Undisclosed Major Works

[AlexT]

Hi all

I'm hoping to get some guidance on whether there is a requirement for a Freeholder to disclose forthcoming Major Works to a purchaser of a leasehold flat.

My wife and completed on a Leasehold flat in January 2015 with the process having begun the purchase process in late October 2014. The freeholder is a local council. During that process our "pre assignment pack" provided to our solicitor suggested future works for 5 years totalling approximately £5,000 which we were fine with.

Roughly 7 months after moving in we were given an S20 that started at £6,500 and was then increased shortly after to £12,500. The work was completed over 18 months ago now and whilst we still haven't had a final bill the last S20b we received is suggesting the cost will be in excess of £25,500.

I have recently been given a survey report commissioned by the council from April 2014 specifying the exact works which were then carried out, albeit priced at a quarter of what they have spiralled to (a separate issue).

Whilst we are very happy to contribute to works as Leaseholders, we feel that the Freeholder should have informed us of these works as we would obviously have factored it into our purchase price. They are claiming it was emergency works despite the surveys.

What is the legal situation on disclosure of this type of information as my understanding is that we have suffered a material loss of approximately £20,000 as we expected £5,000 of major works in the first 5 years based on their disclosure.

Thanks for you advice.

[leaseholder64]

They told you they were a council. That pretty much implies there will be large major works bills at short notice.

Where they asked about major works?

Did they actually know they were needed at the time they were asked?

[AlexT]

Hi Leaseholder64

Thanks for the reply. We bought in full knowledge that it was a council and how much impact they can have. Our solicitor did ask about upcoming major works which they put at £5,000 for the next 5 years and unrelated to any of the works since carried out.

I now have a report, from the council, from 7 months prior to beginning the purchase process that shows they were aware that the works now carried out were required and the costings, and this was not disclosed at the time.

[Gordon999]

I thought there was a limit set at £15,000 for Councils charges by Housing secretary Pickles ..

https://www.lease-advice.org/faq/my-...-can-be-asked/

[AndrewDod]

No they do not have to disclose anything. You should have factored the major downsides of purchasing a leasehold property into the price (basically the potential for theft and scamming). The fact that it is a council, makes it doubly so.

[Jon66]

AndrewDod may not be correct. Firstly councils are susceptible to Judicial Review JR on various grounds one of which is legitimate expectation. There may be a basis for a claim for breach of that doctrine and a good direct access land law and public law barrister should have a look at it, but only if there is evidence that they had knowledge of the forthcoming s20 and if they had a duty to disclose it.

[AndrewDod]

AndrewDod may not be correct. Firstly councils are susceptible to Judicial Review JR on various grounds one of which is legitimate expectation. There may be a basis for a claim for breach of that doctrine and a good direct access land law and public law barrister should have a look at it, but only if there is evidence that they had knowledge of the forthcoming s20 and if they had a duty to disclose it.

Since there is no law relating to whether the freeholder has to respond to a potential buyer at all (about anything) there won't be any law relating to how they have to respond - and in any case the only obligations they have is to the lease (and there is no law to state that they have to provide a projection of future costs in future years to the person involved in that contract - the lessee - let alone a third party.

Yes it would be nice if one could easily deal with freeholder/leaseholder issue. But it's not nice. The precise purpose of the law (what it contains, what it does not contain, and how existing law can be implemented) is to facilitate theft and extraction of money. Judicial review of a corrupt system will be a waste of time. The purpose of JR is to examine whether legislative and executive branches are exceeding their authority - this sort of money extraction is legally sanctioned and smoothed over.

[Jon66]

The point is the council misled the buyer, which is governed by public law.

[AndrewDod]

The point is the council misled the buyer, which is governed by public law.

They didn't. The original S20 was around what they stated. And then it spiralled out of control (which is what Councils do after various layers of ineptness, non-caring and backhanders). They were not able to predict that they would be inept, non-caring and corrupt.

[Jon66]

It's unclear. Op asks the question 'should he have been informed of the works', inferring they had not been so informed, but earlier in his post says he was informed of works but the costs spiralled. Perhaps AlexT would like to come back to us and clarify the point.