard practice to adjust for over- or underpaid charges in calculating the final payment.

I would be disgruntled with a solicitor who let that one slip.


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## staff (19 Oct 2010)

This is something that your solicitor should have done before you signed the lease.  It is standard practice when taking over a property for your solicitor to check the outstanding rates with the local authority and for your predecessor to pay the outstanding rates up to the date that you sign the lease.


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## Ireland.1 (19 Oct 2010)

Complainer said:


> Who told you this?



The landlord and council.  

PadraigB, do you think I should promptly leave or can they pursue my company?


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## Padraigb (19 Oct 2010)

Sorry, Ireland.1, I can't answer that. It's a big question, and I presume that you have signed a lease.

If both the landlord and the council told you that you would not be liable for outstanding rates, you might (just might) have some recourse. It depends on the form of words they used and, most critically, what evidence you have. If it's no more than an idea you came away with after general conversation, you might not get far along that road.


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## Wishes (19 Oct 2010)

OP, I cannot believe you took the word of the landlord or council.  Have you got this in writing?

What if you don't mind me asking is a caretakers lease.  It doesn't sound very official to me


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## Complainer (19 Oct 2010)

ireland.1 said:


> the landlord and council.





wishes said:


> op, i cannot believe you took the word of the landlord or council.  Have you got this in writing?


+1


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## Ireland.1 (19 Oct 2010)

A caretakers agreement is an official document.

No I don't have it in writing.  Its their word against mine.  I had been unemployed for months and ran head first into something, I will admit, I knew very little about.


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## Ireland.1 (19 Oct 2010)

Complainer said:


> +1



I realise I am in deep, deep trouble.  I spoke to the council today and they told me they would rectify the bill if I made some payment but they refuse to remove the arrears until I make that payment and it has cleared.  I am very skeptical to make the payment in case they do not rectify the bill.


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## Complainer (19 Oct 2010)

Did you get legal advice before signing the lease?


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## nuac (19 Oct 2010)

Subseqent occupier liable for two years of predecessors rates.   "Occupier" is a question of fact - irrelevant whether or not you are a lessee.


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## Wishes (19 Oct 2010)

What would the outcome be if the OP vacated?  I'm guessing the LL would have to cough up for the predecessors rates along with what the OP has managed to incur.  Surely this would make it almost impossible for the LL to rent the property again as nobody is going to take out a lease with a rates debt on the building.  Are the councils more lenient on LL's than an ill-informed tenant?  

OP you have allowed yourself be tricked once so I presume you are not going to make the ghastly mistake of paying rates while the previous tenants debts are still attached to the main debt.  This without a doubt needs to be rectified.


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## Leo (20 Oct 2010)

Wishes said:


> Surely this would make it almost impossible for the LL to rent the property again as nobody is going to take out a lease with a rates debt on the building.


 
Isn't this what already happened?


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## Derry (20 Oct 2010)

I used to work in a local authority Rates office for 10 years. for what its worth here are some pointers that may help people when signing commercial leases in future.

1) Commercial rates are heavily bound by legislation some of it going back since Ireland was under british rule.

2) Rates remain with the property NOT with the person.  The owner is usually liable for commercial rates BUT if the property is leased out then the present occupier is automatically liable even for arrears run up by previous tenants.

The owner is liable when the property becomes vacant and remains so.

3) The saying "Buyer Beware really does apply when taking on a lease or buying a commercial property/business.  It is imperative that the buyer /leasee check with the local authority beforehand regarding any outstanding charges for Commercial Rates or Watercharges on the premises. 
A quick call to the local authority rates office will soon clarify the situation.

Don't rely on your solicitor to do it.  In my experience many solicitors never think of checking.

4) Local authorities do have extensive powers regarding the collection of commercial rates.  I would advise the OP to keep trying to reach a settlement with the local authority.  Failing that they should engage a local solicitor/auctioneer to negotiate with the local authority on their behalf.  This  usually is very helpful.


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## onq (21 Oct 2010)

Derry,

When you say _"The owner is liable when the property becomes vacant and remains so"_ the implication is that the owner should have paid the rates not waited until some poor unfortunate came along and landed him with them.

Is there a suggestion that the Council and owner have colluded to allow the leaseholder to form an unfounded opinion?
Add to that the possibility that a local solicitor has not informed his client of the arrears and the whole thing stinks to high heaven - assuming there was a reputable solicitor involved.
In requsitions on title, I thought that solicitors were supposed ot check to see if there were any burdens in the lease, charges against the property, wayleanves and suchlike.
I know of one case where a solicitor was held liable for not ascertaining that the wall through which access had been permitted was not owned by the vendor.

Three questions seem to arise:


 how long should the Council wait before pursuing the owner for the arrears?
 are arrears charegeable on the premises if no profitable enterprise is being carried on there?
 are these arrears, which may have been stacking on an unoccupied premises, to be paid by the leaseholder?
 
ONQ.


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## Towger (21 Oct 2010)

onq said:


> Also, are arrears charegeable on the premises if no profitable enterprise is being carried on there?


 
Rates are not due for the period the premises is not let.


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## onq (21 Oct 2010)

Thanks Towger,

Iss a hard station, expected to pay for arrears from someone who has done a runner in the middle of a recession when you're trying to start up your business.
This law needs to be changed - it should be re-directed to the person who ran up the debt, the council and/or the landowner, all of who have derived or will derive benefit from the premises.

It should not be used to unfairly burden down a guy trying to get ahead in a recession.
Never mind past convention for the landed gentry - this law is unfair and needs to be changed.

Failing that it needs to be popularised so that persons taking up leases are made more aware of it.
We'll only see some changes in the law when the people who have benefitted from it in the past start to suffer because of it.
I guarantee that with unleased buildings standing around empty, both the owners and the local authorities will get the wake up call they need.

ONQ.


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## mercman (21 Oct 2010)

Towger said:


> Rates are not due for the period the premises is not in let.



Incorrect. Most Councils deliver a rebate of 50% for vacant premises. This varies from Council to Council. This appears to be a solicitor problem if one was employed at the time of the lease been granted.


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## Derry (23 Oct 2010)

Hi Again,
Sorry for not replying sooner but I have been laid low with a bad cold.

Now to answer some of your questions as best as I can. I am retired over 20 years from my local authority Rates Office, but I dont think the law regarding commercial rates has changed since then. However correct me if I am wrong as they may have.  Rates have been too much of a cash cow for local authorities since the abolotion of Domestic Rates in 1977 and agricultural (Land) Rates in 1983 following a successful high court challenge.

Rates have therefore been a major revenue raising dept for all local authorities as the grant they receive from Central government has been falling every year.

Rates remain with the property Not the person.  The arrears remain for 2 years.  If a tenant leaves a premises with out paying their commercial rate bill all efforts are made by the local authority to recoup same. This includes legal action.

If a tenant cannot be traced then the owner of the property is liable but sometimes it can be very difficult to trace them too.  and legal action can not be enforced if they reside outside Ireland.

Solicitors are supposed to check with the local authority before a lease is signed or a business is sold.  But sometimes this can be overlooked and believe me it has happened!!! But the solicitor may not be held liable, as there was a case some years ago in our area regarding the same matter.  The conveyancing solicitors forgot to check with the local authority .  the court found that it was an unfortunate error but the solicitor was not liable and the principle Caveat emptor appplied.

Also never rely on a verbal word from a local authority regarding charges or no charges due. Always get it in writing as mistakes can be made by local authorities too.

Finally there is no collusion ever between Landlord & local Authority such a thing would never happen. As mentioned before Commercial Rates are heavily bound by legislation.  The only way to have them changed is to lobby your TD.


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## rees (23 Jun 2011)

Can anybody tell me where I can find something in writing, that says that the current tenant is only liable for two years from when the rates are struck.  I have checked the Poor Relief Ireland Act 1838 but can't find anything.  I am being quoted laws by the local authority so if I can find something to support this two year rule it would be a big help.


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## mercman (23 Jun 2011)

Rees, that's a new one to me. I thought the rates were due by a tenant when they were in occupation under the terms of a lease. Ultimeatly they fall due by a landlord in the case of a default.


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## corkbod (14 Sep 2011)

Hi

If you hold a lease you are the "occupier" for rates purposes.  If you are using the shop on foot of a Caretakers Agreement then the Landlord legally remains the occupier for rates purposes - you only have a license to use it for specific purposes but this does not legally amount to occupation.

Also the the amount of arrears recoverable from a subsequent occupier is simply basede on 2 calendar years arrears - the Council can only recover rates from a subsequent occupier where the rate was struck within the 2 year period prior to the issue of proceedings/ summons. The rate is normally struck by each Council around March in each year - so if the 2009 rate is struck in March 2009 no part of the 2009 rates are recoverable from a subseq. occupier after March 2011.


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## Ireland.1 (14 Sep 2011)

corkbod said:


> Hi
> 
> If you hold a lease you are the "occupier" for rates purposes. If you are using the shop on foot of a Caretakers Agreement then the Landlord legally remains the occupier for rates purposes


 
Hi, thanks for your reply.  I am no longer running the unit as I was having too many difficulties.  

We were lead to to believe by our solicitor at the time that we were liable for rates.  We made a large payment to the LA for rates, for the period of time that we were there just before we left.  We were never made aware that the landlord remains the occupier for rates purposes.


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## ajapale (1 Nov 2011)

Related question raised today.


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## onq (2 Nov 2011)

Given the precipitous exits from profitable business that some enterprises have experienced and the numbers of commercial premises now vacant for a year or more, it may be becoming more likely that commercial premises for lease have unpaid rates.


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