Section 20 and 18 Month Rule

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    Section 20 and 18 Month Rule

    Good Evening All,

    Please can someone assist me with a query?

    We are currently in the process of taking the Landlord to a FTT in relation to works completed on a roof.

    We believe that there has been a number of substantial flaws with the process - one argument being is that the Landlord did not comply with the 18 Month Rule.

    To summarise:

    In Late 2015, my Mother and Father (the Leaseholders) were told that consultation would commence in respect of major works to the roof

    In December 2015, the consultation period began for a period of 30 days, ending on 25 December 2015.

    A meeting was held in January 2016 to discuss the works.

    The situation then went quiet for 3 years.

    In April 2019, the Leaseholders received an invoice for the cost of the works.

    I submitted a Subject Access Request to the Landlord - this was refused. We then took the matter to the FTT. The FTT told the Landlord to provide all relevant documentation by way of Directions.

    Within the documents, the cost for the works of the roof was paid to the Contractor on 22 August 2016. My understanding is that the 18 months starts from this date - as this is when the cost was incurred.

    The Service Charge Invoice is dated 19 April 2019 - on that basis, my understanding is that they are well out of time.

    The Landlord never preserved their right to payment as my Mother and Father were never told that the cost has been incurred and they will need to make payment by way of the service charge.

    Can anyone please assist? Surely I’m missing something?!

    Many thanks.

    #2
    The FTT will side with the landlord unless you have some other valid reason for not paying.
    Have they explained the delay? Why do you think you should not contribute to roof works ?

    Comment


      #3
      It’s a very complex case - no explanation on delay whatsoever. We are paying through monthly instalments but ‘in protest’ - this was made quite clear.

      When we received paperwork from the Landlord through Directions, they sent evidence that relates to a completely different property to the one in question. For example, pictures and videos of the damaged roof relate to a
      completely different block of flats with its own roof and they admitted that they completed work on the roof that was part of a ‘project’ - based on the paperwork, it appears as though work was never required. This is contradictory to what my Mother and Father were told previously throughout the consultation process.

      Why would the FTT side with the Landlord? The 18 month rule is quite clear - case law has dictated that if demand for payment is late or the Landlord did not send a Section 20B notice (or they did, but it didn’t contain the right information), then Leaseholders are not liable for payment and therefore are statute barred?

      Comment


        #4
        Originally posted by Section20z View Post
        The FTT will side with the landlord unless you have some other valid reason for not paying.
        No.
        Leasehold tribunals can be a bit of a lottery in many cases, but in a case like this they will (almost certainly) side with the leaseholder - unless the freeholder has a valid argument why payment should be made.
        The FTT are obligated to follow the law, and the law here clearly says that freeholders must demand service charge with 18 months of the charges being incurred or notify the leaseholder that the charges have been occurred and a relevant portion of these charges will be charged at a later date (again, this needs to be done within 18 months of the charges being incurred).

        I believe that there is case law that means that estimated costs are not sufficient to qualify as notification, so any estimates that might have been mentioned during consultation will not be good enough to count as section 20B notification.



        Originally posted by Section20z View Post
        Why do you think you should not contribute to roof works ?
        The OP hasn't said that they don't think that they should contribute to reasonable and correctly demanded costs associated with roof works.
        It sounds like they didn't really consider the works to be necessary, but that isn't really relevant. Regardless of whether or not the works are necessary, the freeholder has to inform the leaseholders of the cost of the work (the total cost, not the share they will actually pay) within 18 months - or the freeholder risks having to foot the bill themselves.
        Freeholders don't have the freedom to spend their leaseholder's money however they like and demand reimbursement of expenditure when, or how, they like - they need to follow the law, and the terms of the lease.



        The question will be whether or not there has been anything communicated to the leaseholders that could be considered to be valid section 20B notification.
        Although costs do not become payable if demands that are sent out are incorrect, in some circumstances incorrect demands can be considered to be valid as section 20B notices.
        So, was there any communication, regarding the cost of this work, received from the freeholder during the 18 months that started on 22nd August 2016? If so, the specifics of what it says might be important.

        It is also likely to consider precisely what the directions given to the freeholder regarding production of relevant paperwork said. Were they told that they needed to produce all relevant paperwork?
        Is it possible that they might 'find' a letter that they say was sent out that details the cost? Have other leaseholders in the block been informed of your dispute - and would any of them be prepared to join you (or at least to give a witness statement, and attend any hearing, to say that they didn't receive any notification of the cost until 2019)?

        Comment


          #5
          VPatel2707,

          Well good luck with that then. Do let us know how you get on.

          Comment


            #6
            Macromia,

            No communication whatsoever - it went quiet and I remember my Mum thinking that they’d forgotten about it! It’s interesting because the Leaseholder Handbook that my Mum and Dad got when they purchased the property states that they will only invoice for major works ‘when work is completed and inspected’ - however, Section 20 clearly states something else. This is why I’m confused. My Mum has provided me with all paperwork sent by the Landlord and there is nothing. No correspondence whatsoever on the roof - other than 18 April 2019 when the invoice was sent.

            Not all paperwork was provided

            The point on obtaining witness statements is interesting - we will work on this. I assume we would need to make an application for a Direction on this? Also - can we say to the others in the block that if we are successful, this will benefit them too? To date, they haven’t been informed of the dispute but I guess we would need to tell them this to get a witness statement. Would they definitely need to attend? The majority of the block are elderly and probably wouldn’t want to get too involved.

            Comment


              #7
              You're correct about the 18 month rule. It is Under Section 20B of the Landlord and Tenant Act 1985. Have you got in touch with LEASE at all for their feedback? https://www.lease-advice.org/

              Comment


                #8
                Thanks for your response - yes, I did get in touch with LEASE by way of a telephone appointment. They also said the same thing - although they haven't reviewed the paperwork. I might just send this to them for completeness and advice.

                Comment


                  #9
                  Originally posted by VPatel2707 View Post
                  ...the Leaseholder Handbook that my Mum and Dad got when they purchased the property states that they will only invoice for major works ‘when work is completed and inspected’ - however, Section 20 clearly states something else.
                  Nothing in L&T Act 1985 Section 20 says when the cost of major works should be invoiced - only that leaseholders need to be informed of the costs that they will be expected to contribute to "within 18 months of the costs being incurred", although the costs also have to be invoiced in accordance with the terms of the lease.
                  If your parents lease says that major works will only be invoiced when the work has been completed and inspected, or if this is what has been agreed with the leaseholders despite not being stated in the lease, then this is when the costs should be invoiced (as long as this doesn't make the costs irrecoverable).

                  Most leases will allow for estimated service charges for each year to be collected prior to the costs actually being incurred, but will also allow for any over spend to be collected after the total costs for the year have been calculated. There is no reason why costs of major works shouldn't be invoiced after work is completed (unless the lease specifies that all costs must be collected at a different time, and leaseholders haven't all confirmed that they agree to alternative arrangement) as this is generally more favourable to leaseholders.


                  Originally posted by VPatel2707 View Post
                  My Mum has provided me with all paperwork sent by the Landlord and there is nothing. No correspondence whatsoever on the roof - other than 18 April 2019 when the invoice was sent.

                  Not all paperwork was provided
                  The problem that you might have is that the Landlord (freeholder) could claim that notification of the costs was sent out within 18 months of them being invoiced - and might produce a copy of a notification letter that they say was sent out.


                  Originally posted by VPatel2707 View Post
                  The point on obtaining witness statements is interesting - we will work on this. I assume we would need to make an application for a Direction on this? Also - can we say to the others in the block that if we are successful, this will benefit them too? To date, they haven’t been informed of the dispute but I guess we would need to tell them this to get a witness statement. Would they definitely need to attend? The majority of the block are elderly and probably wouldn’t want to get too involved.
                  Your argument relies on notification of the costs, that meets the requirements of section 20B, not having been sent. If several of the leaseholders in the block agree that they did not receive notification this should make you case much stronger.

                  Would it be correct to assume that tribunal proceedings have already been started (either by you or by the freeholder)?
                  If so, you should have been given a date by which all witness statements, communications, and other relevant paperwork should be shared with the other parties and the tribunal. If this is the case you should obtain witness statements, and submit them, by this date if you can.
                  If the date for submission of evidence has already passed, you should still try to obtain statements prior to a hearing. That way, if the freeholder has 'found' notification letters that they 'forgot' to include with the evidence they submitted, and asks the tribunal to admit this into evidence, you can ask for your witness statements from other leaseholders to be admitted into evidence at the same time.

                  If you are successful it will not necessarily benefit the other leaseholders, unless the freeholder chooses to also give them the benefit of any cost reductions that you win (unless they join you as named parties in the tribunal action). However, if you win the case, they could bring a later identical action to tribunal and use your earlier successful claim, and all of the evidence, against the freeholder. You could even offer to represent them.
                  Witnesses would not necessarily have to attend a hearing, and their evidence would not be required at all unless the freeholder claims that notification was sent out, but the tribunal might prefer to be able to speak to at least one other witness if your claim that no notification was received is contested by the freeholder.

                  Comment


                    #10
                    With regards to costs only being invoiced after the work had been 'completed and inspected', there is no reason why this should have delayed notification of the costs.
                    At anytime within 18 months of the invoice for the work being received, the freeholder (or their managing agents) could have sent out a letter stating something like;
                    "Although roof works have not yet been completed, the total costs for these works will be £xxxx. You will be required to contribute towards these works in accordance with the terms of your lease, and an invoice for your contribution will be sent out in due course once the final inspection has been carried out."

                    If you are going to a tribunal, try to anticipate all possible arguments/counter arguments that the freeholder might come up with.
                    Prepare yourself with knowledge of what the law says, and of any relevant case law.

                    Comment


                      #11
                      Originally posted by Macromia View Post
                      Nothing in L&T Act 1985 Section 20 says when the cost of major works should be invoiced - only that leaseholders need to be informed of the costs that they will be expected to contribute to "within 18 months of the costs being incurred", although the costs also have to be invoiced in accordance with the terms of the lease.
                      My parents have never ever received correspondence relating to estimated service charges since they took purchase of the property - the Lease does state this clause but all they ever get sent is invoices for minor works. This is the first time that they are required to contribute to major works and have ever been the subject to a consultation relating to major works. It has certainly not been agreed that this is when costs should be invoiced.

                      Originally posted by Macromia View Post
                      The problem that you might have is that the Landlord (freeholder) could claim that notification of the costs was sent out within 18 months of them being invoiced - and might produce a copy of a notification letter that they say was sent out.

                      Your argument relies on notification of the costs, that meets the requirements of section 20B, not having been sent. If several of the leaseholders in the block agree that they did not receive notification this should make you case much stronger.
                      Understood and noted - my Father is going to try and speak to at least one of the occupiers later today.


                      Originally posted by Macromia View Post
                      Would it be correct to assume that tribunal proceedings have already been started (either by you or by the freeholder)?
                      Yes, Tribunal proceedings have commenced. The first direction was to the Landlord - they were asked to provide some documentation and an overview of their position. It transpired that the work required on the premises in question formed part of a 'single project' - evidence was provided as to why work was required but this related to a completely different property! This is completely contradictory to what was communicated before (i.e. the roof was faulty) - all documentation provided at this stage did not contribute to proceedings. I was then asked to complete a Statement of Case and all of the concerns I've mentioned (along with others) were mentioned.

                      Thank you for your advice, I will obtain witness statements and see what happens. As of yet, we've not been asked to provide bundles in prep for the hearing - the hearing is in July 2020 so I'm sure the Direction to prepare bundles will come soon. The Landlord has to now write up their own Statement of Case and they have been given a deadline of 19 June 2020 - we will see if someone transpires through this in respect of the Section 20B issue from their end.

                      Originally posted by Macromia View Post
                      If you are successful it will not necessarily benefit the other leaseholders, unless the freeholder chooses to also give them the benefit of any cost reductions that you win (unless they join you as named parties in the tribunal action). However, if you win the case, they could bring a later identical action to tribunal and use your earlier successful claim, and all of the evidence, against the freeholder. You could even offer to represent them.
                      Witnesses would not necessarily have to attend a hearing, and their evidence would not be required at all unless the freeholder claims that notification was sent out, but the tribunal might prefer to be able to speak to at least one other witness if your claim that no notification was received is contested by the freeholder.
                      Noted - many thanks for your ongoing advice.

                      Comment


                        #12
                        Originally posted by Macromia View Post
                        With regards to costs only being invoiced after the work had been 'completed and inspected', there is no reason why this should have delayed notification of the costs.
                        At anytime within 18 months of the invoice for the work being received, the freeholder (or their managing agents) could have sent out a letter stating something like;
                        "Although roof works have not yet been completed, the total costs for these works will be £xxxx. You will be required to contribute towards these works in accordance with the terms of your lease, and an invoice for your contribution will be sent out in due course once the final inspection has been carried out."

                        If you are going to a tribunal, try to anticipate all possible arguments/counter arguments that the freeholder might come up with.
                        Prepare yourself with knowledge of what the law says, and of any relevant case law.
                        Will do, I've familiarised myself with a number of cases in respect of this.
                        Thank you for your help.

                        Comment


                          #13
                          Quick question please - we've got at least three leaseholders on board. They have confirmed that they did not receive any correspondence since the Leaseholder Meeting held in January 2016 up until the date of the Invoice Demand (April 2019) - they have agreed to provide witness statements. Please can I ask your help in what the witness statement should say? Do they need to be detailed? Or just a simple statement?

                          Comment


                            #14
                            If you were the first to be asked to provide a statement of case, that means that it was you who applied to the tribunal, so you will have the initial burden of proof - the fact that the invoice your parent were sent is dated so long after the cost of the work was invoiced to the freeholder should satisfy that.

                            The freeholder will then have to make the case that notification was sent within 18 month - or somehow justify why this was not required (I can't think of any reasoning they could use).

                            If they produce evidence that they say is of notification having been sent, you need to provide more convincing evidence that it was not.


                            What is the total cost that is being disputed here if all leaseholders were to have the costs ruled unrecoverable? If thousands are involved the solicitor is quite likely to have a solicitor to argue their case. If tens of thousands are involved they probably will instruct a solicitor.
                            This doesn't mean that they'll win, but it does mean that they are more likely to bring up arguments and technicalities that you may not be expecting. If you haven't been to a tribunal before, don't let this intimidate you - if you are well prepared (and right!) it can still go in your favour.

                            Comment


                              #15
                              Originally posted by VPatel2707 View Post

                              Quick question please - we've got at least three leaseholders on board. They have confirmed that they did not receive any correspondence since the Leaseholder Meeting held in January 2016 up until the date of the Invoice Demand (April 2019) - they have agreed to provide witness statements. Please can I ask your help in what the witness statement should say? Do they need to be detailed? Or just a simple statement?
                              They need to be honest and cover at least the important information - that the first communication they received regarding the cost of these works was in 2019.
                              I would suggest that fairly brief statements are less likely to mention things that might conflict with what your parents are saying, but you want each statement to be in the person's own words, you don't want it to look like they have all been told what to say.

                              There is no harm in the statements including mention of remembering consultation in 2016, or saying that they do, or don't, remember any work actually being carried out, but then heard nothing for three years - if that is what they remember.

                              Comment

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