Section 22 LTA 1985 – Request to inspect supporting records

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    Section 22 LTA 1985 – Request to inspect supporting records

    Dear all,

    Since Nov 2020 I have been demanding to inspect financial records from my RTM. The financial year ended Oct 2020. I am a leaseholder in the building, but not a member of the RTM.
    I have formally made the request twice in writing, the second time cc'ing the freeholder in for the record.

    Every excuse in the book is used, including faulty printers. They will not show me the financial records. I know exactly why but that's another matter.

    I understand I was legally entitled to those records within 6 months of the financial year, or 30 days from my request. Both time frames have now passed greatly. The 'micro' accounts were also filed last month. So there is proof they are knowingly withholding the information from me.

    I understand this is a definite breach of my rights, subject to a maximum fine of £2500.

    I wanted to know how this would play out in reality? Has anyone done such a thing? Or is it toothless, and it would take 6 months only to end up with a £1000 fine for the RTM and £1200 in solicitor fees for me to achieve it.

    Any help would be great .

    #2
    Originally posted by 88xx View Post
    Since Nov 2020 I have been demanding to inspect financial records from my RTM. The financial year ended Oct 2020. I am a leaseholder in the building, but not a member of the RTM.
    I have formally made the request twice in writing, the second time cc'ing the freeholder in for the record.
    Do you receive Service Charge accounts and if so when are they due?

    The lease should set out the period of the service charge, when it is paid and also cover when the summary of maintenance expenses should be served on the lessee.

    If the SC period ended Oct 2020 you should have received a summary of expenses 6 months later.

    https://www.lease-advice.org/faq/how...eing-used-for/

    Comment


      #3
      The legislation is inadequate. You need to apply for a summary of relevant costs under s21 first. That is often ignored and even if it is supplied to you, the summary does not provide any additional useful information but the cost would be added to the service charges. On receipt of the summary, you then need to make the s22 request but as you say that is often ignored.

      A better method is to apply under Article 41 of the Articles of Association which allows you to inspect the accounting records of a RTM Company.

      Unfortunately many RTMs (and freeholders and RMCs) refuse to supply information to leaseholders and the only practical way of obtaining information is for a leaseholder to challenge the costs before a Tribunal. You can then follow the pre-action protocols by requesting information in order to narrow down the issues. You can also claim costs by referring to the failure of the RTM Company to respond to your requests for information.

      Comment


        #4
        Originally posted by eagle2 View Post
        The legislation is inadequate.
        ...
        Agreed.
        Firstly, unless you start by demanding provision of a summary that (1) will add costs to the amount charged to all leaseholders, and (2) is of absolutely no actual use whatsoever to 99.99% percent of leaseholders, you have no legal right to demand to see supporting invoices whatsoever.
        Secondly, even if you do have the legal right to demand to see invoices. any legal action for non-compliance has to be taken by the local authority, and there will almost never be any incentive for them to do so as it will cost them money without any tangible benefit (i.e nothing that is likely to get the elected counsellors in the press and win them votes).

        As said by eagle2, your best option is likely to be to at least threaten to start tribunal/court action and point out that you will use any refusal to provide sight of invoices and other documentation as a reason to ask for costs to be awarded against the RTM on the grounds that the action could potentially have been avoided had they not tried to hide information.

        You should point out that the RTM should be following the "RICS Service Charge Residential Management Code version 3" which makes it clear that information of this type should be provided when requested (note that they don't actually have to provide you with copies of the documents, they only need to provide access for you to see them - and they can make a reasonable charge for this).

        Comment


          #5
          As the link provided states most modern leases contain an obligation for the landlord to provide accounts at the year end. Failure to do so could potentially be a breach of the lease. On receiving the accounts my understanding was that a section 22 L&TA request could be submitted within 6 months.

          Lease Advice still states that the LHA has the power to start legal proceedings against the landlord or you can start them yourself. However since Di Marco v Morshead Mansions Ltd [2014] EWCA Civ 96 it may be futile to do so, but it should be noted where leases require the landlord to provide SC accounts/summary of expenses the leaseholder should be able to sue the landlord for contractual breach under the covenant.

          Also see;
          http://www.flat-living.co.uk/advice/...ght-to-inspect

          Comment


            #6
            Originally posted by fos333 View Post
            As the link provided states most modern leases contain an obligation for the landlord to provide accounts at the year end. Failure to do so could potentially be a breach of the lease. On receiving the accounts my understanding was that a section 22 L&TA request could be submitted within 6 months.
            The wording of Landlord and Tenants Act 1985, section 22 (1) specifically says that the section applies once a tenant has received "such a summary as is referred to in section 21 (1)".
            Since the type of summary referred to in section 21 (1) is difficult for tenants to make much sense of, the summaries that are provided are not usually in accordance with section 21 - although they are usually far more useful for tenants.

            Any reasonable freeholder, RTM, or managing agent, will allow leaseholders to view invoices that support the service charge costs that they are expected to contribute towards regardless of the type of service charge summary they have been provided with (or even if they have been provided with none and have just been told what the total is).
            Whether or not leaseholders are legally entitled to use section 22 if they don't already have a summary that meets the requirements of section 21 is another matter.

            This is something that will probably never be settled in court because tribunals do tend to treat it as unreasonable for freeholders, RTMs, etc., to withhold this type of information, so I doubt that higher courts are likely to be asked to provide their opinion.

            Comment


              #7
              Originally posted by Macromia View Post
              ..........you have no legal right to demand to see supporting invoices whatsoever.
              Secondly, even if you do have the legal right to demand to see invoices. any legal action for non-compliance has to be taken by the local authority, and there will almost never be any incentive for them to do so as it will cost them money without any tangible benefit (i.e nothing that is likely to get the elected counsellors in the press and win them votes).
              My confused understanding came from reading "The above right applies even if the summary was provided as end-of-year statement of account, rather than in response to a formal request for a summary under section 21 of the Landlord and Tenant Act 1985."

              https://www.lease-advice.org/advice-...her-issues/#14

              In the past I have also received annual Service Charge accounts from a managing agent that included a Managing Agent's report that stated "We hereby certify that in our opinion the annexed statement is a fair summary complying with section 21 (3)(a) of the L&TA 1985 as amended by (S41 and schedule 2) of the L&TA 1987..........the annexed statement is sufficiently supported by reports, receipts and other documents that have been produced to us."

              Those accounts were issued the year after I submitted a section 22 L&TA 1985 request following receipt of annual service charge accounts, I was informed that as a leaseholder I could only see "maintenance invoices" as only the directors of the management company were authorised/permitted to view receipts due to data protection etc.

              I contacted LAS who stated the Data Protection Act applies to personal data and they could not see how this could be applied to business receipts/invoices which I was entitled by law to inspect. They went on to say that I should advise the RMC that failure to comply with section 22 is a criminal offence. The prosecuting authority is the local council (usually the tenancy relations officer), ...........it is rarely cost effective to start a private criminal prosecution though this is sometimes possible.

              Most recently I have issued a section 21 L&TA 1985 to the present managing agent and the directors of the RMC which has been ignored by both. LAS have stated I didn't need to submit the request as there's a clear covenant within the lease that the summary will be provided within 6 months of the year end.

              It would also appear there's still the route of a private prosecution in the magistrates court?

              Comment


                #8
                Surely taking legal action will result in great expense to the RTM which presumably has no other source of income, and will thus be passed on to the flat owners ?

                Comment


                  #9
                  The audited service charge accounts should be made available to leaseholders after 6 month from the year end of the service charge year. After the leaseholder has received a copy of the service charge accounts, he /she can make an appointment with MA for access to inspect the vouchers and statements ( which substantiate the audited accounts ).

                  Any service charge arrears owing by any flats will be shown in the service charge accounts..You can ask the MA to use the small claims court to recover the arrears.

                  Comment


                    #10
                    You should study section 7 in the RICS Residential Management Code v. 3 and save yourself £1200 in solicitor fees

                    https://www.rics.org/globalassets/ri...ition-rics.pdf

                    Comment


                      #11
                      There should be a specific request from a leaseholder for a s21 report. If the accountant has prepared and referred to a s21 report, a leaseholder is entitled to make a s22 request to inspect the accounting records without making another s21 request,

                      It is up to the directors to ensure that the RTM Company complies with legislation, otherwise they could be personally liable for the costs. The lease will specify whether or not the costs of legal action may be recovered as service charges but costs resulting from the failure to comply with s21 or s22 are unlikely to be regarded as reasonable by a Tribunal.

                      Comment

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