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

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.
 
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.
 
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.
 
Towger said:
Rates are not due for the period the premises is not in let.
Click to expand...

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.
 
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.
 
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.
 
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.
 
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.
 
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
Click to expand...

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.
 
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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