Sinking fund breach of covennat?

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    #46
    Originally posted by Stacker View Post

    Macromia are you a freeholder and a director?
    Neither, I'm a leaseholder who expects freeholders and managing agents (and directors if there is a management company) to manage properties according to the lease.

    However, leaseholders need to consider the battles they are going to fight carefully, and in this case I really don't think that this is one worth pursuing.

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      #47
      Originally posted by eagle2 View Post
      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.
      I have to disagree with you Eagle2,a board should never and has no legal right to take a decision that is against the terms of the Lease for
      the block even if there's complete unanimity. The directors can not be changed as they are the majority.

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        #48
        Originally posted by Macromia View Post

        Neither, I'm a leaseholder who expects freeholders and managing agents (and directors if there is a management company) to manage properties according to the lease.

        However, leaseholders need to consider the battles they are going to fight carefully, and in this case I really don't think that this is one worth pursuing.
        That's just it the directors are not managing the building as per the Lease, they have still not got their act together to come and inspect Matey's place, he is still waiting and they have been ignoring him to date. Its just so rude and disrespectful. He has been reasonable, they have collectively ignored him.

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          #49
          You are perfectly entitled to disagree. I am trying to assist but feel free to ignore my comments and seek advice. I am commenting for the benefit of readers who may be following this thread and may find themselves in a similar position.
          I recommend that you re-read the lease but from your statements, it appears that the operation of a sinking fund is entirely optional. You appear to have accepted lower service charges and the lack of a sinking fund in the past. The time to complain was then. It is unreasonable for you to complain now that the service charges are likely to be higher when works are going to be carried out.
          The administration charges are too small to be of concern and are not worthy of your energy. It does not appear to be the directors who have benefitted from the decision, it appears to be the recent purchasers of the flats. There is probably a clause in the lease in which you can require the RMC to enforce the terms of the lease but you may need to reimburse the RMC for any costs involved. I don’t think that it is worth pursuing but it is your decision.
          There is no requirement for a RMC to inspect a flat, your best option is to provide the RMC with a list of any works which are its responsibility, let it have a reasonable time to attend to them and if the RMC fails to arrange them, you may have a case to apply for a manager to be appointed.

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            #50
            Originally posted by Stacker View Post

            That's just it the directors are not managing the building as per the Lease, they have still not got their act together to come and inspect Matey's place, he is still waiting and they have been ignoring him to date. Its just so rude and disrespectful. He has been reasonable, they have collectively ignored him.
            Unfortunately this is often the case, regardless of whether it is an RMC/RTM run by leaseholders or a separate freeholder, and irrespective of whether or not a 'professional' managing agent is involved.

            My point here is that some of the things that you seem to think are important, and are using as examples of breaches of the lease, are things that are, at best, brought up only as an additional minor point when challenging other issues.
            The parts that you have quoted from the lease seems to show that the sinking fund is optional, funds can be contributed but do not have to be - so there is no breach of the lease from the directors not ensuring that a sinking fund was created (and as has really been said, no-one has been financially disadvantaged).
            Whether or not subletting fees should have been paid to the company will depend on parts of the lease that have not been quoted. It may be that the way that the lease is written makes this as obligation that has to be paid, but equally it may be that the directors did have the right to decide not to collect those fees. It would only be discrimination if they insisted that other leaseholders paid the fees. As eagle2 has said, it is also likely that, if these fees had been collected, they would represent a fairly negligible amount (some of which would potentially be lost as taxes as this would be company money, not money for the service charge account, so might mean that the company accounts could not be treated as dormant).

            The damp issue is something that needs to be pursued, and that the management company is likely to be responsible for addressing (depending on the terms of the lease), but trying to argue that there should have been a sinking fund collected in the past, and that directors who has now left should have previously paid subletting fees, will not help to get the damp issue sorted.
            Concentrate on the issue that actually is important, and which can likely be won if this ends up in a court or tribunal hearing.

            Comment


              #51
              Originally posted by eagle2 View Post
              You are perfectly entitled to disagree. I am trying to assist but feel free to ignore my comments and seek advice. I am commenting for the benefit of readers who may be following this thread and may find themselves in a similar position.
              I recommend that you re-read the lease but from your statements, it appears that the operation of a sinking fund is entirely optional. You appear to have accepted lower service charges and the lack of a sinking fund in the past. The time to complain was then. It is unreasonable for you to complain now that the service charges are likely to be higher when works are going to be carried out.
              The administration charges are too small to be of concern and are not worthy of your energy. It does not appear to be the directors who have benefitted from the decision, it appears to be the recent purchasers of the flats. There is probably a clause in the lease in which you can require the RMC to enforce the terms of the lease but you may need to reimburse the RMC for any costs involved. I don’t think that it is worth pursuing but it is your decision.
              There is no requirement for a RMC to inspect a flat, your best option is to provide the RMC with a list of any works which are its responsibility, let it have a reasonable time to attend to them and if the RMC fails to arrange them, you may have a case to apply for a manager to be appointed.
              Thank you Eagle 2 I know you are trying to help, Matey is now trying to get someone to price up the work to do and give the board one final chance to come along, inspect and then he will get the repairs done himself and take them to court for the monies.

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