Freeholder awarding major works contract to a contractor that he owns

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    Freeholder awarding major works contract to a contractor that he owns

    Our freeholder ran a section 20 consultation for a major works contract. He obtained three quotes, one very high (around £100k), another very slightly cheaper (just 0.5% cheaper in fact) and another very low (around £30k). He 'disqualified' the cheapest one, purportedly on the grounds that they must have misunderstood the job. The second bidder has therefore won the job, and we have now discovered that this contractor is in fact owned by the freeholder! We suspect he waited for the first bid to come in (possibly even asking the contractor to bid on the high side) and then submitted a slightly cheaper one in order to win. I know the landlord is obliged to disclose any connection with a contractor for Qualifying Long Term Agreement consultations, but strangely there doesn't seem to be a similar obligation for Major Works consultations - the only thing I can see is the obligation to obtain at least one quote from a non-connected bidder. Is there anything we can do to challenge this selection? It smells like fraud but what can we do? He's refusing to re-open to consultation/tender process. Thanks.

    #2
    My own experience of LH has been bruising, I would guess whatever legal avenues you have will be ineffective (others will tell you what avenues you have).

    I would expect once on the job the generous contingency will be consumed and then there will be extra work that will skip the whole s20 process, urgent, scaffold already up, etc.

    Is this a bldg where you can take over management?

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      #3
      Not sure what you expect. The relationship between freeholders (whether they be external or lessee owned companies) and lessees is all about facilitation of fraud. Fraud is the bread and butter of practitioners in this area and they have the legislators in their pockets (together with the bundles of cash).

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        #4
        Have you seen the actual quotes. They should give a lot of detail of the work, and even a detailed price breakdown, which can be compare with standard pricing guides.

        A very wide difference in price does indicate either the specification was badly written or the contractor failed to read it properly.

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          #5
          Andrew your advice is generally very helpful. However, your entrenched hostility towards MAs is not rational. I am sure the majority are honest and doing their best.
          I don't think you would speak like this if it was in a situation where you could be sued.

          could you engage a surveyor to advise on a fair cost ?
          Money collected would be service charge so I think you should be able to challenge its reasonableness at FTT.
          Unfortunately, any options are likely to cost. Sorry.

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            #6
            My understanding is that you have a right to nominate a contractor. In fact, the notice of intention to carry out major works should have informed you of your right to nominate a contractor.

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              #7
              The only instance where you don't get to nominate a contractor is if there was an abridged version of consultation. The abridged version applies where the freeholder has a “Qualifying Long Term Agreement” in place, which means the freeholder had a contract for services with a contractor of more than 12 months.

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                #8
                Originally posted by scot22 View Post
                Andrew your advice is generally very helpful. However, your entrenched hostility towards MAs is not rational. I am sure the majority are honest and doing their best.
                I don't think you would speak like this if it was in a situation where you could be sued.

                could you engage a surveyor to advise on a fair cost ?
                Money collected would be service charge so I think you should be able to challenge its reasonableness at FTT.
                Unfortunately, any options are likely to cost. Sorry.
                Saying that fraud is widespread, rife, and even the norm (when it is) is not something that is amenable to sueing.

                "Fair costs" is not a legal concept here. There is generally no point whatever in engaging a competing surveyor - there is no provision in law for this to be taken into account -- except perhaps if the case is brought to FTT under the umbrella of an unreasonable service charge where this would provide some weak evidence.

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                  #9
                  Originally posted by TruthLedger View Post
                  My understanding is that you have a right to nominate a contractor. In fact, the notice of intention to carry out major works should have informed you of your right to nominate a contractor.
                  This is usually not helpful. There is only a requirement to forward a single nominated contract from lessees, and the lessor can often nominate one themselves as lessee if they own a property via a family member for example.

                  Further, lessors often specify restrictive criteria a prospective contractor has to fulfil -- some of which might be reasonable, but this is mostly designed to prevent competitive quotes.

                  Comment


                    #10
                    I was not specifically referring to the post. Read more carefully please I referred to like this. You have no evidence for your generalised slur. If it were a specific claim then...
                    referring to surveyor that was obviously, to most people, linked to FTT.
                    We need more courtesy and consideration in the world.

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                      #11
                      The freeholder is also under a duty to state in writing the reasons for awarding the contract to that contractor. If the freeholder doesn't and/r has not followed the proper consultation procedure, you have grounds for a Tribunal hearing. The freeholder will have to justify their selection procedures to the Tribunal. If they fail to convince the Tribunal, the freeholder's consultation procedure could be invalidated.

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                        #12
                        Originally posted by scot22 View Post
                        I was not specifically referring to the post. Read more carefully please I referred to like this. You have no evidence for your generalised slur. If it were a specific claim then...
                        referring to surveyor that was obviously, to most people, linked to FTT.
                        We need more courtesy and consideration in the world.
                        Actually, here we disagree. Politeness is not always appropriate when dealing with thugs, crooks, fraudsters, rapists etc... Nor is it a top priority. It can be (and often is) is often a diversion (from the thuggery). Some thugs thrive on a sea of politeness.

                        Of course there is plenty of evidence for the generalised slur (as you put it). The whole sector is way overdue for a complete overhaul from the cesspit upwards.

                        Comment


                          #13
                          Happy to disagree.
                          I do agree that there is need for an overhaul and of leasehold in general.
                          Let's also not forget the actions of some leasehold are dubious.
                          Best Wishes.

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                            #14
                            This kind of thing is all about a kind of misplaced politeness

                            https://www.forbes.com/sites/rogersc...l-correctness/

                            Yes certainly many leaseholders are crooks too. It is far harder for them to be crooks however, except where they control freehold owning companies (which is part of the problem that needs addressing), in which position they can do far more damage and thievery than standalone freeholders.

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                              #15
                              Thanks your contributions, everyone. It looks like the freeholder will be pressing ahead with their affiliated contractor, so we have decided to obtain our own quotes for comparison purposes, and (assuming they show the price has been inflated) will apply to the First-Tier Tribunal after the event for a decision as to reasonableness. That seems to be the only option we have, as the freeholder has (on the face if it) complied with the relevant section 20 requirements.

                              Comment

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