Freeholder - Apportionment of costs for maintenance/ repairs

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  • Freeholder - Apportionment of costs for maintenance/ repairs

    Hello, I hope someone can provide me with advice on the following:

    I am the freeholder of a property which comprises of 2 flats, which have both been sold off on long-lease (99 years) and a shop, which is situated on the ground floor and basement, which I currently rent. The structure of the building is such that the part of the building which accommodates the flats is set back behind the shop. This means that the shop is self-contained and has its own flat roof, which is also used by the upper flat as a terrace. The main roof of the building requires emergency repairs and I have made arrangements for this to be done and notified the leaseholders that the cost of these repairs will be split between them equally (50:50). The leaseholders are arguing that the cost should be split three ways to include the shop, but I have argued that this is not correct as the main roof has nothing to do with the shop, which has its own roof. If repairs were to be undertaken on the shop roof, only the flat which shared this roof with the shop would need to contribute to the costs for example. The shop is neither connected to nor benefits from the main roof. Equally, the leaseholders are not liable for any repairs to the shop facade etc. Is my approach correct? I would be grateful for your advice on this matter.

    Many thanks.

  • andydd
    replied
    Originally posted by leaseholder64 View Post
    If the lease does not provide for a sinking fund, you cannot have one at all. (Also, some sinking funds are structured as a fund per lease, so costs still get attributed to a particular lease.)

    Does the lease provide for arbitration. Whilst I've a feeling that such clauses may have been redirected to the FTT, they may contain some information on who pays the cost of arbitration.
    You can have one by agreement between the FH and LHs..many FTTs comments on this and suggest such voluntary arrangements.

    Leave a comment:


  • scot22
    replied
    I agree with Andrew Dod. Unfortunately we cannot rewrite the past. I would want to look at damage limitation for the future. See if you can persuade leaseholders to agree to new, explicit leases which would be in everyone's best interests.
    You will not have spent a fortune.
    Draw a line with what has gone before and look to improve the situation in everyone's interests.
    Good Luck !

    Leave a comment:


  • AndrewDod
    replied
    "Fair and proper proportion" does not mean "whatever you like". No proportion at all is specified (we gather).,

    The lease also talks about that (unspecified) proportion being to do with maintenance of "the structure of the building". So it depends massively on the definition of "the building" in the lease.

    If "the building" is defined as all the parts then there can be no argument about whether they pay for the roof -- they do. But you are still left with the problem of what proportion. If the building is not defined at all, then you are in an even worse hole.

    Whatever way you look at this I cannot see how you can levy any service charges at all that are not wide open to challenge.

    The bottom line is that YOU sold a lease to these guys that is a steaming pile of dung. And YOU face the consequences for doing that because the bad consequences are mainly in your lap. It may be that your only resort is to make the lessees some sort of offer - like

    "your leases I sold to you are defective and they do not permit me to unambiguously collect any service charges at all, or to enable me to fulfill MY obligations to maintain the building - I would like to give you a heap of cash in exchange for you agreeing to sit down and agree a way out of this."

    or

    "I would like to buy your leases and properties back, so that I can correct the leases and re-sell them" - here is an offer.

    I cannot see how the FTT can really correct this -- it is not a case of correcting something a little ambiguous -- it could be a case of rewriting the fundamental parts of the leases from scratch -- which is not something I see within the FTT remit.

    Leave a comment:


  • SpicedOrange
    replied
    Originally posted by leaseholder64 View Post
    If we are only talking about £250 a leaseholder, it isn't going to be worth the cost of arbitration.
    __________

    Agreed. They have agreed to pay...this time. My concern is about the next time and I do not want to wait until then. The lease is quite useless and unhelpful.

    Leave a comment:


  • SpicedOrange
    replied
    Originally posted by leaseholder64 View Post
    If the lease does not provide for a sinking fund, you cannot have one at all. (Also, some sinking funds are structured as a fund per lease, so costs still get attributed to a particular lease.)

    Does the lease provide for arbitration. Whilst I've a feeling that such clauses may have been redirected to the FTT, they may contain some information on who pays the cost of arbitration.
    ___________________

    1. Lease does not provide for a sinking fund.
    2. Lease does not provide for arbitration.

    Leave a comment:


  • leaseholder64
    replied
    If we are only talking about £250 a leaseholder, it isn't going to be worth the cost of arbitration.

    Leave a comment:


  • leaseholder64
    replied
    If the lease does not provide for a sinking fund, you cannot have one at all. (Also, some sinking funds are structured as a fund per lease, so costs still get attributed to a particular lease.)

    Does the lease provide for arbitration. Whilst I've a feeling that such clauses may have been redirected to the FTT, they may contain some information on who pays the cost of arbitration.

    Leave a comment:


  • SpicedOrange
    replied
    Originally posted by leaseholder64 View Post
    I agree, it is is a bad lease if it doesn't say exactly what proportion should be used. However it may not actually be defective enough to get corrected, easily, if not cheaply, if it says something like "appropriate proportion", rather than completely failing to say who will pay.

    Also, it is almost certain that this will require a section 20 consultation. (I can't imagine roof repairs coming to less than £500 in total!). In principle, it was invalid of you to arrange repairs without going through the full section 20 process. However, if this was a real emergency, and the delays which would have been imposed by consultation were completely unreasonable, and especially as the leaseholders are revolting, you should:

    1) Make sure that you have documentation that shows you consulted, and gave an opportunity to them to nominate contractors, to the greatest extent possible within the time constraints;

    2) Make preparations to be able to petition the FTT to retrospectively waive the consultation requirements;

    3) Make preparations to demonstrate that an adequate job really could not have been done for a lower price..

    Otherwise the actual result may be that the leaseholders pay £250 each, and you pay the rest!

    You may want to seek legal advice on whether to pre-emptively start the process of trying to get exemption from the consultation requirements, and if the lease is poorly worded, to get a ruling on who should pay what.
    ____________________________

    Thank you. The repairs are emergency repairs and I have been consulting the leaseholders. The total cost of the repairs is £600, but I have already paid £100, which I decided not to pass on to the leaseholders so that their contribution each is £250. They have eventually agreed to pay the £250 each, but I would like some clarity going forward.

    It may be worth getting a ruling on who should pay what in order to ensure that this is clear for all parties.

    Leave a comment:


  • SpicedOrange
    replied
    Hi, the lease is very vague. It just says that it requires the leaseholders to pay a 'fair and proper proportion of the expense properly incurred by the Landlord in maintaining, repairing, renewing, rebuilding and replacing all fences, gates, main walls, boundary walls, foundations, roofs, exterior and structure of the building.' Everything else is left to interpretation.

    My argument is that the building has two roofs - a main roof which the two leasehold flats share and a shop roof which is shared with one of the leasehold flats shares with the shop. Damage to the main roof would not have an impact on the shop in the way because the main roof has nothing to do with the shop and is set back from it. In addition, there is a communal corridor, which services the leasehold flats and which has nothing to do with the shop, which neither has nor requires access to this corridor. Any costs for repairs or maintenance of the communal hallway, would therefore not be apportioned to the shop, only to the flats.

    As there is no provision in the lease for establishing a building/ maintenance fund any works are paid for as they arise.

    If the shop roof required repairs, it would only be fair to apportion the costs to the shop and the leasehold flat who that benefits from the using the roof as a terrace. In the same way, costs for repairing the main roof should be apportioned only to the leasehold flats because it is their roof and not the shop!

    I have told the leaseholders that if they want to have the shop included in the apportionment of maintenance and repair costs for the whole building, including those aspects of the building to which the shop is not connected (such as the communal corridor), I would be more than happy to consider this provided that the following is agreed to:
    • Any repairs or maintenance costs to the shop exterior, structure and roof would be also be apportioned to the flats equally (i.e. split three ways);
    • A Building Maintenance Fund to cover/contribute towards the costs of on-going maintenance and major one-off repairs (such as the replacement of the roof etc) is established, into which the leaseholders and the shop contribute equally; and
    • The leases for both flats are amended to reflect this arrangement, thereby providing absolute clarity for all parties.
    Interestingly, they have fallen silent!

    Leave a comment:


  • leaseholder64
    replied
    I agree, it is is a bad lease if it doesn't say exactly what proportion should be used. However it may not actually be defective enough to get corrected, easily, if not cheaply, if it says something like "appropriate proportion", rather than completely failing to say who will pay.

    Also, it is almost certain that this will require a section 20 consultation. (I can't imagine roof repairs coming to less than £500 in total!). In principle, it was invalid of you to arrange repairs without going through the full section 20 process. However, if this was a real emergency, and the delays which would have been imposed by consultation were completely unreasonable, and especially as the leaseholders are revolting, you should:

    1) Make sure that you have documentation that shows you consulted, and gave an opportunity to them to nominate contractors, to the greatest extent possible within the time constraints;

    2) Make preparations to be able to petition the FTT to retrospectively waive the consultation requirements;

    3) Make preparations to demonstrate that an adequate job really could not have been done for a lower price..

    Otherwise the actual result may be that the leaseholders pay £250 each, and you pay the rest!

    You may want to seek legal advice on whether to pre-emptively start the process of trying to get exemption from the consultation requirements, and if the lease is poorly worded, to get a ruling on who should pay what.

    Leave a comment:


  • scot22
    replied
    To state the obvious - It depends on what it says in the lease. It should show how repairs are to be paid for.

    Leave a comment:

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