Service charge accounts - shortfall

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    Service charge accounts - shortfall

    I recently enquired if there were outstanding service charge payments due from other residents for the last couple of years and have been informed that some monies are outstanding. From the payments we make some is put aside into a sinking fund. Are the MA allowed to take money from the sinking fund and transfer it to the service charge account to cover costs, due fo the outstanding payments? Thanks

    #2
    I think it is all too common practice. Whether it is allowed probably depends on exactly how the lease is worded as to whether the contributions to the sinking fund remain distinct or not. I know of at least one regular contributor who describers it as stealing.

    Really it is the management company/freeholder not the managing agent that is doing this, as the MA are just implementing policy agreed by the management company/freeholder.

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      #3
      Typically, the lease will say that a sinking fund or reserve fund may be created for a specific purpose and if it does, the fund may be used only for that purpose.

      All too often, a fund will be used incorrectly for other purposes.

      The MA is supposed to have integrity and be independent. He should refuse to operate the fund incorrectly and he should educate any persons who are instructing him otherwise.

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