Can service charge/sink fund be used for this?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Can service charge/sink fund be used for this?

    On behalf of a friend..

    We are a Right to Manage Company (RTM). We have some leaseholders who are in significant arrears with their service charges. We have stuck to the ARMA recommended system of sending reminders and notice before action etc. Next step therefor is a County Court Application. Does anyone know where the RTM is supposed to get the funds to pay for the County Court application fees and if necessary any legal representation? Thanks

    #2
    What do your leases say?

    Does it explicitly allow service charge funds to be used for legal fee or court costs?
    Does it contain any more ambiguously worded clauses that would allow it (e.g. something that covers all costs of collecting service charges)?

    If the RTM company has no funds of its own, and the leases do not allow these costs to be taken from service charge funds, the directors may have to decide whether to pay any costs themselves (as a freeholder would) and home that the leases and/or court allows the costs to be recovered from the defaulting leaseholders (who should be the ones paying any costs anyway - if the leases are written well).

    Comment


      #3
      The RTM has a legal right to demand annual service charge from leaseholder under the lease .

      So use the small claims court ( online service ) to collect the service charge arrears . No solicitor required .

      The court fee for online claims below £1000 is £60 or below £2000 is £105 etc .

      The claim should include "the arrears + court fee + interest if allowed in lease, calculated from due date ) .

      https://www.moneysavingexpert.com/re...-claims-court/

      You can test the small claims court method by entering claim for first year service charge arrears..

      Comment


        #4
        I would try to avoid legal action if at all possible, costs are rarely recovered in full and it usually results in some or all leaseholders unhappy with the outcome, if there are several leaseholders involved, it suggests that some of the charges are unreasonable. I would try engaging with those leaseholders and attempt to find a solution. If you cannot reach agreement, it says much about the parties involved but you could try mediation or arbitration etc. Alternatively, applying to the First Tier Tribunal would be a better option than applying to the court, which would often transfer the case anyway,

        Comment


          #5
          As post #3, if you've tried usual polite reminders then just take out MCOL summons , after notifying any mortgagees.
          If RTM has no funds then best use a directors loan to fund it and recover costs from recalcitrant lessees.
          Absolutely no point in applying to FTT where there is no dispute, you will just be wasting time and money.

          Unfortunately RTMs often suffer from these issues with selfish leaseholders not meeting their obligations and often delaying essential maintenance and pitting neighbour against neighbour.
          It sounds like you have a number of flats so might be worth considering employing a professional management company that could routinely handle these arrears.

          Comment


            #6
            It is the responsibility of the RTM to get to know its leaseholders and understand the reasons for none payment, you cannot assume that they have no grounds for withholding payment. It is all very well others saying that the directors should lend monies to the RTM but what happens when the costs are not fully recovered from the leaseholders, as in most cases? The benefit of going to the FTT, if private negotiations fail, is that it is simple, it costs very little and the FTT will determine what is payable. The leaseholders will then have no legal argument against paying.

            Comment


              #7
              I believe in always having a competent property manager, most are. Seen too many volunteers working without thanks and even hassled.
              With a P.M everyone must contribute to the running of the place.
              I am not advertising but don't know why people put up with the demands.

              Comment


                #8
                I must have been unlucky, I have yet to find a competent property manager, each one I have across has been more interested in making money for himself at the expense of the leaseholders. There is no reason why you cannot manage the building yourselves, but it does require a good relationship with all leaseholders and trust needs to be built, earned and maintained.

                Comment

                Latest Activity

                Collapse

                • How much can the freeholder charge for registering details of a sublet?
                  by Joubert
                  I am a director of a Freehold Company of a small block of 28 flats in a popular residential area.

                  Over the past few years the majority of flats have been purchased by investors who sublet the flats on ASTs.

                  Although the leases between the Freehold Company and the lessees are...
                  04-12-2021, 17:35 PM
                • Reply to How much can the freeholder charge for registering details of a sublet?
                  by eagle2
                  If the lease states that you may charge a registration fee of £10, that is the amount you may charge, you are not entitled to increase the charge unless the lease specifically allows an increase. Even then you would be limited to a reasonable amount and £100 would be considered to be unreasonable....
                  05-12-2021, 06:55 AM
                • Legal Action Against Landlord - Local Council
                  by Isaac1400
                  Hi,

                  Hoping someone can advise. I am leaseholder and the landlord is a local council. my property is a flat and there are about 55 flats spread out over 3 floors.

                  Now the problem is that over the years the council has failed to maintain the exterior and communal areas - including...
                  02-12-2021, 07:13 AM
                • Reply to Legal Action Against Landlord - Local Council
                  by andydd
                  I sued my freeholder for failure to maintain my driveway, judge was quite damning but I was only awarded £100 as hard to proof any loss BUT in your case it sounds you have exceptional worry over various incidents so yes you could sue and as I found out it was useful, I got costs too and its something...
                  04-12-2021, 21:19 PM
                • Dilapidated Flat
                  by scot22
                  In a block of 24, unfortunately one flat has become dilapidated. The new owner has bought cheaply. She is now demanding the Freeholder pays to refurbish it claiming they have been negligent. Is there a reasonable case ?
                  04-12-2021, 11:21 AM
                • Reply to Dilapidated Flat
                  by scot22
                  Thanks all. It was a great price, significantly below market value, plus in further negotiations a reduction to pay for any further work. This was identified by a surveyor. She is not clueless.....
                  Artful in my research I read that can only claim for her ownership period.
                  It is all i...
                  04-12-2021, 19:33 PM
                • Reply to Legal Action Against Landlord - Local Council
                  by Isaac1400
                  Thank you for bringing this to my attention. I have heard of this. In summary do you know if this would benefit those with older leases and not on the builds which have has issues with rising ground rent etc?...
                  04-12-2021, 19:09 PM
                • Reply to Dilapidated Flat
                  by Macromia
                  If a leaseholder can show that internal maintenance is required because of a freeholder's negligence (e.g. a failure to meet external maintenance obligations according to the terms of the lease), they will potentially have a claim against the freeholder and be entitled to expect the freeholder (the...
                  04-12-2021, 16:59 PM
                • Reply to Dilapidated Flat
                  by theartfullodger
                  The previous owner might have had a case. The new owner I think only for claims for problems during their ownership. But ianal.

                  Presumably she got a great price as it was so dilapidated
                  04-12-2021, 16:51 PM
                • Reply to Dilapidated Flat
                  by Neelix
                  What utter nonsense.

                  The new buyer should have had a survey before they purchased.
                  04-12-2021, 16:15 PM
                Working...
                X