Interpreting Service Charge Account, Balance Sheet And Reserve Fund

[eagle2]

11.3 says that you should be credited with your share of the surplus for the year, so there should not be a cumulative surplus.

[TruthLedger]

11.3 says that you should be credited with your share of the surplus for the year, so there should not be a cumulative surplus.

Well spotted, eagle2. If that is the case, they are not going according to the lease and they are using a cumulative surplus like a reserve fund?. Like Leaseholder64 pointed out, I need to find out whether the management agents are the directors and /or secretary of the company. If there is a cumulative surplus, they are not using that money to cover the deficit because they have issued a deficit demand this month. Any ideas what they might be doing with the surplus money they are supposed to be crediting leaseholders?

[eagle2]

You should check the accounts for 2019 and ensure that they have deducted the cumulative surplus brought forward.

[TruthLedger]

You should check the accounts for 2019 and ensure that they have deducted the cumulative surplus brought forward.

Thanks eagle2, will do. Looking at the previous years demands, it does seem like they are deducting the surplus being carried forward, are they not?.

[eagle2]

I agree that the deficit for 2017 was deducted from the surpluses brought forward. It suggests that there is still a deficit after using up the £1,389 surpluses brought forward from 2018.

[TruthLedger]

I agree that the deficit for 2017 was deducted from the surpluses brought forward. It suggests that there is still a deficit after using up the £1,389 surpluses brought forward from 2018.

Looks like it, because I did receive a deficit service charge demand a few days ago, which the solicitor says the previous seller will have to pay.

[Gordon999]

I notice the building insurance was £2255 in 2016 but cost has gone up £1000 in 2018 ( approx £300 per flat ) .

Has there been any past claims against the building isurance policy ?

[TruthLedger]

I notice the building insurance was £2255 in 2016 but cost has gone up £1000 in 2018 ( approx £300 per flat ) .

Has there been any past claims against the building isurance policy ?

Thanks Gordon999. Not that I am aware of so I will need to find out. I don't think the agents might be getting the cheapest cover by the looks of it....Terrorism cover, Underlying Insurance premium tax (IPT) Terrorism IPT,

[leaseholder64]

The taxes are legal requirements.

[Macromia]

Thanks Gordon999. Not that I am aware of so I will need to find out. I don't think the agents might be getting the cheapest cover by the looks of it....Terrorism cover, Underlying Insurance premium tax (IPT) Terrorism IPT,

There is no requirement for the person who arranges insurance for a block of leasehold properties to seek out the cheapest price available. If the price of insurance was challenged at a tribunal they would only look at whether or not the amount charged was within a typical range of insurance costs for similar properties, even if the person contesting the cost can provide quotes that show that exactly the same cover can be purchased at half the price. If the insurance is at the upper limit of the typical commercial prices instead of the lower limit, it will still be likely to be determined reasonable (although in future years it may be considered reasonable for a quote to have been obtained from the company that provided the lower quote, and for that quote to have then been accepted if lower and the cover really is the same*).

Nowadays terrorism cover is considered to be reasonable for most properties, even if the property is considered to be low risk, and I would personally consider it to be worthwhile cover to have (I don't know if insurance payouts were made for the properties the plane landed on in the 1988 Lockerbie bombing, but it wouldn't surprise me if payouts in a similar case now were only made if terrorism cover was in place). The chance of terrorism affecting most residential properties would be considered to be very low, but on the off chance that it did happen, wouldn't it be better to be covered?

[TruthLedger]

Thanks for the input guys.

[eagle2]

I would expect 50% of the cost to be outside the band of reasonableness but 20% to 25% are likely to be within the band.