Sinking fund breach of covennat?

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    #31
    (c) if the work is necessary, it should be carried out and the RMC may need to beg, steal or borrow in the absence of a sinking fund. The RMC can arrange payment plans with those leaseholders who are unable to pay on the due dates.
    (d) a court or a tribunal would never create or increase a sinking fund contribution where there is a clear option available to the RMC. It may make a comment that it would be preferable to have a sinking fund but it would go no further




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      #32
      The leaseholders say that more money ought to have been collected from them and their predecessors in the past and the managing agent was in breach of an obligation and should have collected more, to meet future capital expenditure costs and this would have increased the price the leaseholders would have had to pay to acquire their flats.

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        #33
        I still don't understand what you expect to achieve.
        Yes, there could have been more money collected into a sinking fund, but it's equally true that the leaseholders could have put the money aside themselves (or, in the case of those who have bought the leasehold more recently, should have factored some contingency for expenses of this type into their purchase and ensured that they had extra funds available).

        Nothing that you are saying suggests that any of the leaseholders have lost out financially, they are just expecting the management company to have budgeted for them rather than putting some money aside themselves.

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          #34
          The leaseholders will not succeed with an argument that they ought to have been charged more. The answer is agree to the RMC charging you now and pay the amount which you have saved.
          You are unlikely to succeed with a claim against the managing agent. He is an agent acting on behalf of the RMC. All he will say is that he was instructed by the RMC.
          You are not entitled to interfere with a contract for the sale of a property between two third parties, Whatever the purchaser paid is a matter of fact as is the level of the sinking fund at the time.

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            #35
            Problem now is some leaseholders want account to be charged now and monies collected and others are saying the others did not pay so we are not paying and no consultation has taken place for the works, the repairs have not been identified by the directors no inspection and this delay has made repairs worse and will now cost more.

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              #36
              I suggest that you have a meeting of members and decide how to proceed. If some leaseholders object to being charged for past contributions, you should start to operate the sinking fund from now.
              If any leaseholder is required to contribute more than £250 the consultation process should be followed, leaseholders should be informed about the works and the cost and allowed to comment. The RMC can always apply for dispensation if necessary. The managing agent should be dealing with this on behalf of the RMC.
              If a leaseholder wishes to complain that the cost is unreasonable, he should be asked to supply proof. He may complain to a Tribunal if agreement cannot be reached but he should consider whether or not it is worthwhile.

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                #37
                Originally posted by Stacker View Post
                Problem now is some leaseholders want account to be charged now and monies collected and others are saying the others did not pay so we are not paying and no consultation has taken place for the works, the repairs have not been identified by the directors no inspection and this delay has made repairs worse and will now cost more.
                If the work is urgent the sums required needed to be demanded as soon as the lease allows, and the directors need to find a way to proceed ASAP even if leaseholders refuse to pay.

                What do you mean by "others are saying the others did not pay so we are not paying"?
                No one is obliged to pay anything towards repair work if the sums required have not been properly demanded, and if "the others" sold their leases before money was demanded they have escaped the obligation to pay.
                Any leaseholders who haven't recently purchased their leases had the same benefit of not paying into a sinking fund as the previous leaseholders who has sold up did, and the new leaseholders accepted all future responsibilities when they purchased their leases.
                All current leaseholders have an obligation to pay whatever sums are now required (following appropriate consultation if the leases make this necessary before the sums become payable).

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                  #38
                  Yes I hear you Macromania but the Directors and managing agent deliberately did not issue administration papaerwork for them to pay. I am guessing here but seems like its been some sort of Tax avoidance thing so the company holds no money to be taxed on....they are buy to let investors.

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                    #39
                    There was no tax advantage to be gained by not having a sinking fund, quite the opposite. Buy to let investors can deduct service charges from rental income so by reducing the service charges, the directors increased their personal tax liability.

                    You stated in #25 that the FTT had allowed the recovery of monies but you have not referred us to the case when requested. The FTT does not have the jurisdiction to determine that directors or managing agents repay monies.

                    You have also not responded to the request for further information about the amounts involved and whether or not the directors withdrew nore than their share of the service charge surplus.

                    I suggest that you choose your battles and concentrate on those which you can win. You need to move forward, I suggest that you arrange a meeting of members, appoint new directors and decide how you want the property to be run in future.

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                      #40
                      Originally posted by Stacker View Post

                      Yes I hear you Macromania but the Directors and managing agent deliberately did not issue administration papaerwork for them to pay.
                      If you're talking about the subletting assignment fees that you have previously mentioned, have any other leaseholders been charged these fees? If no one has been charged, then what's the issue? (especially when fees like this are supposed to cover the landlord/agents costs associated with the subletting - so the directors would, effectively, be paying for their own time).

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                        #41
                        Originally posted by eagle2 View Post
                        There was no tax advantage to be gained by not having a sinking fund, quite the opposite. Buy to let investors can deduct service charges from rental income so by reducing the service charges, the directors increased their personal tax liability.

                        You stated in #25 that the FTT had allowed the recovery of monies but you have not referred us to the case when requested. The FTT does not have the jurisdiction to determine that directors or managing agents repay monies.

                        You have also not responded to the request for further information about the amounts involved and whether or not the directors withdrew nore than their share of the service charge surplus.

                        I suggest that you choose your battles and concentrate on those which you can win. You need to move forward, I suggest that you arrange a meeting of members, appoint new directors and decide how you want the property to be run in future.
                        Eagle, that is what has happened, the directors have deliberately not set up a sinking fund or paid their administration charges so the company pays no tax, they have done this for their benefit NOT the company. So it is abuse of position as they benefit.

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                          #42
                          Originally posted by Macromia View Post
                          If you're talking about the subletting assignment fees that you have previously mentioned, have any other leaseholders been charged these fees? If no one has been charged, then what's the issue? (especially when fees like this are supposed to cover the landlord/agents costs associated with the subletting - so the directors would, effectively, be paying for their own time).
                          The subletting fees are an administration charge, it is to be paid to the company, it is not for any director to decide NOT to pay, its in the Lease to pay, they cant pick n choose. It is monies which should have been paid to the company, they have benefitted from not paying and the company has not benefitted. The managing agent should have been vetting the subtenants and ensured that their ASTs are in alignment with the Lease.

                          Comment


                            #43
                            Originally posted by Stacker View Post
                            The subletting fees are an administration charge, it is to be paid to the company, it is not for any director to decide NOT to pay, its in the Lease to pay, they cant pick n choose.
                            That is likely to depend on precisely what wording is used in the relevant parts of the lease.

                            Originally posted by Stacker View Post
                            The managing agent should have been vetting the subtenants and ensured that their ASTs are in alignment with the Lease.
                            That wouldn't be within the normal duties of most block management agencies - even if it would be good practice.
                            It is the leaseholders responsibility to ensure that all sublets are in alignment with the lease, and the responsibility of the directors (perhaps via the managing agents) to take action against the leaseholder (not usually the tenants) if the lease is breached by the tenants actions.

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                              #44
                              Originally posted by Macromia View Post
                              That is likely to depend on precisely what wording is used in the relevant parts of the lease.


                              That wouldn't be within the normal duties of most block management agencies - even if it would be good practice.
                              It is the leaseholders responsibility to ensure that all sublets are in alignment with the lease, and the responsibility of the directors (perhaps via the managing agents) to take action against the leaseholder (not usually the tenants) if the lease is breached by the tenants actions.
                              Macromia are you a freeholder and a director?

                              Comment


                                #45
                                The Company is entitled to decide not to operate a sinking fund and to waive its right to collect administration charges.
                                If the members do not like the way that a Company is being operated, their remedy is to replace the directors. The members should have been aware of the decisions which the directors were taking and if they were dissatisfied, the obvious question is why did they not act earlier to replace the directors?
                                As the directors have now left, the new directors are able to decide how to run the Company, they can start to operate a sinking fund and they can reinstate the right to collect administration charges if they wish.
                                There is no mileage in attempting to read the minds of the previous directors, you are unlikely to be able to prove that they benefitted from the decisions or that they abused their position, their argument would be that they were entitled to make the decisions and their position was no different to any other member.

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