Is applying to FTT to appoint manager my best option?

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  • Is applying to FTT to appoint manager my best option?

    Hi
    Property: Four storey split into four self-contained flats. Three of us are freeholders (and leaseholders), one of whom resists all efforts to maintain the building due to lack of funds. The fourth leaseholder (non-freeholder) also continually resists payment and usually waits until the last legal threat before paying. There is no management deed, RTM or contract detailing how the freeholders should work together.

    In the last 10 years I have been the only person to put in the effort to maintain the building which is now reduced to an ‘essential works only’ schedule due to the amount of time I have previously had to put in with no assistance from the others. There is now some substantial work required due to council mandates and freeholders are at risk of prosecution if the work is not done soon. The lease is not that helpful as it requires the estimated yearly amounts to be requested annually on 1st April and nothing was requested this year; I fully admit I have been at fault for dropping the ball on this being the only fairly responsible freeholder.

    From past experience I know that I will have to fund most of these works myself (possibly shared with the one other cooperative freeholder) and then seek legal action to recover the funds from the others. I have done this before and received a repayment plan that paid me back over 18 months, and saw numerous missed payments and required many reminders and further threats.

    My appetite for doing this again is low and I suspect that I may have to go down the forfeiture of lease route to ultimately recover my funds.

    So, I am now at the stage of considering applying as leaseholder to the FTT to appoint a manager to take over the management and follow through with these works and collecting the funds, legal action etc.. I’m not familiar with this and so can’t say for sure if this is my best option; from what I understand it will ultimately incur their management costs and there is a risk that the maintenance works will be more expensive as we lose control of contractors. From my perspective it seems a good option because it means that everybody will be required to pay for the managers time instead of me doing it all for nothing.

    Can anyone pass comment please on the pros/cons of going down this route?

    Many thanks

  • #2
    I think this is RaM's area of expertise, so I'll leave him to consider the process of appointing a manager.

    Reading between the lines, I think the freehold is held by tenants in common, rather than a company. With a company, directors can only be personally convicted if they contribute to the illegal action, so for a company, I would say that you should make sure good minutes are taken.

    Section 20 means you still have significant control over the contractors, so as long as your current contractors are capable of working to proper B2B standard, you should be able to get at least one included as a bidder. The danger is that you may have been using contractors that don't have adequate insurance or don't have proper health and safety provisions. You would have been at legal risk by doing this, but a professional manager will simply reject any nominations that the do not think capable of doing a proper, and legal, job.

    There is likely to be a health and safety and project management cost, at around 15%. To comply with the law, you probably needed to use a professional consultant for at least the health and safety aspects, before.

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    • #3
      Thanks for reply, yes we are tenants in common. So if the usual S20 process has to be followed then to me it seems a no-brainer to employ a manager. I am hoping that just the threat of appointing a manager will spur them into cooperating. Reading some of the other threads it seems as if the key downside for me will be to pay management charges that I currently don't have to do which is something I already pay on other properties so almost expected.

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      • #4
        Parchester,

        You are already paying them in sorts... Your (precious) spare time being eaten up and all the stress!

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        • #5
          Exactly Sam. One of the issues I've had before when I looked into this was trying to find an agency willing to take on just 4 flats, as the associated time vs payment is not really big enough to merit the work. Luckily I've just found a local agency who is willing to take it on..............as I write this I can feel a huge weight being lifted....unless someone here brings me crashing down to earth with horror stories?

          Comment


          • #6
            Having read your posts, AND the council are on your back, the only option is to go to the F.T.T to appoint a Manager.
            If you wish to take legal action for none payment of service charges, get the money in pronto for the urgent works, all freeholders should agree, but as most don't want to pay in advance, and probably wont pay in advance, and to stop the council prosecuting you, you have no alternative but to go to the F.T.T. to appoint a manager.

            To appoint an agent needs all the freeholders signed authorisation, But an agent can only sue for none payment of service charges with the approval of the freeholder ( 3 signatures again ) and I don't think you will get those if one of them is a joint freeholder who is not paying.

            You will not get far with an agent, especially if they need the freeholders authorisation on legal matters.

            An F.T.T. manager does not have to liaise with the freeholders to set service charges, or to sue any one, but you and the agent will have problems trying to do it .

            An F.T.T. Manager's costs could be for 4 flats £ 1500 per year to £3000 if there is a lot to do.
            I strenuously suggest you quickly apply to the F.T.T, AND write to the council that due to the animosity of the other leaseholders, your only option is to apply for a Manager, and state when you will be applying, ( 3 days time for example) then send them a copy of the application , stating that it is nearly impossible to get money out of some of the leaseholders, and the only way to be able to comply will be under A First Tier Tribunal ( Property ) manager to enable the funds to be collected to meet the obligations of the lease and the council. They like that, as they just have to wait, rather than have to spend time and money they have not got, in taking you to court ( as happens in my district )

            Also state that you are the only person who is bothered about all this, and trust they will accept your explanation and guarantee to follow through with your promises on behalf of the freeholders.


            Another option is -- sorry, no, threatening with a manger wont work, and is delaying convincing the council to wait till a manager is appointed.

            Comment


            • #7
              Thanks for the in-depth info ram. From what I've read elsewhere the FTT will want me to propose a manager (i.e. they won't provide one) and I spoke to one yesterday who will charge £200+vat per flat, plus additional sums for S20 notices and any other action necessary. I'm assuming any costs related to chasing unpaid maintenance will be assigned to the leaseholder direct rather than the whole block, but I'll need to check this. The lease states that the leaseholder shall pay all landlords legal costs so I think that should cover it.
              Thanks again.

              Comment


              • #8
                You propose a likely candidate to be the Manager.
                Your likely candidate then prepares a detailed -- I call it an essay - as to how he will run the place,( thats a whole page in it's self ) and that he abides by the R.I.C.S. code of practice, has or does run property, and for so many years.
                Your candidate will, if you are prudent, have knowledge of what needs to be done to get the place back on track - getting in overdue service charges, getting a surveyor to note repairs needed....... in fact everything to persuade the F.T.T. he is the right man for the job.

                Other leaseholders can nominate a different candidate, sending in similar qualifying criteria.

                The problem I see is getting the freeholders to agree to get an agent in, if you don't go to the F.T.T. and other leaseholders just being apathetic once more.

                A good lease will say, Lessee ( leasholder )

                To pay all costs charges and expenses ( including solicitors costs and surveyors fees ) incurred by the lessor for the purpose of or incidental to the preparation and service of a notice under section 146 and 147 ... etc.

                This means you can write to the leaseholders ( those entitled to write ) stating that they have X number of days to pay the ( for example ) service charges, and if not forthcoming, you will prepare your case for litigation under Section 146, and any further costs incurred from the date of this leter will be at the leaseholders cost, which could run into many thousands of pounds if they do not comply ith your letter.

                Note: - You cannot issue a formal notice stating you ARE issuing an S146 notice and is included attached to your letter until the F.T.T. prove the leaseholder has breached the lease, irrespective of whether they admit the breach or not.

                Once F.T.T. rule the breach ocured, you then take that ruling to court where you apply the S146 and the court already has their findings from the F.T.T. and it's a simple matter to forfeit the flat, but more likely an order to pay the costs incurred + the service charges or what ever.

                Read up on it if you go the F.T.T. route.


                Comment


                • #9
                  Thanks ram. The actual lease does not have the 'incidental to the preparation of' statement but it does say 'incurred in connection with' and the other parts. Can the manager appointed by FTT issue the S146 on freeholders behalf?

                  Comment


                  • #10
                    Originally posted by Parchester View Post
                    lease does not have "incidental to the preparation of"--- statement says "incurred in connection with" and the other parts. Can the manager appointed by FTT issue the S146 on freeholders behalf?
                    "incidental to the preparation of" would, if someone had the money to challenge Pre solicitors costs for all communications prior the an actual final issue of an S146 by a solicitor, as meaning only the actual S146 issue, and not everything before hand, such as solicitors letters about going to the F.T.T.
                    However, never having to defend your lease term, it could be taken two ways by a judge.

                    I have been to the F.T.T. as other members have, and doing the F.T.T. paperwork yourself is time consuming, but costs no more than £ 100,( But check ) and my last one cost nothing as a paper determination. ( no appearances )

                    You ask, "Can the manager appointed by FTT issue the S146 on freeholders behalf"

                    The Manager takes control and overrides the freeholder / landlord / Managing agent / R.T.M. / R.M.C. and only he can and will issue an S146 .
                    Those that used to mange the property no longer can.
                    He can also go back and start proceedings to curtail previous breaches of the lease.
                    The appointed Manage is king.

                    Although sometimes you get a local managing agent in an estate office that prove to be no better than what you originally had, if you have to choose someone with Leasehold experience, they normally come from an estate agents who also manage leasehold, but hope that wont happen to you.

                    The appointed manager, if you get one, by your efforts, and once you give him the lowdown ( he won't know anything about the place and problems unless you tell him,) he acts on his own and does not take any orders from anyone connected with the building, and does not have to listen to them or entertain them, although initially, you will have to give "The dirty" on everyone and everything so he can rectify everything.

                    Remember, you will be seen as the bad boy, you will be ostracised, no one will want to speak to you once the place is under a Government appointed manager( to stop all the freeholders from being fined by the council ) and getting the place in order. All that wont matter to them.

                    But you have no option, but the place will be better run.

                    Comment


                    • #11
                      Sorry for delay in replying I didn't get a notification for this response ram - thanks again, useful info. I'm just writing an informal letter to all involved stating my intentions to give them one last chance. It won't matter to me that I am ostracised, we're barely on speaking terms as it is :-)

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                      • #12
                        below is form you fill in to send to "The management".

                        https://www.lease-advice.org/files/2...naryNotice.pdf

                        and more info links at : --
                        https://www.lease-advice.org/faq/wha...of-a-manager/#

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