disputes over correct allocation of funds

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    disputes over correct allocation of funds


    We live in a shared freehold. 5 flats, 2 resident trustees of which I am one.

    Currently there is only £3,500 in the account and we are planning that and future summer income to do essential maintenance works on the roof and slowly build a sink fund (it has taken years to slowly gain increased contributions from owners to enable this - 10 years ago we were only paying £40 pcm, now we pay £100 pcm which has allowed for better maintenance of the property which is a large Victorian house.)

    Unfortunately, we have one non-resident flat owner who has been trying to sell his Flat for a while and thinks it would sell if we upgraded the hallway. The carpet is not worn, the hall is clean and in good condition. We polled owners and everyone but they would prefer to wait given the lack of sink fund, and the more important (non-cosmetic) spending needs.

    This owner is becoming very bullying and aggressive in the face of opposition, says he doesn’t want to pay for a sink fund, has accused us of mismanagement as states he will take legal action against the trustees. Some others have washed their hands of the situation after his multiple ranting emails.

    As trustees we have final say and a responsibility to ensure the property is managed appropriately and for the benefit of all. I believe that we are right to put roof repairs and other structural and building needs ahead of of cosmetic needs given the size of the existing fund, and that the suggestion IS purely cosmetic - the carpet does not need replacing, he just doesn’t like it. I believe it is also standard and prudent to put a sink fund in place.

    I am tempted to simply reply saying that he should seek legal advice. I can’t imagine a judge saying we have not exercised our duty appropriately and well here, but concerned that legal action will involve costs (legal costs are covered by the house insurance but will increase the premium next year and so cost everyone in the long run I suspect)

    I seem unable to resolve the situation calmly - With every email trying to explain why we have said ‘not now, but we will revisit in Autumn when we know the state of the account’ he comes back with multiple personal arguments and threatens legal action.

    It’s very stressful for everyone, but particularly for us two trustees - some of his emails verge on libel.

    Most leases don't allow for upgrading at all. If you literally mean upgrade, the seller will need to be prepared to pay the whole cost, and even then you might not want to do so if it increases future costs.

    If you are really talking about repairs and renewals, you would need to check the lease as to when they need to be done.

    If work is essential, or required by the lease, the state of the sinking fund shouldn't matter. If it is too low, people will have to pay a lump sum.


      Thank you, that’s what we thought. There is no right to upgrade in the lease and it his objection to the hallway is purely cosmetics, not necessary repairs.


        Is this in the right section. I think that HMOs have to have communal areas in good decorative order, but this sounds like a long lease issue, not an HMO one.

        Returning the decorative state to the original state is a repair, not an improvement, so it would e question as to exactly what the lease says about that. If it is bad enough to make the property difficult to sell, the work needs doing. Except in true luxury situations buyers tend not to be interested in the decorative state of communal areas, at least not BtL ones, who will be the only buyers for older flats, and the a significant proportion of those for new build.


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