Section 20B, The 18-Month Rule and the Protective Notice
s.20B LTA 1985: a service charge is not payable unless the tenant is notified of the costs within 18 months of their being incurred. If the costs will not be demanded within 18 months, the landlord must serve a protective notice on each qualifying tenant within 18 months, stating that costs have been incurred and will be included in a future service charge demand. When costs are 'incurred': generally when the liability arises, when a valid invoice is raised by the contractor (not when paid). For staged major works projects, each invoice creates a separate 18-month clock. Protective notice requirements: in writing; must inform the tenant that costs have been incurred; must state they will be included in a future demand; no prescribed form; no precise amount required; must refer to costs already incurred (not anticipated future costs); must be served on each qualifying tenant individually with proof of service. Best practice: diary the 18-month notice deadline for every major cost item; issue protective notices for any cost not demanded within 12 months of incurrence (6-month buffer before the statutory deadline). No FTT discretion: the First-tier Tribunal has no power to waive the 18-month limit; breach = cost irrecoverable as a matter of statute regardless of reasonableness.
Common Traps and Interaction with s.20C
Most common 18-month rule traps: (i) delayed certified accounts, costs incurred in Year 1 but accounts not certified and demanded until Year 3; by then, many costs are irrecoverable; (ii) managing agent changes, incoming agent unaware of historic invoice dates and 18-month exposure; (iii) long major works projects; early-phase costs (surveys, scaffolding, groundworks) more than 18 months old before the project is complete and the final account issued; serve protective notices in tranches throughout the project; (iv) retrospective recovery, historic service charge costs cannot be recovered on a flat sale or lease renewal if more than 18 months have elapsed. s.20C LTA 1985 interaction: a tenant who successfully challenges under s.20B can apply for a s.20C order preventing the landlord from recovering its Tribunal legal costs as a service charge, a double penalty for the landlord. Defence options: prove the cost was demanded within 18 months (obtain original contractor invoices and date records); prove a protective notice was served in time (proof of service); argue the liability crystallised later than the invoice date (e.g. settled or adjudicated dispute). Scotland: s.20B LTA 1985 does not apply; service charges governed by Tenements (Scotland) Act 2004 and the relevant Deed of Conditions.