Section 20 – question: Can you get money before any estimates?

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    Section 20 – question: Can you get money before any estimates?

    Section 20 – question


    Good morning – I have some question regarding the section 20 process. I feel that my managing agent is acting unlawfully:

    Last year, all leaseholders received a £3,000 invoice from our management for “Major work” with absolutely no detail whatsoever, A number of leaseholders asked for an explanation and the managing agents / directors arranged a meeting.
    They explained during the meeting that the flat was in need of works, refurbishment etc. etc. Nobody had any issues with that as long as we know transparently what the money was going to be used for.
    I was expecting minutes from the meeting but did not receive them – instead the managing agent sent me a solicitor letter (£144 fine) and started to threaten me of legal action if I did not pay the £3,000. Feeling under pressures, I paid under protest and tried unsuccessfully to challenge the £144 fine. But they don’t want to hear anything and are extremely bullish.

    I’ve been telling them that in my view they are not respecting the section 20 process but they keep telling me that first they need to get the money, then they can start the section 20 process.

    We still haven’t received the Notice of Intention to Carry Out Works.

    What are your views on this?

    #2
    Firstly check your lease to see if there is a covenant allowing them to demand money in advance for works.

    Based on your comments, I assume the £3,000 is your contribution (the appropriate proportion of total estimated costs) defined by your lease. Given the sum I think the MA should have started the section 20 consultation and only demanded money at the award stage. Even then they can only ask you to pay for works in advance if your lease allows this.

    Above said, the dilemma for the MA is the code of practice they must follow requires them to collect all money for works before appointing contractors. This should not, however, prevent them from completing a section 20 consultation.

    Perhaps you should contact the freeholder to assess the position; and contact LEASE for advice re your best course.


    Comment


      #3
      You should check your lease to see whether or not you are obliged to pay monies in advance. Similarly, your lease will state whether or not you are obliged to pay an administration charge (fine).

      The MA would not normally deal with works required to a flat or refurbishments. He would only deal with the freeholder’s obligations set out in the lease.

      A s20 notice can be issued at any time, the MA is clearly trying to ensure that monies are held first in order to avoid serving several notices but whether or not he is allowed to collect monies in advance depends on the lease.

      Comment


        #4
        Firstly, what do the leases say regarding collection of service charges?
        If the leases allow for estimated expenditure to be collected in advance it is likely that the freeholder, or their managing agent, can ask for the money to be paid in advance. Section 20 consultation is intended to allow leaseholders to have a chance to have a say in how the money for major works is spent, I don't believe that it prevents estimated costs from being collected in advance.

        However, I would also suggest that the managing agents/directors have nothing to gain from not letting leaseholders know what the work they intend to propose is.
        They don't necessarily have to formally commence consultation (and may not wish to do so until they know they have enough funds available to proceed with the work), but they can at least provide a general overview. The majority of leaseholders might actually agree that the work needs doing and then be prepared to provide the requested payments.

        Was the £3000 demanded in accordance with the terms of the lease and applicable service charge legislation (e.g. was the correct "summary of rights" included with it?).
        Does the lease allow solicitors fees to be charged if payments are not made when demanded? Did the invoice for the £144 come with details of the relevant rights for administration charges?

        Comment


          #5
          Thanks for the replies - I have an under-lease only (What's the difference with a lease?) and no real mention of this.

          Comment


            #6
            An underlease is a lease. It is a lease where the superior title is also under a lease.

            Comment


              #7
              Originally posted by Chook View Post
              Thanks for the replies - I have an under-lease only (What's the difference with a lease?) and no real mention of this.
              There's probably a 'head lease' involved which sits between/alongside the landlord and your lease.

              Comment

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