Managing Agents Getting Stroppy Over Arrears

We are Leaseholders of a purpose built block of 36 studio flats in West London.
Over the last 10 years or so the managing agents (owned by the two Freehold ers!!) have delayed or even not bothered sending out Service Charge Account s (as required by the Lease) or even demands for Ground Rent. On two occasi ons we know that this was because they didn't want us to find out how much the Sky TV system cost (a luxury not provided for in the Lease); and also t he cost of installing and maintaining the CCTV system (which doesn't work).
The upshot is that about 24 flats are in arrears to a total of about £60,000.
Effectively the company is bankrupt, and we think that it must have an enormous overdraft with its bank to carry on trading. It is our impression that the bank is putting pressure on the company to lessen its debtors.
Whilst are we in the process of applying for 'Right to Manage,' the company has suddenly issued us all with demands for the arrears to be paid within days.
And many Leaseholders are elderly or they are young single mothers etc., and none of us have that kind of money available at the drop of a hat.
However the company is refusing to negotiate payments.
Some of the demands are for monies already paid to the company - such is the chaos of its accounting. It refuses to acknowledge payments when they are made. I and others have made payments last year and earlier this year but the company has refused to confirm receipt.
Personally I want to pay by Internet Banking, and on the advice of consumer financial advice organisations I have made a test payment for £1 to see if I have the right banking details. However the company has failed to confirm receipt - so I really don't know what to do. I really want to set up a standing order for an agreed monthly payment plan. But the company refuses to correspond.
Other Leaseholders are paying or have paid by post-dated cheques - and yet these have all been returned as unacceptable.
So the company is making it next to impossible to pay the arrears, and yet is demanding total payment in respective lump sums which we cannot afford.
So what is its likely course of action? Can the company cause the Leaseholder(s) to forfeit their properties? Or can they take them to County Court to obtain a Judgement against us?
Some of the more elderly Leaseholders are very worried about being evicted from their properties; and one elderly gentleman is getting suicidal.
Many thanks -
C.J.Brady Leaseholder
Reply to
CJB
I can't help with your question but suggest you post it also to uk.legal.moderated. There are some people there with relevant experience - and one barrister who sometimes replies is exceedingly expert in the area
Reply to
Robin
Head straight to , where there is a lot of
information on the leasehold law and government funded free advice to leaseholders and their freeholders.
Is the company acting on a for profit basis, or it is it a residents management company but with only some residents on it? If it is not for
profit, the implications of actually refusing to pay may be complicated,
leaving you without any real management at all.
At one time, it was mandatory to pay the ground rent whether demanded or
not, but now the law requires a formal demand for it.
Whilst Sky normally subsidise most of the cost, so you would normally only be paying for electrical safety work, such work, and on normal private sector leases, any improvement work, cannot be funded from the service charge. (In practice there are borderline cases, where it is better to turn a blind eye. The only time that Sky might be legitimate is if you had a terrestrial TV distribution system, but you no longer have coverage after digital switchover.)
It is possible to force lease variations where the lease is considered defective, and security measures are listed as one of the possible cases, so they could try doing that retrospectively, if the case went to
a tribunal.
There are time limits on how long after expenditure is made before it must be notified or recovered. They are fairly short (two years comes to mind). If the demand was delayed and you were not notified of it in time, it may be irrecoverable through the service charge.
Any single contract that comes to more than £250 a leaseholder can be capped at £250, even if allowed by the lease, unless a proper consultation process has been followed. At one time this was absolute, but now the tribunals will consider the loss to the leaseholders, not the total amount, so if the work needed doing, was allowed by the lease,
and the cost was reasonable for a proper professional job, they will allow it.
Service charge funds are held in trust, separate from the company funds,
although this mainly has an effect if you have a reserve in the fund.
Right to manage is not all it is cracked up to be. The problem will be in finding people prepared to manage, especially if people decide that managing agents are too expensive, and also, it very difficult to take hard action when needed, if you are dealing with your neighbours. You also need to track the law carefully.
The other option you have here is to force the appointment of manager on
the grounds of mismanagement.
You will find this everywhere, and it can actually make right to manage more difficult, as you will be pressured to spend less than you really need to spend to maintain the property and stay legal.
If they take you to the county court, they will redirect to the relevant
tribunal. Your service charge demands must have details of the tribunals (and the £250 limit), otherwise they are void.
The tribunals have a reputation for interpreting leases very strictly. You can find their rulings online.
The lease cannot be forfeited without the permission of the tribunal.
Sounds like possible grounds for asking the tribunal to appoint a manager .
Service charge payment deadlines are normally too short for post dated checks, and many businesses won't take them because of the administrative hassle. I would ignore this part.
If they followed proper process, which seems unlikely here, that is a possibility that you have to consider. There are circumstances where large expenditures become necessary at short notice, and, if you don't have a sinking fund to buffer you, it could be very expensive for you.
A tribunal will need to get involved in any forfeiture proceedings and the county court will almost certainly redirect to the tribunal, anyway.
Tribunals will generally go by the law, and not take such details into account. Although benefits law keeps changing, at one stage, if you were on pension credit, your service charges could be paid for you.
Reply to
David Woolley

There is absolutely no need to have "Sky" as an alternative to normal broadcast TV.
A "free" satellite installation is a perfectly sensible alternative. ( I put the word in quotes because it refers to the ongoing costs of using it, obviously the installing part isn't free)
I really don't see how it is that the OP thinks that the accounts are somehow subsidising a "paid for" satellite service. Normally the agreement to install these things allow individuals to opt out (though obviously if they do so it will cost them more in the future to opt back in). Even if he thinks that the leaseholders have tried something underhand, it seems most unlikely that Sky would have been
RTM does not mean that you actually do the management yourself (though you can if you wish). It means that you are in control of selecting the person who does. There are dozens of companies who will provide this service for you
This takes far too long for the OP's current problems
tim

Reply to
tim.....

It is going to take a similar amount of time whatever they do, because the same sort of tribunal deals with non-payment of service charges as deals with appointment of a manager, or RTM.
My guess is the best tactic here, as well as carefully reading the information on the web site I quoted, to work out what can actually legally be charged, is to pre-empt the county court process by going direct to the the tribunal. Unfortunately, there is a cost in doing that. Those on means tested benefits are exempt from the charge, but using them to bring a test case is a recognized abusive practice, and likely to be rejected by the tribunal.
Unless the freehold company has resources to pay outside the service charge, the result is going to be messy whatever happens, and I suspect only the lawyers will win in the end. Having flats without a functioning freeholder is not a good position to be in.
The last time I saw Sky's rules for these things, the freeholder will have to pay for an electrician to earth bond the system, and they may have to pay if the installation is particularly complex, or Sky don't get enough takers. I can't imagine the cost of the electrician will be that high, but, with a typical private sector lease, it would not be recoverable from the service charge. The CCTV system is more likely to be significant, but I would be surprised if that broke the £250 limit for work without consultations, even though it may not be recoverable for other reasons.
It is almost certainly the up front costs that are the issue here. Whilst you could almost get away with it, if it qualified for Sky for Flats, it would be very definitely illegal to charge an unsubsidised system to the service charge assuming a normal, repairing only, private sector lease. (Generally what is and is not legal here will depend on what is written in the specific lease, and if the OP wants free legal advice on that, he should use the leasehold advisory service, not USENET. They will need a copy of the full lease.)
Incidentally, the running costs wouldn't be free, as there would need to
be a power feed for the multi-switches, as well as the cost of repairing
long term wear and tear, and potentially eventual de-commissioning.
One additional point on consultation. Although the freeholder must consult, they are only required to "have regard" to the comments. There
is no absolute right to override the freeholder (and in some cases, the freeholder may be under legal obligations that they cannot ignore just because of the cost to the service charge).
Under the new case law, the simple case would be if the freeholder failed to consult properly, then chose a contractor other than the cheapest bidder. The difference from the cheapest bid might not be recoverable. I'm not so sure that there is any protection where the work is required by the lease, but the leaseholders don't want to pay for it. I don't believe you can consult your way out of spending outside the terms of the lease; I think that has to be a separate, one off, contract with the leaseholders.
Generally, though, freeholders don't want to have to deal with non-payers, so they should endeavour to avoid expenditure that would force that result.
Reply to
David Woolley

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