Some will argue that no provision should be included as units cannot be sold without the debt being discharged, however the issue of, if and when these sales take place must be considered. If you are a director of a management company you should ensure that the company has a clear policy on providing for long term debtors. To ensure that all members are aware of the policy in place it should be discussed at the AGM as well as included in the financial statements of the company. Where a clear policy is put in place by the directors it should mitigate the concern that some members would see it as an invitation not to pay their own fees.

By taking a proactive approach to the recovery of service charge debtors, including providing against long term debtors the directors are ensuring the financial stability of the company. In the short to medium term where the recovery of debtors is an issue these uncollected service charge debtors may lead to a shortage of cash for the company. The nature of owner management companies is such that any shortfall will have to be met by other members of the company or by a reduction in future expenditure within the development or a withdrawal of services.