Mismanagement of accounts and funds by freeholder

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    Mismanagement of accounts and funds by freeholder

    I have a friend who owns a flat in a block and the freeholder is demanding a relatively large service charge contributions without providing any quotes, evidence, budgets annual account etc. My friend has no objection to paying what is due but she knows the freeholder who owns a couple of the flats as well has been dipping into any previous SC collected and not paying their own share. She just doesn't want to pay any funds knowing that it could be going to fund the freeholders lifestyle but she is aware the FH may try to collect direct from her mortgage provider.

    What options would be open to her?

    #2
    Pay up and then ask for a determination from the First Tier Tribunal.

    Comment


      #3
      This is a common problem (theft by freeholders who are also lessees/majority owners of a freeholder company).

      Step 1: Demand full summary of accounts and detailed invoices. Do this repeatedly over w few weeks by recorded delivery post and with certificates of postage as well without recording.

      Step 2: Pay service charges in full and put in an application to FTT

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        #4
        Or if the full amount is really exorbitant pay what you believe is a reasonable amount.
        Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

        I do not accept any liability to you in relation to the advice given.

        It is always recommended you seek further advice from a solicitor or legal expert.

        Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

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          #5
          You may find the rules on administering the service charge account in the RICS Code :

          https://www.fpra.org.uk/wp-content/u...ition_2016.pdf

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            #6
            thanks for the replies guys.

            As the freeholder has been f leasing any funds previously received does a FTT have the power to force him to present accounts and statements. If so what powers do they have to penalize or enforce any ruling.

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              #7
              FTT ruling can be enforced as per the court system...i.e you can apply for CCJs, bailiffs, etc. As for forcing him to present accounts, etc..this often pops up where a FH wont say how much insurance commission he gets so the FTT will say ok we will assume its a lot.

              There is interesting case/appeal here where its discussed if FTT has penal powers..i.,e to order extra sums or even imprisonment - http://landschamber.decisions.tribun...w.aspx?id=1393

              Generally though you will find FHs can get away with murder.
              Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

              I do not accept any liability to you in relation to the advice given.

              It is always recommended you seek further advice from a solicitor or legal expert.

              Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

              Comment


                #8
                The FTT is a civil tribunal. Fleecing sounds like a synonym for fraud to me, which is a criminal offence. Also failing to provide the accounts, when properly requested, and within the required time limits, is a criminal offence (in theory prosecutable by the council, in practice never prosecuted).

                As part of the initial fact finding, the FTT will insist on being provided with the relevant accounts, but only the upper tribunal can take contempt of court action if they are not provided. Nonetheless, not providing them is likely to result in a finding against the freeholder in any area of doubt. and may result in costs being awarded against them or their being refused permission to charge their costs to the service charge.

                The FTT will say what the correct service charge would be. I believe you may have to go to the county court if the freeholder fails to refund any part they should not have charged. The FTT will have established the value of the debt, but, I believe, can't enforce it.

                Comment


                  #9
                  Mine just credited the difference to the following year.

                  Comment


                    #10
                    The funds in trust protection is worded in just such a way that makes it useless, LH are protected from one bldg funding another, but a LH funding the FH, no problem, if the FH collects a sinking fund it can go on indefinitely without the bldg running out of money.

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