Freeholders breach of the lease

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    #16
    It seems to me that the freeholder does not know his leaseholders, he should communicate with them.

    I should refer the freeholder to paragraph 7.3 of the RICS code of practice. It says that some leases do not require advance payments … from a landlord’s point of view it is not a satisfactory system … but the landlord must follow the terms of the lease. (my emphasis)
    In such a situation, the landlord may have to wait over a year to recoup the expenditure incurred … and may have to pay for the cost of borrowing money to finance the costs. Sometimes, the landlord cannot recover any interest charged on borrowings as part of the service charge.

    In my opinion, the freeholder is in breach of the terms of the lease, you are entitled to take action to protect your property and you are entitled to claim compensation for reasonable expenditure which you have had to pay.

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      #17
      In Spain they have a good way of dealing with this sort of problem. If there are insufficient funds to carry out major repairs the community of owners get a loan from an insurance company and pay it off over several years.

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        #18
        There is no reason why the freeholder could not obtain a loan if necessary. What he should be doing is consulting the leaseholders and explaining the position, it appears that at least some of them would be in a position to pay large sums so he is not entitled to assume that none of them are able to contribute. He should collect what he can, try to agree payment plans with others and proceed with the required works and if necessary borrow monies to pay the contractors. His decision to delay the works cannot be considered to be reasonable.

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          #19
          What he can't do is charge the loan interest to the service charge.

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            #20
            Lawcruncher,

            Yes they do. We have had that here putting in a new lease. The properties though are commonhold, a lot different from Freehold. A much better system altogether.

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              #21
              eagle2,

              We all own the freehold. We are a company but one of the Leaseholders wanted a year to save up the money instead of getting a loan, so the others went along with that. I could not wait as I have a tenant in it and water was coming in everywhere, naturally it was not there flat which was affected only mine and the flat next door but he carried out major works when the tenant left six weeks ago and tanked the tanked the whole area, it was in a terrible state, but he was the secretary and swore blind there was no problem with damp etc however after the surveyor came - which I pushed and pushed for - his flat was deemed to be in urgent need of repair due to damp coming in from through the walls and rising damp which for years he had denied.

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                #22
                eagle2,

                The Leaseholders own the Freehold. We set up a company but the people running it are not up to scratch it is not their flats which are affected. Just the two at the bottom and one over me has water coming in through the render in a very small area and she wanted to wait to safe up the money, however as I say they all have high flying jobs.

                I had no other choice but to tank the area water was coming in everywhere going through another winter, also we are now appointing a managing agent so more delays. The problem was that they would not do it separately either and wanted one builder to do the lot and that proved difficult. I found several companies who specialised in outside render but they would not agree with me to do that. The roof could have been done separately.

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                  #23
                  OK. We have finally established that the freeholder has no money of their own. I imagine it is going to be difficult for them to get a loan. The only real asset they have is the freehold, and you don't really want them to be forced to sell that to one of the usual suspects.

                  We have also established that one leaseholder is unable to pay without a loan themselves, although possibly not that they couldn't easily obtain a loan. It was an important piece of information, that seems to have been omitted, that the freeholder is owned by the leaseholders.

                  On balance, the correct thing to do here for the overall benefit of the members, is to force the holdout leaseholder to pay. However, that is only the case because they are not a poor pensioner,so won't get media sympathy.

                  There is no point in suing the company, as it has no money. Although you could get an injunction, it would have no way of paying the legal costs. You are in a minority, so can't change the board. I'd say the only other option is to appoint a manager, but,by the time that happens,I imagine the year will be up, anyway.

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                    #24
                    The legal position does not change, the freehold Company should have issued demands for the works and collected monies. The leaseholder who wants time to pay should have arranged a personal loan so that there was no delay. You are entitled to recover your reasonable costs due to the freeholder failing to arrange works in a timely manner. I recommend that you call a meeting of members and inform your fellow members that you insist on being reimbursed and ask the Company to comply with its obligations, you may also wish to threaten to withhold service charge payments until you have recovered the amount which you have paid. A majority of members is not entitled to make a decision which impinges on your legal rights as a leaseholder.

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                      #25
                      eagle2,

                      Thank you for that Yes I agree, they could have got a loan. I am certain that since there are two of them £10k loan each should not be any hardship or but it on their cards. I have already told them I am going to charge them for the work I have had to have done to stop water coming into my flat. They sent me a letter to say they are not going to pay, but they are. The people managing it have done a very poor job, they should have got going when we had the surveyors report last April, he said it was "priority" to get the damp sorted out but they took no notice whatsoever because there are only a few flats who are compromised, mine being one of them.

                      and I bet that they earn at least five times what I have coming in. As I have said they are all high flyers with good jobs.


                      I am a pensioner myself and my flat is meant to be my pension, but far from it. However I have saved up £10k and got a loan for the rest.

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                        #26
                        Worthwhile I really feel for you. I still believe that my first post is correct. Asking LEASE is free and qualified legal advice. Not paying your service charge is itself a breach of the lease, while you are doing that my understanding is that the freeloader is not under any obligation to repair. I urge you to ask LEASE telephone or email. Best Wishes.

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                          #27
                          scot22,

                          They are under an obligation to repair, it states so in the lease. I agree though taking it from the service charge would not be a good idea. I would have to not pay the full sum owed for all the works. Yes I will ring the Leasehold advisory service and ask them but I am certain once there is a problem they are obliged to fix it as soon as possible.

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                            #28
                            No disagreement on that. However, as is often the case, enforcement can be a problem. Their obligation to repair is contingent on you fulfilling your side of the contract,i.e. lease, by paying your obligation regarding service. I think the saying is you must have clean hands. Hope you get clarity on the issue.
                            ethically I agree with you but legality will trump ethics. Hope all goes well.

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                              #29
                              I agree that you should seek all the advice that you need. It seems to me that the other leaseholders are bullying you and they think that they can refuse to reimburse you simply because they outnumber you. As you own part of the freehold, I would change tack slightly and try to reach agreement with the other leaseholders, the threat of withholding monies until they agree is a bargaining position and lets them know that you are serious. If you are unable to reach agreement, perhaps you can suggest that an independent person decides, possibly a surveyor appointed by the RICS, who should rule in your favour.

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                                #30
                                Originally posted by scot22 View Post
                                Their obligation to repair is contingent on you fulfilling your side of the contract,i.e. lease, by paying your obligation regarding service. I think the saying is you must have clean hands. Hope you get clarity on the issue.
                                ethically I agree with you but legality will trump ethics.
                                This would depend on the terms of the lease.
                                I would suggest that a freeholder's obligation to keep a building in a good state of repair is usually independent of the obligation of leaseholders to pay service charges and/or rent. Unless a lease is defective, both will be covered, but the freeholder will not normally be entitled to refuse to maintain a building if leaseholders fail to meet their financial obligations. In this circumstance the freeholder will usually be required to get the work done and then pursue the leaseholder through the courts to make them pay their share (with forfeiture being a potential outcome).

                                Some leases might make the obligation to repair/maintain contingent on prior receipt of service charge funds, and where the freehold is 'owned', or controlled, by leaseholders, this may be necessary for sufficient funds to be available, but it shouldn't be assumed that this is the case.

                                The lease to the flat I live in requires the freeholder to keep the building properly repaired and only allows them to charge most of my share of the costs in arrears - therefore my obligation to pay service charges is dependent on the freeholder having paid for maintenance of the building, and not the other way around.

                                The details in the leases determine each parties obligations, and whether or not one is contingent on the other.

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