Section 20 Consultation

[SiMagic]

Hi,

I am one of 6 owners in a block of flats who own a share of the freehold and are directors on the management company. Each of the owners are leaseholders.

We need to get some major urgent work done to the roof which is likely to cost ~£10,000. It is likely that we'll have difficulty with the two of the owners contributing.

If we are all directors and owners of the freehold rather than just straight forward leaseholders, do we still need to go through the three stage Section 20 consultation process if the majority of directors have agreed on a quote and for the work go ahead?

My worry is that if we have to legal action against one of the owners and we haven't gone through the proper process then we won't be able to recover any more than £250.

Any advice greatly appreciated.

Regards,
Simon

[leaseholder64]

To be legal, you need to go through the procedure. If someone is likely not to want to pay, that's particularly important.

A single leaseholder can challenge for failure to do this, and they can even change their mind after any company vote. From a legal point of view company members are not the same as leaseholders.

If you could get 100% agreement, you might be able to risk it, but if non-payment is likely you need to consider a pre-emptive application to the FTT to waive the process. Generally though, in the case of urgent work, if you can demonstrate that you consulted as much as possible within the available time, and that you took steps to ensure you got value for money, you should be able to get a retrospective dispensation. Because of case law, from the Daejan case, you will be able to recover most or all of the cost. The test will be how much would it have cost if the consultation had been done in full, rather than a limit of £250.

Some people report that managing agents are not doing S20's, because the Daejan case severely weakens the law.

[SiMagic]

Thank you for your reply

The owner of the top floor flat who wants the work done has has got two quotes and emailed the rest of us all of the details, asking for feedback, however, he wants wants to book the work in for this week - 5 days after sending out this information.

I don't think extending the consultation period would have meant he would have got a significantly lower quote.

Unfortunately the owner that we will have the problem with never replies to any form of communication (and owes a large amount of service charge payments), so no matter how long the consultation period I doubt we'd hear anything from him.

[leaseholder64]

It's a pity you couldn't prove you would hear nothing from them. If you could, you would have proved that curtailing the consultation did not disadvantage them, so they would have no claim post Daejan, as long as the FTT was prepared to give retrospective dispensation.

The danger here is that share of the freehold type company members tend to not like the delays that S20 causes, in all circumstances, whereas dispensation is only intended for real emergencies (e.g. the lift in a retirement complex).

[SiMagic]

Thank you, really appreciate the insight.

[SiMagic]

One more question...do you know what the minimum length of time is between each stage of the S20 consulation process? From my own research it appears to be 30 days.

Thanks

[leaseholder64]

30 days from when each of the notices is deemed to have been received. There are only two stages if go for the lowest bid.

Contractors may or may not be unwilling to prepare quotes before the specification has stabilised, and may be unwilling to schedule a start day before they are 100% sure of the contract.

If you have a non-payer, how are you going to pay for the work. Most leases don't allow you to borrow money from other leaseholders.