Disputes with present freeholder

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  • hexu
    started a topic Disputes with present freeholder

    Disputes with present freeholder

    Hi there,

    It's really a nightmare if the freeholder is bad enough!

    When I purchased the property in 2006, the freehold was held by the Council. In August 2007, the Council sold the freehold of the building to a housing association. Major works of the building were planned in April 2012, and the maximum that the housing association can charge me as a resident leaseholder for major works was capped at £5K as per the Stock Transfer Cap.

    In November 2012, unexpectedly, the housing association sold the freehold to the present freeholder (former leaseholder) without giving me any notification in advance. In 2015, a £10K bill was sent to me by the present freeholder for the major works without mention the Stock Transfer Cap.

    Can anyone kindly advice me please:
    - Is it legal for the present freeholder to charge me major works without imposing the conditions that have been agreed with the former freeholder?
    - How can the former leaseholder buy the freehold from a housing association without informing me?

    Any suggestions will be appreciated, thank you in advance!

  • Macromia
    replied
    Leases can be changed either by all relevant parties agreeing to the changes or (in certain cases) following application to the FTT and a decision being given in favour of the changes. In both cases each party will usually pay their own legal costs linked to having he leases changed.

    Again, whether the contribution to the buildings insurance that you are being asked for is reasonable or not depends on details that have not been given in this thread.
    Have you seen a copy of the policy that you are being asked to contribute to?
    Have you confirmed that the policy covers more than just the 'reserved parts'?
    What exactly are the 'reserved parts'? In some cases it might be reasonable for each flat to pay at equal contribution towards costs of insuring and maintaining 'reserved parts' even if the properties themselves are not of equal size (it depends on factors such as what each lease requires regarding maintenance of the property as a whole).

    It isn't possible to say whether or not you are being treated unfairly, or whether the freeholder is following the terms of the lease, without more details.

    You have already said that you have paid solicitors - they should have told you exactly what you should be paying for under the terms of the lease, and whether or not you were being charged incorrectly (again with explanations). They should also have advised you whether or not it was worth taking action.

    Leave a comment:


  • hexu
    replied
    Thank you both,

    It seems my reply did not appear and I am posting it again.

    I don't really know who can change the lease and how? But ideally, I am fine to pay building insurance to the landlord if he charges me by square meters reasonably. As mentioned, my flat is the smallest in the building, I think that's why the lease states I only need to contribute insurance of reserved property (common area) and insure demised property (my flat) by myself. To pay one-fourth insurance of the whole building is unfair (and never happened before) as they are not the same size, not even close. However, the freeholder won't want to charge me by square meters, because he won't be able to take me as an advantage to pay for his use if he does this way.

    As you can see, he doesn't even admit the lease and forces me to pay as he invoiced. Under this circumstance, do you think he can start processing at the Court? He will clearly hire solicitors to help him which I couldn't.

    Because of him, I lost the Stock Transfer Cap protection and the cost increased almost double, not to mention the fairness of the apportionment. To consider the way that he deals with insurance, what will you do if you were me?

    Leave a comment:


  • Macromia
    replied
    Originally posted by hexu View Post
    It said clearly, my liability to pay insurance to the freeholder is limited to the Reserved Property (common area), not a contribution to the whole building.
    This is correct, but it does depend on what parts of the property are demised, what parts are reserved, and precisely what is covered by the 'whole building' policy.
    For example, it is common for the property demised to flats to exclude any structural parts of the building and the external parts of walls. If this is the case in your block, then a policy that covers the whole building might be necessary to properly cover "the reserved parts".

    As leaseholder64 has suggested, this arrangement is messy, and should really be changed. With a patchwork policy of this sort in place, there might be problems getting the insurance companies to pay out if there was a situation that resulted in severe damage to the entire block (and that assumes that all policies that the lease requires are in place).

    Have you asked for a copy of the policy that you are being asked to contribute to, so that you can see exactly what it covers?

    Also, have you insured your demised property in the manner stated (in joint names of yourself and the freeholder) and has a copy of the policy been provided to the freeholder?
    The clause that you quote doesn't seem to require that you provide the freeholder with a copy of the policy, but it would be reasonable for them to expect this from you - and if they have requested this and you have not provided it, it might be considered reasonable for them to pay for insurance covering your property themselves, and then claim this additional cost back from you (although they probably shouldn't claim this via the service charge).

    If I was a potential buyer, this sort of arrangement for insurance would be a big red flag and I would walk away.

    Leave a comment:


  • leaseholder64
    replied
    That arrangement, in itself, might cause problems in selling, even if operated correctly. The problem with it is that the owners of the other flats (presumably the one person in this case) are dependent on your actually taking out adequate insurance. It also means you are likely to have more than one insurer involved in any major building claim.

    It would probably be better to get the lease changed to the more conventional arrangement (and the one the freeholder seems to be trying to operate), where the freeholder is responsible for the building insurance, and recovers the costs from the leaseholders. However, there will be costs involved in having it changed.

    Leave a comment:


  • hexu
    replied
    Many thanks Macromia, it's helpful, very appreciate. Life was in peace until the change of freehold. Feeling like stones smashed on my head, cost both money and time..

    It's a small block (four flats), I am the only leaseholder owns a one-bedroom flat and the other three flats owned by the freeholder (former leaseholder). I have no comrade and the freeholder takes me as an advantage to pay for his use. I am stuck.

    Here are the details of paying building insurance from the lease:

    The Lessee's Covenants: To keep the Demised Premises insured at all times throughout the term of this Lease in the joint names of the Lessors and the Lessee from loss or damage by fire flood and such other risks and special perils normally insured under a comprehensive insurance policy on property of the same nature as the Demised Premises in the offices of the Municipal Mutual Insurance Company Limited or some other office approved by the Lessors in the sum equal to the full insurable value thereof from time to time.

    The Lessor's Covenants: To insure and keep insured the Reserved Property (unless any such insurance shall be vitiated by any act omission or default by the Lessee or the lessee or occupier of any Flat/Maisonette) against loss or damage by fire tempest flood and such other risks and for such sums as the Lessors may from time to time

    It said clearly, my liability to pay insurance to the freeholder is limited to the Reserved Property (common area), not a contribution to the whole building. I understand that a single insurance policy is easier, but because of the size of my flat (the Demised Premises) and the size of the whole building, the cost of insuring my flat is much cheaper than one-fourth of contribution to the whole building. Most importantly, in order to obtain a mortgage, paying insurance for my flat under my name is a condition. I don't know why the present freeholder can consider that he has the power to change this? How am I going to explain this to a future buyer?

    I have to say I was surprised that there wasn't a law to protect leaseholders. Leaseholders have to suffer the cost to Tribunal or legal advice, just to correct freeholder's mistakes. A bad landlord will get all benefits If people have to put up their right because of money. I think this is truly unfair and sad.

    Leave a comment:


  • Macromia
    replied
    Originally posted by hexu View Post
    Not in a good mood these days..thinking of selling the flat, but have been told I can lose buyers with the disputes.
    The likelihood is that any potential buyer would either reduce the offer price by how ever much the total disputed sum is, or (probably more likely) expect this sum of money to be retained by their solicitors to be used to pay the disputed charges if they were eventually deemed payable.
    Some buyers would potentially be put off by the mere fact that there were recent disputes because they wouldn't want to buy a property where there was a likelihood that they would end up having to dispute costs. If costs are unfair/unreasonable, you might be better off getting all issues resolved, one way or another, before attempting to sell - although this may cost you.


    Originally posted by hexu View Post
    My liability to pay for insurance is limited to the Reserved Property under the lease, but the present freeholder charged me for a contribution to the insurance of the whole building. Former freeholders did the same as the lease states, but the present freeholder didn't.
    The precise wording of your lease would be important here, and without seeing that no way can say if you are correct (and whether or not the lease may be defective if you are).
    Who does the lease make responsible for arranging insurance?
    If the freeholder is responsible, the way that the lease is written might make buying a single policy for the whole building, and then splitting the cost between the leaseholders a reasonable way of having them pay what would be appropriate for their 'reserved properties' - it may even work out cheaper for each leaseholder to do things this way.


    Originally posted by hexu View Post
    No matter the Stock Transfer Cap or the size of my flat, I should be considered to pay less than the others. I don't understand why you find it hypocritical rather than unfair?
    These are two separate issues that should be argued separately.

    What constitutes a 'reasonable proportion', of the total service charges for the building, to be paid in respect of your flat is the first issue. If your lease states that "a reasonable proportion" is payable, the freeholder is allowed to decide the method by which that proportion should be calculated (unless the lease states otherwise). You would need to ask them to explain the way that they have decided what proportion you should pay, and you can then challenge this if you consider it to be unreasonable and don't think that the freeholder can justify this method.

    Having your service charge contribution capped at a maximum of £5000 (or any other amount) will, in my opinion, always be unreasonable if you own the property - because it means that someone else has to make up the shortfall, or else other residents have to suffer from repairs not being done because of funding problems. If the reasonable costs of your share of the service charge come to more than £5000, then that is what you should ethically pay (although it is possible that your lease does unfairly limit your contribution).


    Originally posted by hexu View Post
    Thank you for suggesting the Leasehold Knowledge Partnership, Macromia. Waiting for their response (Do they normally take long to reply?)
    I have no idea how long they take to reply I'm afraid - or even if they always reply.


    Originally posted by hexu View Post
    I don't know how the Tribunal would consider the disputes of the Stock Transfer Cap and apportionment, but the way of charging building insurance is wrong without a doubt.
    You won't really know what the decision would be for any of these without going to a tribunal. Even if the insurance isn't being charged how you think it should be, it may be that it is decided that the requirements are being met - but if they aren't then you should be able to get a decision that means that you don't have to pay what has been demanded for insurance.
    It is up to you to decide whether to withhold payment (potentially very risky and not recommended), or to pay under protest, making it clear that you don't agree that the amounts demanded are payable, and then apply to the tribunal for a determination (if you apply it will cost you time and money, and you will have the burden of proving that the costs are not reasonable).
    If you don't pay the freeholder will likely eventually take you to court/tribunal, possibly trying for forfeiture of the lease, and you might end up having to pay substantial legal fees in addition to any service charges they claim are owed if you lose (depending on how the freeholder decides to pursue the claim).


    Originally posted by hexu View Post
    What I find hard is the present freeholder doesn't do as the lease states and keeps harassing me for money. I don't feel stay at home as I don't know when he would come to knock my door. I feel disgusted to face him or speak to him. I do hope he can go to the Tribunal, but he won't. He did mention the Court, but he hasn't. Keeping sending incorrect bills that all he has done in the last five years. I have paid solicitors and even the solicitors told me to stop corresponding with him as he didn't take seriously with the lease. I used up my money for legal advice and couldn't afford more, but what are my options to do with this rogue?
    If I was you, and I was certain that sums being demanded weren't payable, I would write to the freeholder, stating clearly that I would ignore any future incorrect demands for payment and that I would treat any further visits to my home pursuing incorrectly demanded sums as harassment and that I would be taking legal advice regarding this.

    As I have said, withholding any payment is risky unless you really are certain that the sums are not payable under the terms of your lease. However, if you wish to try to force the freeholder to go to court (giving them the burden of proof) this is a risk that you may have to take.
    From the details that you have revealed, I would not personally take the risk of not paying - and I'm not sure that I'd consider it worth making a tribunal application myself.

    Leave a comment:


  • hexu
    replied
    Originally posted by Macromia View Post
    How are the requirements of the lease not being met? And what did the solicitors you paid say regarding this?
    The fact that you don't think that the insurance meets the requirements of the lease doesn't necessarily mean that you are correct.

    I find it hypocritical that you are arguing that the proportion that you are being charged is not a fair proportion, while at the same time you are arguing that your contribution should be limited, even if the fair proportion would be more than the capped limit.

    The Leasehold Advisory Service, C.A.B., and perhaps The Leasehold Knowledge Partnership are probably your best bets for free legal advice, but in all cases (and if you pay for legal advice) you would be best off knowing exactly what you want to know before you approach them.
    Not in a good mood these days..thinking of selling the flat, but have been told I can lose buyers with the disputes.

    My liability to pay for insurance is limited to the Reserved Property under the lease, but the present freeholder charged me for a contribution to the insurance of the whole building. Former freeholders did the same as the lease states, but the present freeholder didn't.

    No matter the Stock Transfer Cap or the size of my flat, I should be considered to pay less than the others. I don't understand why you find it hypocritical rather than unfair?

    Thank you for suggesting the Leasehold Knowledge Partnership, Macromia. Waiting for their response (Do they normally take long to reply?)

    I don't know how the Tribunal would consider the disputes of the Stock Transfer Cap and apportionment, but the way of charging building insurance is wrong without a doubt.

    What I find hard is the present freeholder doesn't do as the lease states and keeps harassing me for money. I don't feel stay at home as I don't know when he would come to knock my door. I feel disgusted to face him or speak to him. I do hope he can go to the Tribunal, but he won't. He did mention the Court, but he hasn't. Keeping sending incorrect bills that all he has done in the last five years. I have paid solicitors and even the solicitors told me to stop corresponding with him as he didn't take seriously with the lease. I used up my money for legal advice and couldn't afford more, but what are my options to do with this rogue?

    Leave a comment:


  • Macromia
    replied
    Originally posted by hexu View Post
    - Building insurance. It is simply being incorrectly billed. The demand does not meet the requirements under the lease. But the present landlord doesn't accept it.
    How are the requirements of the lease not being met? And what did the solicitors you paid say regarding this?
    The fact that you don't think that the insurance meets the requirements of the lease doesn't necessarily mean that you are correct.


    Originally posted by hexu View Post
    - Proportion. It is mentioned as "a fair proportion" in the lease, the present landlord and I considered it differently.
    What you consider to be "a fair proportion" is likely to be unimportant. What will matter is whether the freeholder can show that they have given consideration to what is fair, and how well they can justify the way they arrived at that proportion.


    Originally posted by hexu View Post
    - The stock transfer cap. I realised it recently and I can't afford to pay more for legal advice. I would be grateful if you know anywhere offers free legal advice?
    I find it hypocritical that you are arguing that the proportion that you are being charged is not a fair proportion, while at the same time you are arguing that your contribution should be limited, even if the fair proportion would be more than the capped limit.

    It is possible that a limit to your service charge contribution is written into your lease, or into some sort of legal paperwork that does make it binding on the new freeholder, and, if that is the case, the new freeholder cannot charge you more than the stated amount. If there is a cap of this sort in place, the freeholder will find it very difficult to maintain the building properly.

    The Leasehold Advisory Service, C.A.B., and perhaps The Leasehold Knowledge Partnership are probably your best bets for free legal advice, but in all cases (and if you pay for legal advice) you would be best off knowing exactly what you want to know before you approach them.


    Originally posted by hexu View Post
    I wonder what is the difference between tribunal and court? Why does he only consider court, not tribunal?
    Based on what you have said, and the details of your lease that you have revealed (very limited in both cases), I would expect that he is threatening court rather than tribunal because he thinks that will be the best way to get you to pay up.
    If his intention is to try to pursue forfeiture of your lease, which might be a possibility, he may not realise that he is likely to need a tribunal decision first.

    Leave a comment:


  • leaseholder64
    replied
    The Leasehold Advisory Service can probably give you free advice on the insurance and apportionment issues, but may struggle on those relating to the conveyancing between council and and housing association and housing association and current freeholder. They won't be able to do anything without the exact texts of all the relevant documents that we have been asking for on this thread.

    My guesses are:

    insurance - one way or another you will end up having to pay your fair share of the full building insurance - it is possible a request will be made to have the lease changed, if it is incompatible with this;

    apportionment - it will cost you to have the tribunal to rule on this and it may not end up in your favour;

    service charge cap from stock transfer agreement - my suspicion is that ceased to exist when the transfer to the current freeholder was done.

    The County Court can force you to pay, but are not experts are leases and property maintenance. The tribunal can't force you to pay, but can say what you should pay. In simple cases of can't pay, won't pay, the County Court is the easy and appropriate route.

    If you choose to challenge court action, your defence should be that the charges are unreasonable and you should ask for the tribunal to brought in.

    Leave a comment:


  • hexu
    replied
    Thank you all, it's helpful.

    Building insurance, proportion and the stock transfer cap are my main disputes with the present landlord sadly.

    - Building insurance. It is simply being incorrectly billed. The demand does not meet the requirements under the lease. But the present landlord doesn't accept it.

    - Proportion. It is mentioned as "a fair proportion" in the lease, the present landlord and I considered it differently.

    - The stock transfer cap. I realised it recently and I can't afford to pay more for legal advice. I would be grateful if you know anywhere offers free legal advice?

    I wonder what is the difference between tribunal and court? Why does he only consider court, not tribunal?

    Leave a comment:


  • Macromia
    replied
    Originally posted by hexu View Post
    The reason I keep mentioning a notification of change of freehold, it's because I could question the stock transfer cap with the housing association (former landlord) before they started the selling process. No one needs to suffer the costs, it's the housing association's duty. But now, resident leaseholders (unfortunately only me, non-resident leaseholders who rent out their property won't be eligible for the stock transfer cap) became the victim, not even given an apology. It happened quietly.
    Somebody has to 'suffer' the costs.
    If work needs to be done on a building, and the cost will be £10,000 for a leaseholder once the total costs have been shared according to the terms of the lease, but the leaseholders contribution is capped at £5000, the remainder has to come from somewhere (other leaseholders, the freeholder, the government etc.) or the contractor will not be paid in full and therefore will suffer the cost himself.
    I wouldn't consider you to be a 'victim' here, I would say that it is more a case that you are now being asked to pay your full contribution, like the non-resident leaseholders you mention, instead of having the benefit of having your costs subsidised by the housing association (which probably means that it was a cost to taxpayers).


    Originally posted by hexu View Post
    I have paid two solicitors to read my lease (why do I have to pay for his mistakes?!) and suggested me to stop corresponding with the present freeholder. He can refer to the tribunal. But instead of the tribunal, he kept sending bills and knocking my door for money years and years. He said he will go to court and start processing if I don't pay in full as he asked.

    I cannot afford more for solicitors. I want to stop corresponding with him, but he kept calling me. It is so stressful.
    If solicitors have read your lease and told you that you are being incorrectly billed, it is presumably the case that you are either (i) being billed for sums that the lease does not allow to be collected, (ii) being charged a proportion that is considered unreasonable, or (iii) the demands do not meet the correct legal requirements so can be disregarded until corrected (in this case the full amount may become payable at a later date).

    If you have been advised to stop corresponding with the freeholder and to wait for him to go to tribunal, you should have been told exactly why the demands did not need to be paid - so what did your solicitors say?
    Not paying demands without knowing precisely why you don't need to pay is extremely risky, and unlikely to go well if you end up at a tribunal - especially if the freeholder has been chasing these debts for years.
    At the very least you need to make sure that any amounts that have been properly demanded and are not in dispute have been paid. The advice would usually be to pay by cheque and to write on the back (and in an accompanying letter) precisely what part of the sums demanded the payment was for, and that the cheque is only to be cashed if accepted for that part of the demands. Keep a copy of the letter and photos of both sides of the cheque.

    You should start recording the details of every time that the freeholder comes to your door or contacts you, and if you are certain that you don't owe anything you should tell him that you consider the visits to constitute harassment and may take legal action if he doesn't stop - although this may just prompt him to start legal action himself.

    Leave a comment:


  • hexu
    replied
    Originally posted by Macromia View Post

    If I was you I would forget about this because it doesn't sound like you could have purchased the freehold yourself if you had been given the right of first refusal (which is the only reason notification has to be given).

    This seems to have been an arrangement that was highly advantageous to you, and resulted in it being likely that you were paying less than your fair share of costs.

    You may well have a legitimate argument here, and could potentially take the freeholders to tribunal to dispute the way that they are apportioning service charges.

    If charges genuinely don't comply with the lease you have a choice of either withholding payment (potentially risky unless you really are certain that you are correct - and a court or tribunal later agrees with you) or paying and then contesting the payments later at a tribunal.

    Unfortunately the system favours the freeholder. If you start a claim yourself you have to pay application and hearing fees upfront ...
    The reason I keep mentioning a notification of change of freehold, it's because I could question the stock transfer cap with the housing association (former landlord) before they started the selling process. No one needs to suffer the costs, it's the housing association's duty. But now, resident leaseholders (unfortunately only me, non-resident leaseholders who rent out their property won't be eligible for the stock transfer cap) became the victim, not even given an apology. It happened quietly.

    I have paid two solicitors to read my lease (why do I have to pay for his mistakes?!) and suggested me to stop corresponding with the present freeholder. He can refer to the tribunal. But instead of the tribunal, he kept sending bills and knocking my door for money years and years. He said he will go to court and start processing if I don't pay in full as he asked.

    I cannot afford more for solicitors. I want to stop corresponding with him, but he kept calling me. It is so stressful.

    Leave a comment:


  • leaseholder64
    replied
    You would have to get a ruling from the FTT. However, if the lease doesn't allow for adequate funding of insurance, expect a counter claim to change the lease.

    Leave a comment:


  • hexu
    replied
    Originally posted by leaseholder64 View Post
    ... if the lease does not require you to pay a proportion of the whole building insurance, there is a good chance that it is defective, and a change could be forced to bring it in line with what is actually happening.

    Housing associations are immune from the first refusal rule on freehold sales, although, in this case, they had a moral duty to behave as though they weren't.
    I have paid two solicitors to read my lease, and the former landlords did the same as the lease states. How can I bring it in line with the present landlord if he doesn't want to accept it and keep sending me the wrong bills?

    Yes the housing association failed to apply their moral duty...let it go or report it?

    Leave a comment:

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