Freeholder breach of trust.

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    Freeholder breach of trust.

    Hi I own a lock up shop in a mixed use building all sold off on long leases. 6 flats and two shops. My lease is 999yrs. I have under let my unit on a 20 yer lease since 2001, it’s now has its third assignment. Its been brought to my attention that the management co/freeholder has been overcharging on the insurance contribution %. For the term of the underlease. Would they be liable to reimburse all tenants who had the lease and if the tenant could not be traced would I be entitled to the overpayments at the legal tenant? For this as I understand it, Breach of trust.
    Thanks

    #2
    I am confused as to what you are exactly alleging here. In particular, without the exact wording in the the lease that you believe to have been breached, it is not clear that anything wrong has been done.

    Also, the general approach to pursuing such issues legally is through the First Tier (Property) Tribunal. There are specific options for dealing with leasehold insurance.

    Comment


      #3
      Hi Leaseholder 64
      thanks for having a look at this. My lease clearly states the our contribution towards the building insurance is 34% of the premium.The freeholder has been charging my tenants 40% of the premium for 17 years. would i be able to claim back all the over-payments even if i cant locate some previous tenants?





      The lease wording......

      clause 4 (1) Landlords Obligations

      Subject to the tenant making payment in accordance with the provisions of clause 4 (2) of this lease the landlord will insure the building and all landlords fixtures and fittings of an insurable nature, (subject to availability of cover and to such the insurers may require) in such reputable insurance office or with such underwriters and through such agency as the landlord may from time to time decide in such amount as the landlord shall reasonably determine. (including architect's and surveyor's and other professional fees and incidental or consequential expenses)against loss or damage by fire, (and such other risks as a prudent commercial landlord would normally insure)and any other perils as the landlord may properly require, including terrorism and subsidence cover and will cause the tenant and/or its mortgagees interests to be endorsed on the policy.

      clause 4 (2)
      The tenant will pay on demand:- (a) a 34.00% proportion of the cost of the cost of effecting insurance in accordance with clause 4 (1) of this lease. (provided that no deductions shall be made by the tenant in respect of any agency or other commission or discount whether be paid or allowed to the landlord, or otherwise and the full amount of each sum or premium shall be treated as expended by the landlord for the said insurance and the landlord shall be entitled to retain for the landlords own benefit any such agency or other commission or discount so paid or allowed) and the cost of insurance valuations and settling insurance claims in respect of the building.


      (b) any increase in the cost of effecting insurance either in accordance with clause 4 (1) of this lease, or in respect of any nearby premises as a result (directly or indirectly) of the use or occupation of the property.

      Thanks
      Desamax


      Comment


        #4
        Your tenants are completely irrelevant. They should not have been paying the insurance in the first place.

        The tenant in your quote is your landlord's tenant, in other words, you.

        Comment


          #5
          Thanks again,
          I take it that I would be able to raise a dispute as outlined in my lease. If the freeholder refuses to refund. Then claim back the apparent overpayments and reimburse my current Tennant and other tenants if I can locate them. And insist that all demands in future are sent through me.

          I really apriceate your input.
          Thanks again

          Comment


            #6
            As above..surely it's you who is liable for insurance. .the contract is between the FH and you...why do you think your tenants are liable to pay the insurance ?

            But beyond that yes if you have been overpaying you could get a refund BUT I don't see how this would work of tenants have been paying. .you can't start a claim on their behalf.
            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


              #7
              It seems the 999 years lease between the freeholder and yourself requires you (as tenant ) to pay 34% of the annual cost of insurance for the building.

              Under your 20 years rental agreement between yourself and shop tenant , you require your tenant to pay the shop rent plus your liability for insuring the building. You have discovered the freeholder has been charging your shop tenant 40% contribution and not 34% figure in your lease.

              Is it possible for the extra 6% represents a management fee for collecting the insurance contributions from 8 leaseholders and pay the collected money to the insurance broker ? .

              Comment


                #8
                The freeholder also charge a management 10% maintenance external 34% fee on top or the insurance.
                On the requested breakdown that the freeholder was reluctant to provide it clearly states “ insurance 40%” all other leaseholders have similar bills, and the total management fee pa is 5k. The residents are not happy with the fee or service provided. Luckily we do not contribute to the communal upper internal parts maintenance.

                Comment


                  #9
                  Originally posted by andydd View Post
                  As above..surely it's you who is liable for insurance. .the contract is between the FH and you...why do you think your tenants are liable to pay the insurance ?

                  But beyond that yes if you have been overpaying you could get a refund BUT I don't see how this would work of tenants have been paying. .you can't start a claim on their behalf.
                  the freeholder has always invoiced my tenant for insurance and service charge etc. As soon as the overcharging came to light the freeholder insisted on dealing with me direct his “legal tenant”
                  thanks

                  Comment


                    #10
                    I think you have the right to ask for refund of any overpaid insurance money . But if freeholder is not willing to refund , you may have to make a claim in the small claims court. .

                    Comment


                      #11
                      Originally posted by Gordon999 View Post
                      I think you have the right to ask for refund of any overpaid insurance money . But if freeholder is not willing to refund , you may have to make a claim in the small claims court. .
                      We have a dispute resolution Arbitration clause in our lease, that either party can instigate. Would this be the best way to go about this?
                      thanks

                      Comment


                        #12
                        In arbitration , the freeholder may argue that you never paid the money and you have no right to claim and you may lose.

                        If you make a specific claim in the small claims court, you can show a copy of the lease with 34% .as your correct contribution and show the demand asking 40% payment , its clear that you have been overcharged.

                        You may need to consult a solicitor as to which is the better way to proceed . .

                        Comment


                          #13
                          Originally posted by desamax View Post

                          the freeholder has always invoiced my tenant for insurance and service charge etc. As soon as the overcharging came to light the freeholder insisted on dealing with me direct his “legal tenant”
                          thanks
                          That is odd..normally the contractual relationship would be between the Fh and you (as LH), and there also may be relationship between you (As a Landlord) and your tenant....NOT between FH and Tenant..this is a major problem..and this would need sorting before anything else..unless there is something missing..the tenant has no legal obligation to pay the FH..do you have documentation that says otherwise. (He may need to pay you and you then pay this money to FH but thats different)

                          As I said earlietr YOU cant take action on behalf of the tenants..they are different legal entities.
                          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


                            #14
                            Hi again the Freeholder has succumbed to the lower insurance of 34% of the premium. However they have upped the management fee charges up from 10% to 34%. My lease states that I don’t contribute to any communal parts maintenance or repairs etc, I only contribute to external repairs 34%, insurance now 34%& management fees that was 10%.
                            My lease also states

                            “ if any dispute arises as to the tenants liability for service charge in respect of all or any of the landlords services being inequitable. (having regard to user the expenditure incurred or the premises in the building benefited or any other cause) the liability shall be adjusted to a fair and reasonable amount or proportion in accordance with clause 6(9). Here of and this procedure shall be repeats often as circumstances require”.
                            (6) 9 is the arbitration clause.

                            as I don’t contribute to the main Management of the building. Does anyone think the freeholder can just up the Management % because they have lost the overcharged insurance %.and are now charging 34% through the card.

                            But I would argue that most of the Management is for the upper parts ie cleaning, Fire safety lighting etc. So my contribution shold not be anywhere near the new 34% charge.
                            I will be asking for backdated payment of the overcharging.
                            Any enlightened comments would be appreciated
                            Thanks

                            Comment

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