Section 20 Nightmare

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    Section 20 Nightmare

    My Wife & I are leaseholders in a block of 10 flats. 7 of these flats are leaseholders who also have a “share of the freehold”.
    For some time now the roof among a few other minor bits of maintenance have needed doing.
    A section 20 was issued and our share was almost £9000, (10% of the total value, each of the 10 leaseholders paid 10%) This included contingency money in the event of extra works needing to be done.
    ( I have concerns the section 20 process was not followed correctly as the scaffolders were changed at the last minute days before the work was due to start without consultation)

    A number of the freeholders decided to project manage the work themselves to save money.
    Instantly this proved a terrible idea, The first work they had done was the painting, which was of an awful standard.
    But the real issues came when work started on the roof. Our flat was beset by leak after leak and the roofers were throwing lead flashing off the roof, a piece of which almost struck myself. The freeholders were not interested in our concerns about this so we had to inform HSE to have it dealt with.

    The leaks have been so bad and so numerous that we have not been able to live in our flat for the last 6 MONTHS. Throughout this time we have constantly asked the freeholders to change the roofers, as they are clearly cowboys. They did not listen and just allowed the damage to get worse and worse.
    Finally they have agreed to have another roofer repair the awful cowboy job.
    They are only having the roofer spot repair a couple of areas. So we will have paid £9k for an awful roof and then paid extra to have a couple of areas spot repaired with the ongoing worry the rest of the work will not hold up to the elements.
    However they are not following any sort of section 20 process for the new work or the surveyor who did a report of the terrible work the original roofers did.
    The freeholders say that they will be asking for more money to fix the roof and using the contingency funds! How can this be right when the reason we are in this situation is that they have mismanaged the work and allowed this to happen despite being constantly warned?
    The building insurance also will not cover alternative accommodation for us which leaves us up **** creek without a paddle.
    The freeholders are freeholders when it suits them and leaseholders when that suits them, they are absolving themselves of any and all responsibility. My wide and I are at our wits end and just don’t know what to do.

    #2
    Another prime example of dad's army property management.
    Unless you can get some control of the freeholder company then best advice is sell up.
    You could apply to FTT to appoint a manager but that could be costly and you might well end up with something worse.
    If you can't get a decent manager appointed amicably then cut your losses and get out as this situation will only deteriorate.
    Sorry

    Comment


      #3
      I take it from your post you paid the £9,000. Did you pay this sum 'under protest'? Did you make any observations during the s.20 consultation? Did you nominate a contractor for the works?

      Have you made a formal complaint to the freeholder? I am assuming the freehold is held by a company and its shareholders or members are the 7 lessees you referred to.

      s.20 is a prescribed process and if it was not followed then you may be entitled to pay only £250. Even if it was followed you would still be able to contest charges on the basis of 'reasonableness' if this applies OR standard of work which clearly does apply from your comments.

      There also appear to be other issues with new s.20 consultations that should have occurred in which case the point above may apply unless the freeholder applied for and was granted dispensation to dispense with s.20. They can do this retrospectively but there is no guarantee they will be granted dispensation.

      I would advise paying no more monies to the freeholder at this time. They may use reserve funds but it does not mean a court will agree with them.

      I suggest your next step is to book an appt with LEASE for advice and you will likely need to make an application to the FtT or a County Court.

      Once you have taken advice you will write to the freeholder and/or instruct a solicitor which, in this case, might be the best option. This does not mean you will need to use the solicitor's services going forward but an initial letter from a professional is likely to carry more weight than a letter from you. Ensure from this point on all communications are in writing; and collect evidence of all of your expenses as a result of not being able to live in your home.

      Do check insurance polices as you may be covered for legal advice and/or even legal costs.

      Case law re s.20 you may wish to consult include: Daejan v Benson; and Andrew Collingwood et al. v Carillon House Eastbourne Ltd.

      Good luck. It is a stressful situation and complicated but prima facie you have a good case.

      Unfortunately, the freehold/leasehold system is fraught with issues and arguably enfranchisement only exacerbated problems. We are currently going through this process and notably all of the participating tenants are those that do not pay their service charges, breach their respective leases in multiple ways and they will be charged with managing the building.

      Of course enfranchisement can occur again but you would need two of the current members to work with you and the other 2 lessees to acquire the freehold. It may be worth exploring if all members/shareholders are in agreement.



      Comment


        #4
        7 out of 10 flats are the freeholders, taking legal action or refusing to pay will just deplete the service charge or bankrupt the company. And make the flat unsellable.
        Bit like suing yourself really

        Comment


          #5
          Originally posted by Lease20nightmare View Post
          The freeholders say that they will be asking for more money to fix the roof and using the contingency funds! How can this be right when the reason we are in this situation is that they have mismanaged the work and allowed this to happen despite being constantly warned?
          The building insurance also will not cover alternative accommodation for us which leaves us up **** creek without a paddle.
          The freeholders are freeholders when it suits them and leaseholders when that suits them, they are absolving themselves of any and all responsibility. My wide and I are at our wits end and just don’t know what to do.
          The freeholders need to learn their responsibilities - but Section20z may well be correct, and your best option may well be to cut your loses and get out - if you can.
          You do have the option of taking the freehold company to court, and could quite likely win a fairly significant reduction in service charge costs (and perhaps most of any out of pocket expenses you have incurred). It does depend on the precise circumstances though and you would potentially have to forget about irregularities with the section 20 consultation and instead prove that the costs were unreasonable and that the incompetence of the directors caused you to incur costs (perhaps not though - it might depend on whether or not the company asks for dispensation from the consultation requirements.


          Originally posted by Section20z View Post
          7 out of 10 flats are the freeholders, taking legal action or refusing to pay will just deplete the service charge or bankrupt the company. And make the flat unsellable.
          Bit like suing yourself really
          Potentially. It certainly wouldn't leave the OP with an amicable relationship with their neighbours.
          On the other hand, if the OP just lets them get away with it, nothing will change.
          ​​​​​​​

          Originally posted by vmart View Post
          IAndrew Collingwood et al. v Carillon House Eastbourne Ltd.
          An interesting, very recent, case that I wouldn't be surprised to find isn't finished with yet.

          Comment


            #6
            The practical issue is that service charge monies have been used and they are unlikely to be recovered. Yes you can take legal action against the freeholder and you may "win" to the extent that your service charges would be reduced but that would only mean that the freeholder would be short of funds and unable to provide services. I agree with other comments above, you do not seem to be able to change the way in which the freeholder is run, so your options are to apply for a manager to be appointed by the FTT, which could cause other issues, or you can cut your losses.

            Comment


              #7
              Hey all, thanks for all the advice and replies thus far.
              We have paid all section 20 funds and service charges so far, haven’t wanted to do anything to show we are being uncooperative.
              The block does have a managing agent the freeholders use. However for this section 20 they have decided to “Manage the project ourselves to save money” So while we having a managing agents, they are of no use and will not get involved.
              Bizarrely when I ask the freeholders for copies of quotes and invoices to see where my money is going they refuse and point me to the managing agents?? The managing agents are not providing me with any documents so I feel trapped and uneasy.
              Another development, the freeholders today have managed to lose a set of keys to our flat which they had in order to gain access in our absence for quotes, surveyor etc. I have previous correspondence with them asking them to please lock the flat as they visited and left it unlocked afterwards, and now they have totally lost the keys! Meaning locks will have to be changed etc.
              I understand what you are saying about cutting my losses and getting out but I just don’t think I can leave this alone.
              My wife was 8 months pregnant when this started and we had to vacate our property due to water ingress. The stress this has caused has been immeasurable.

              Comment


                #8
                If you do not wish to cut your losses as recommended, I suggest that you apply to the FTT to appoint a manager. It is not ideal, it can be costly, it is not always easy to remove the manager and it may deter prospective purchasers when you wish to sell. If you are satisfied with the current managing agent and it has qualifications, you could propose that organisation as the manager, If you speak to them, they will probably assist you with your application and may even be willing to pay the costs involved.

                Comment


                  #9
                  s.20 prescribes a right for you to have access to estimates.

                  The freeholder will have to pay for the locks to your flat to be changed and this arguably cannot be reclaimed via Service Charges. Personally, I would not give my keys to someone else and expect arrangements to be made for access when someone can be home.

                  Comment

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