House- enfranchisement to escape mgt. co.

[hezekiah]

I own a 992 year lease of a house attached to a block of retirement flats for the over 60’s.The freehold is owned by a company of which all lessees are shareholders. I have been contemplating purchasing the freehold of my house but I am unsure if this is possible as I would have to cross communal areas to access my dwelling and designated parking space. My services are also routed through the blocks cellar. The lease mentions a peppercorn rent but this is not evident in any accounts. Would I still be liable to pay some sort of service charge? Can anyone give me a rough estimate for the purchase of the freehold and legal fees and recommend a suitable solicitor.

Thanks

[jeffrey]

1. "Peppercorn rent" means simply a rent of no value- a cipher- which is why the Accounts omit it.
2. If you've owned for > 2yrs., you have a legal right to purchase freeold reversion (making your own ownership freehold, not leasehold).
3. The easements- access/service rights- would continue. So would your obligations to pay for services still benefitting your house.
4. You'd have to pay vendor's legal fees [amount unknown] as well as your own solicitor's. The latter would reflect the complexity of the Deeds needed, but budget for £400 to £500 (+ VAT + disbursements) on this element.
5. Finally, you hold a long lease and would save no rent. The transaction costs will be quite steep, as you can see. Are you sure that you wish to buy f/r at all? What do you want to achieve here?

[hezekiah]

The Dormant Company is operated and has been since the company was formed by a small group of elderly lessees who bully and manipulate other elderly lessees into to siding with them. After owning my dwelling for a couple of years I started questioning the way they operated which they retaliated by changing the articles making it impossible for any one under the age of 60 to be a director. I am in my 40's with no age limit on my dwelling.

They held General Meetings without notifying me.
Refused minutes to any one who didn’t attend the meetings.
Refused to distribute agenda’s.
I contacted Companies House who gave them a warning but since them they deal with the majority of issues at residents meetings instead allowing sublet dwellings non lessees to make decisions.

After a year of unsuccessful requests for a service charge summary I took the case to the LVT where the company secretary announced herself as the Rev _ _ _ _ MBE and stated that over 4 years of accounting records had disappeared after the death of a resident.
There has been no meeting to discuss the missing accounts.

I am sure that the Company Secretary’s title influenced the decision and they were let off but were told to have future accounts certified.

I now see solicitor’s letters and LVT Trials as a waste of time and money.
Companies House are not interested in internal matters.

They have been ignoring requests from me for repairs to the structure of my dwelling, one of which I had been reporting for nearly 3 years and was causing damage to the interior of my dwelling.
Subsequently I submitted a claim to the block insurers who were not interested because of the longevity of the fault.
As I am now worried about any possible future claims been rejected should I insure the structure of my dwelling separately?

Money is readily available for repairs to the main block which houses the 8 flats.

I am not the only lessee who’s unhappy with the situation.
They just keep quiet at meetings for an easy life.

The first and only time the majority stood up to the Officers we were told by the Company Secretary that the officers would stand down but were well within there rights to charge for the work they had done over the last few years. Subsequently the vote was to keep the Officers 8 to 1.
I later learnt that this was in fact a breach of company law but can not prove because of the lack of support from other lessees.

Because of the average age of the officers I have to be very careful as they could soon turn it round to implicate me as a bully.


I could go on but I’ve probably already bored you.

Any advice would be welcome.

Thanks.

[jeffrey]

OK. So enfranchising rescues the f/r but leaves you being serviced by the alleged wrongdoers (unless any services for your house- the only house attached to the eight flats?- do not absolutely need to be within the service charge and could also be rescued).

Alternative: how many of the eight lessees are on your side? You + four of them would be a majority!

[hezekiah]

Possible lessees support outside a meeting 3.At a meeting when it counts, no one.
Since my last message one of the directors has past away. This is why I have to tread very carefully.
So basically you are saying I would own the freehold but would still be liable to pay a service charge.
I was hoping for complete disconnection from the company but new there would be complications with the access.
The car park has lights and is accessed by electric gates. Would this mean I was still liable to pay a ninth share towards the whole electric bill?


Thanks for your quick response Jeffrey

[tenant29]

In your situation the billing for service charge payment should be accompanied by a "service charge budget" showing the forecast annual expenses. It should show the separation of maintenance expenses for external areas ( estate costs ) and internal areas ( block costs ). You ( in a house) would contribute towards 1/9th of the "estate" cost and the flats would contribute to both "estate" and "block" costs.

The administration of service charge accounts should be done with proper book-keeping record and money held in separate bank account. You have the right to make a written request to inspect the service charge documents.

You should also inform your local MP about your situation by letter and send a copy to the Housing Minister. And also ask for the the leasehold system to be abolished. Its unacceptable for 4 years of accounting records to be missing when it is a legal requirement to produce audited accounts within 6 months from end of the reporting period certified by a chartered accountant.

[hezekiah]

Thanks for the advice Tenant29.

It sounds like the best way to proceed as solicitors letters and LVT trials are costing me money and getting me nowhere.

Thanks again.

[jeffrey]

So basically you are saying I would own the freehold but would still be liable to pay a service charge.
I was hoping for complete disconnection from the company but new there would be complications with the access.
The car park has lights and is accessed by electric gates. Would this mean I was still liable to pay a ninth share towards the whole electric bill?

Yes. Even if/when you purchase f/r, your services will still be supplied by or via Mgt. Co.- so you'd have to pay for them unless/until disconnected from them and supplied direct. The Transfer Deed could re-write covenants etc. as agreed at the time.

[hezekiah]

Thanks for the extra advice Jeffrey.

[animal]

They have been ignoring requests from me for repairs to the structure of my dwelling, one of which I had been reporting for nearly 3 years and was causing damage to the interior of my dwelling.

Surely if there is a liability in the lease for the lessor to do these repairs, then it is a simple claim for breach of contract?

Depending on what is in the lease & articles of the company, I would withhold the service charge payment and do the repairs yourself. When they sue you for the service charge, you then counterclaim for breach of contract.

ps I'm not a solicitor, just in a similar situation where the directors are claiming the L&T act does not apply in our case!

[hezekiah]

I have to tread carefully Animal because of the average age of the 8 lessees and could antagonise the few who sympathise with me if I try to recoup outlay for unauthorized work from the service charge fund.
The present Officers no that they will get the full support of the lessees when necessary because none of the lessees are interested in running the company.
The lessees have been warned that if the Officers stand down a management company will be needed at greater expense.

What can you do when minutes are altered and non-existing meetings are fabricated to cover up the Officers constant disregard for statuary and contractual law?

[andyz1]

This is a very sad tale and thankfully not a common scenario.

Is there no way you can start an action group? Or at least start keeping all the other lessees in the loop? You may be surprised at how much support you get. But doing nothing guarantees nothing will change.

Definitely do not withhold your service charge. That will get you in a world of pain and will reduce your leverage if things go legal.

You could start raising a stink with the local press and try to embarass the directors into action.

You appear to have a number of legal avenues. But I can't see anyone out of this situation without spending more money on solicitors. It simply has to be regarded as a cost of owning a flat as opposed to the costs of owning a house.

[animal]

I have to tread carefully Animal because of the average age of the 8 lessees and could antagonise the few who sympathise with me if I try to recoup outlay for unauthorized work from the service charge fund.

If it helps, when we bought a counterclaim we expected all hell would break loose, but the vast majority of our neighbours started treating us nicer :-) The average age is 85 ish over 50 odd properties.

This is a very sad tale and thankfully not a common scenario.

Are you sure? I seem to be finding lots in this situation, but no one seems to have an answer.

But doing nothing guarantees nothing will change.

Wholeheartedly agree :-)

Definitely do not withhold your service charge. That will get you in a world of pain and will reduce your leverage if things go legal.

Huh? Can you elaborate? (not meaning to hijack the thread)

[hezekiah]

I'm just gathering useful information whilst deliberating my next move.

[hezekiah]

Insurance refund when I complete enfranchisement?

I am a lessee of a house attached to a block of flats.
The lessor is a RTE company of which I’m a shareholder.
I have started proceedings to enfranchise my house which if all goes well will now make me responsible for the buildings insurance for my dwelling.

I have been paying via the service charge towards next years block insurance which is due for renewal in January.

I expect the correct procedure is to write to the company secretary asking for a refund. As there is more chance of me seeing a flying pig than this happening?

1
Can I deduct the equivalent amount from my remaining service charge instalments?

2
Or is it not a refundable expenditure.

I hope this does not seem petty but I’ve been forced to spend enough unnecessary funds because of the unreasonable behaviour of the Officers and their followers.

Even if there are unforeseen circumstances with the enfranchisement I would still like to be responsible for obtaining my own insurance.

If anyone could let me now the correct procedure for notifying the lessor, in layman’s terms I would be very much obliged.

Thanks again.