16th September 2015

Couple use Crowd Funding to Challenge Unfair Factoring Fees

A case is due to be heard in the Lands Tribunal for Scotland on the 18th, 19th and 20th of August to consider the legality of a factoring company’s current business practices and charges. The Lands Tribunal for Scotland has statutory powers to deal with various types of dispute involving land or property and works in much the same way as an ordinary civil court

At present, developers commonly sell off the communal areas of new developments to factoring companies and insert clauses into the owners’ title deeds requiring that they pay these companies an annual fee in respect of maintaining these areas. It is notoriously difficult to both object to these charges or have these factors removed from office. This is a common source of dissatisfaction amongst the residents of such developments.

The current case arises from a seven-year long dispute between residents of a development in Clackmannanshire and the Greenbelt Group. Greenbelt Group is Britain’s largest land maintenance firm responsible for the communal grounds at more than 550 new-build estates and as such several bodies, such as the Office of Fair Trading, have welcomed this test case in order to bring clarity to this area of the law.

The residents are challenging Greenbelt Group on 3 grounds namely:

  • That the current business practice of Greenbelt Group creates a monopoly scenario in the title deeds prohibited under Section 3 of the Title Conditions of (Scotland) Act 2003;
  • That Greenbelt Group are abusing the dominance of their position contrary to the Competition Act 1998; and,
  • That the title deed conditions themselves are unenforceable due to their manifestly unfair nature as stipulated within the Unfair Terms in Consumer Contracts Regulations 1999.

Should the residents be successful in their court action, there is likely to be a large increase in the number of people across the country that refuse to pay similar factoring fees. Blackadders LLP will be providing a further report and analysis once the outcome of the case has been determined.

Alastair Johnston
Solicitor – Dispute Resolution

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