Reasonable Costs associated with RTM Claim

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    Reasonable Costs associated with RTM Claim

    I'm part of a RTM company which has recently been granted RTM over a small residential block. The Freeholder disputed the RTM claim on frivolous grounds and the decision was subject to the FTT who ruled in our favour. We have now received notice of the Freeholders "Reasonable Costs" which consist of solicitors fees of ~£1,300 and Management Fees of £400 + VAT. The costs seem excessive, and the solicitors fees include time allocated to preparing a counter notice to our RTM claim. Are these costs "reasonable"? I would be grateful if anyone can advise whether there is merit applying to the FTT to have these costs reviewed. Many thanks.

    #2
    When we moved for RTM we were told that £1500 was about right for reasonable legals and that they'd challenge anything above £2000 at Tribunal. When we got the fees of £5k we told them that that was ridiculous and rejected and that they'd need to apply to Tribunal for a determination, which they have not yet done.

    Anyway, point is, that'd be under the threshold for me but I've 24 other flats to share it with. If you've only got a few people to share it with that may be a sharper share.

    Comment


      #3
      I doubt that a solicitors fees will be much different for a small block than they would be for a large block.

      I also think that some costs involved with resisting a RTM application would be considered reasonable.

      Others may disagree, but I don't personally think that you'll get very far if you try to challenge costs of the amount you state.

      Comment


        #4
        It is interesting though. It doesn't seem reasonable for a landlord to charge residents for legal advice involved in resisting an RTM claim through a counterclaim notice. Know what I mean?

        Comment


          #5
          Not necessarily...
          There are very few legitimate grounds on which a RTM claim can be denied. Leaseholders who want to take over the management of their block should ensure that none of these apply before making the application.

          If there are no grounds on which a claim can be refused, the freeholders solicitors fees will only reasonably cover checking the claim (a counter claim is not reasonable if their are no valid grounds for it).


          On the other hand, if there are grounds which give the freeholder valid reasons to deny the RTM, it is reasonable for the freeholders cost of the counterclaim, refusing the request, to be covered by those who are applying.

          Comment


            #6
            The FTT have powers to declare those costs are not payable.

            If the FTT has declared your grounds for establishing RTM is legally justified and is not a frivolous exercise , then it should be willing to confirm the freeholder's attempt to block your RTM is a "frivolous action because it acts against the intention of the law " and the freeholder's legal costs should not be charged to the RTM.

            If the freeholder is a company, you can suggest the company will have professional liability insurance which will cover their legal expenses.

            ( I have not seen any definition to confirm setting up RTM is a frivolous action but I may be wrong.)

            Comment


              #7
              Originally posted by Gordon999 View Post
              ( I have not seen any definition to confirm setting up RTM is a frivolous action but I may be wrong.)
              I don't think that the desire to set up a RTM can be considered frivolous, but it is reasonable to expect the residents to ensure that an application is valid before submitting it.

              Once a claim has been submitted, I would say that it is reasonable for a freeholder to pay a solicitor to check the validity (and pass these costs onto the applicant), but it is only reasonable for them to dispute the RTM is there are valid grounds to do so.

              The fact that RTM was awarded by a tribunal might not always mean that the freeholder didn't have reasonable grounds to dispute, it just means that despite the challenge the tribunal found in favour of the RTM.

              Comment


                #8
                Macromia,

                Ha yes, that's my prejudices showing there - I was working from the assumption that the freeholder was going to manufacture frivolous reasons for blocking the RTM, as that's been my own personal experience, but I suppose it isn't universal. Our counterclaim was frivolous (the FTT called it 'nonsense') but that didn't stop the freeholder from trying to charge us £5k. We're off to the Upper Tribunal now.

                Comment


                  #9
                  Many thanks for the responses. Our RTM claim was challenged by the Freeholder on the basis that the claim did not correctly identify the premises. The FTT ruled that the "point taken by the Respondent is purely technical and lacking in any merit". We were also awarded costs in respsect of the reimbursement of the tribunal fees paid to bring the case to the FTT. I'm inclined to challenge the Freeholders "reasonable costs" given this and the advice above, please advise if anyone believes this would be a waste of time.

                  Comment


                    #10
                    I don't think it'd necessarily be a waste of time; I think the limit over which most RTM companies would challenge is around £1500, so you're above that. Our company replied to a similar email stating that the costs are rejected, that we cannot be charged legals incurred as a result of frivolously resisting your RTM claim, and that they would need to apply to Tribunal for a determination; however we are willing to pay XXXX in legals without prejudice in order to put the matter to rest. May be worth doing the same - having an offer there may look good for you at Tribunal.

                    Comment


                      #11
                      thanks Benzo, sounds sensible

                      Comment


                        #12
                        Having an RTM claim going through at the moment I'm quite interested in this. The freeholder's solicitors have said that the freeholder will not contest our claim.

                        Our claim must be one of the most basic RTM application for a solicitor to deal with. There are only two flats. Both leaseholders are members of the RTM company. There are no ongoing contracts in relation to maintenance of the building except the one between the freeholder and the managing agent so there won't need to be many contractor notices prepared.

                        Given the above, what do people think should be reasonable legal fees in our case?

                        Comment


                          #13
                          NIL legal fees.

                          The RTM gives power to leaseholders to take charge of the service charge account , which is paid by leaseholders. i.e take control of leaseholders own money.

                          The RTM s Opposed by the Freeholder companies are probably at blocks of flats, where the freeholders or the MAs are taking a cut in the service charge or hitting BTL leaseholders for subletting consent .

                          All of you can check with Sebastian at the "leaseholdknowledge" website if your freeholder or MA is making excessive demands .

                          Comment


                            #14
                            It would be nice if you could get away with nothing for the freeholder's legal fees, but I doubt that will be the case.
                            I think that it is reasonable for the freeholder to ask a solicitor to check your RTM claim is valid, and also feel that it is reasonable for him to request that the solicitor deals with the process, including sending out letters.
                            Even though the freeholder is not contesting the RTM, I suspect that costs of up to at least several hundred pounds could be considered reasonable.

                            Comment


                              #15
                              I think you're probably right in that we're unlikely to get away with paying nothing, however several hundred pounds or more seems completely unreasonable to me. I would say that even being generous, there is at most two hours of work for a solicitor in dealing with our claim.

                              Comment

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