How to Know if Charges are Advance or Arrears

The lease will provide you with all the information you need to know, however, you may need to pay attention to the language of the lease carefully. More often than not the lease will clearly state that the service charge is payable in advance by the tenant. If you can’t see the word advance mentioned clearly then look for the following.

• Payment Dates – when are the payment dates in relation to the financial year. Do they provide a clue as to the intention of the nature of the service charge.
• Accounting principles – Does the lease talk about overspends, underspends and how to behave in each situation. If this is mentioned then it is likely an advance charge.
• Interim Service Charge – If there is a mention of an interim service charge then you are likely dealing with an advance charge.

Service charges in arrears will have very different language in their leases. The wording will centre around the tenant repaying the landlord for costs