Long-leaseholder of flat faces unwarranted fee demands

[jeffrey]

This doesn't work to prevent the requirement for a licence in the case of most flats as they were not leased "in consideration...of the erection...of buildings...". That would only be the case if the lease was granted to a lessee by a landowner and the lease provided that the lessee should put up a building.

This is obviously not the case with most flat developments/improvements but generally is the case with long leases of houses built c. 1900.. Here it was common for a landowner to grant a lease to a builder of so many plots of land (typically 2-6 at a time) and the builder would agree to build the houses and pay some small ground rent of £2-£4 per year per plot. The houses were then rented out by the builder/lessee on short term tenancies and at some point from the 1950s onwards aws the tenants died or moved out, the lessee (or his children or grandchildren) would have got bored and sold off the houses. At that point only part of the land comprised in the lease would have been sold and a licence to assign would not have been required because of the 1927 Act.

It all depends on the lease's wording. Many DO state that the demise is in consideration of erecting or substantially improving a building.

[ram]

Sacking Directors

The articles of association cannot be used to impose obligations on shareholders, at least not of the type under consideration in this thread.

This means that when it comes to sub-letting you cannot impose new rules or impose new conditions or charges not allowed by the lease

Not arguing with you, but if above was to be the case, then we will be suing every new tenant ( probably the owner ) every 2 months ( see middle of post 20 ) which says "Now we have tenants coming and leaving on average every 2 months ( 3 flats, on 6 month ASTs, at 2 months between first tenancy ) [ instead of owner change every 3 to 7 years ] and of course. Lawcruncher is right when he says

(not really a practical one because of the expense involved)

Every tenant violates the headlease in the very first week, usualy the first day on parking, then filling rubbish bin ( large one on 4 wheels ), with prohibited items, ( every new tenant ) thereby causing the Management company to be fined between 500 and £ 10000 by council should they so wish. Failing to keep the grounds free of rubbish ( dropped on leaving and new tenancy arrival ) -- As mentioned, this can now occur at 2 / 3/ and 6 month intervals, and we dont have the time or money to continualy look after owners tenants, and letters to letting agents about ( minor ) violations of their tenants on a monthy basis.
The live in owners ( + other flat owners) are not here to wipe the bottoms of sub-tenants and continually battle with Letting agents, who don't care.

( Post 23 ) A company can only pass resolutions about what the company will do, not what the shareholders will do

A Limited Company CAN dedide what Shareholders do in this instance, as the sharholders ARE the Directors, and the Directors are the Flat owners and directors can be removed if they do not comply to the wishes of the company, see http://freespace.virgin.net/xx.x/manco/288B.pdf

The Shareholders -are- the directors, and their mandate by company law is to act in a responsible way, and if by their actions or lack of actions of those they employ to act on their behalf, other owners are put into distress, additional expense and unreasonable duties not associated with the management company, then "The company" can impose what ever obligations on to that Director as the "Company" so decide by resolutions. ( Nothing to do with leases ).
If the Directors are not capable of ensuring other directors are kept in quiet enjoyment of the property, then can leave their job as a Director, or be sacked by the company, and lose his voting rights as well.

I would really like to be able to quote some law on this... :-)

You don't need laws to ensure Directors of a company do their job, however, if they don't comply with the companies act, they can be imprisoned, therefore Directors of a Management co. Ltd --should-- ensure the other owners do not have to run after sub-tenants and letting agents.

All members shall from time to time and whenever called upon by the Company so to do, contribute equally or in such proportions as the Directors may reasonably determine, to all expenses and losses which the Company shall properly incur and in respect of which they are not otherwise bound to contribute in their capacity as dwellingholders and members.

Above is all well and good, 66% Directors dont live here, so cannot contribute equally, They "say" they will do things, buit never do, but when 80% of the time is spent on Sub-tenants and Letting agent failures, the other Directors will not pay any share, Why should they, it's none owners ( sub-tenants and letting agents ) that are incuring time and money to be spent, which is being diverted from running the Company for the owners, to the sub-tenants.

R-a-M

[Stillere]

All members shall from time to time and whenever called upon by the Company so to do, contribute equally or in such proportions as the Directors may reasonably determine, to all expenses and losses which the Company shall properly incur and in respect of which they are not otherwise bound to contribute in their capacity as dwellingholders and members.

I would really like to be able to quote some law on this... :-)

I am no company lawyer, but I have to doubt the enforceability of such a provision.

If the shareholders have any sense there will be no need to enforce it. If an RMC, or worse a freehold owning RMC, gets into financial trouble the consequences can be disastrous in terms of property values.

[animal]

Thanks anyway Lawcrucher,

There are many others who hold your position :-)

[Lawcruncher]

Originally Posted by Lawcruncher
The articles of association of a company govern the relationship between the shareholders and the company and deal with matters such as voting rights, meetings and transferring shares. They cannot be used to impose obligations on shareholders, at least not of the type under consideration in this thread.


Is this explicitly stated anywhere in the law? What you say would invalidate a clause in our articles, which states

I cannot point you to anything specific.

All members shall from time to time and whenever called upon by the Company so to do, contribute equally or in such proportions as the Directors may reasonably determine, to all expenses and losses which the Company shall properly incur and in respect of which they are not otherwise bound to contribute in their capacity as dwellingholders and members.

I would really like to be able to quote some law on this... :-)

I am no company lawyer, but I have to doubt the enforceability of such a provision.

[animal]

Thanks Lawcruncher,

A fog is starting to lift :-)

The articles of association of a company govern the relationship between the shareholders and the company and deal with matters such as voting rights, meetings and transferring shares. They cannot be used to impose obligations on shareholders, at least not of the type under consideration in this thread.

Is this explicitly stated anywhere in the law? What you say would invalidate a clause in our articles, which states

All members shall from time to time and whenever called upon by the Company so to do, contribute equally or in such proportions as the Directors may reasonably determine, to all expenses and losses which the Company shall properly incur and in respect of which they are not otherwise bound to contribute in their capacity as dwellingholders and members.

I would really like to be able to quote some law on this... :-)

[Lawcruncher]

An obligation is something that either you agree to or is imposed on you by the law.

For there to be a contractual obligation there needs to be a contract - an agreement and an exchange of promises.

A company can only pass resolutions about what the company will do, not what the shareholders will do. It cannot unilaterally impose obligations on the shareholders - the shareholders must agree to be bound. In the absence of a consideration, they can only agree to be bound by deed.

The articles of association of a company govern the relationship between the shareholders and the company and deal with matters such as voting rights, meetings and transferring shares. They cannot be used to impose obligations on shareholders, at least not of the type under consideration in this thread.

[animal]

Lawcrucher,

I am interested in your statement

...nor can you impose obligations on shareholders by means of company law. ...

Is this your common understanding or are you basing this on a precedent or statute?

It is my very limited understanding that you can agree anything in a contract, even a statutory contract such as the Articles of a company. I do not understand how a conflict between a contractual obligation to a company and a statutory protection under the L&T act is resolved.

Not arguing with you, I am trying to understand how different laws interact when they conflict.

[Lawcruncher]

When the flat owners collectively own the block you still have the landlord on one side and the tenants on the other. You cannot by a resolution of the management company alter the terms of the leases, nor can you impose obligations on shareholders by means of company law. The position is exactly the same as if the block were owned by someone unconnected with the tenants. You have to operate within the terms of the lease or, if the lease does not cover the problem, the general law.

This means that when it comes to sub-letting you cannot impose new rules or impose new conditions or charges not allowed by the lease. The only charge you can make if the lease does not provide for it is to charge a reasonable sum in respect of any legal or other expenses incurred in connection a licence or consent to sublet (Landlord and Tenant Act 1927 Section 19 (1) (a)).

All sub-tenants are of course bound by the terms of the long leases whether they specifically agreed to them to not. The only remedy where the terms are not being observed (not really a practical one because of the expense involved) is to take action against the long leaseholders whose tenants are causing problems. The situation is not a lot different from that where resident long leaseholders cause problems.

[ram]

Provisions such as this have a limited application. They cannot be used to change existing or impose new obligations.

So, you are saying that, by implication,
That when a meeting is called by a limited company ( Managing property company), of its Directors, and a resolution is put forward ( such as items in previous posts )
Or any meeting that passes resolutions by a majority of the directors ( who are the flat owners ) "cannot be put in place" ?.

Sorry, it's a limited company, acting on behalf of it's shareholders, ( Who are the Directors, who are the owners ) looking after the safety, care, comfort and convenience of owners, and not care, comfort and convenience of inept sub-tenants and inept letting agents, which costs considerably more than just the owners.

Owners used to sell up between 3 to 7 years, and service charges reflected this. (solicitors, land registry, directorships ) Now we have tenants coming and leaving on average every 2 months ( 3 flats, on 6 month ASTs, at 2 months between first tenancy ) . . More time is spent on none owners, and costs a furtune. Hence changes to reflect this additional high on cost in time and money.

Hence resolutions to ensure service charges are not spent on persons and agents who do not own the property.
It's called property Management, not inept sub-tenant and inept letting agency Management.

Again, ----- That's why a cost is imposed if you sub-let your flat.

Some on here say it's a rip off, and some are right in their situation.
But here, we are now in a possition where the sub-tenants and letting agents rule the place, hence resolutions to redress the balance.

R-a-M

[Lawcruncher]

The lessor reserves the right to make such other rules and regulations from time to time ( either in addition to or by way of variation or of substitution for these rules or any or them ) as the Lessor may deem needful for the safety care and cleanlines of the building or for securing the comfort and convenience of the tenants ( This means the owners, in this context ) generaly of the building and such further rules or regulations when made shal be binding on the lessee as if the same had been incorporated in this schedule.

Provisions such as this have a limited application. They only apply to matters such as the circulation of traffic, the disposal of refuse, hanging out washing and similar matters, and even then no changes can interfere with any rights that have been granted.

They cannot be used to change existing or impose new obligations in respect of restraints on assignment and subletting, insurance, repairs, service charge etc.

[geester]

it is simply a money skimming exercise

I received the exact same letter and phoned the National Landlords Assn for their take on it. For a start the letter is completely non specific with phrases such as 'in a majority of leases'...so they don't know what's in the lease and are demanding monies? I had furnished them with all the details some months beforehand. They ask for my address yet they managed to mail me the letter so they have the details anyway.
The letter is worded with implied threat in a passive aggressive style. For my part I manage my flat myself and so there are no issues relating to mail/etc.
The NLA say that they have to supply 'strict proof' on the terms they refer to and not some vague assertions. The fee requested was £50 last year and now £100 plus VAT. They are making it up as they go along. 1 in 10 will probably pay and that will pay the bar bill for the directors' hols in Barbados.

[ram]

Not arguing for or against extra charges, Ram, but as you seem to be a company secretary of a ROMC you should be aware of the comments in p6.1of CAM/00MC/LIS/2005/0009.

CAM/00MC/LIS/2005/0009
Have read http://www.rpts.gov.uk/Files/2006/March/00000G05.htm

But this was about a faulty water meter.

It is not about the management company having to expend time effort and money for the failings of owners and letting agents.

The point of my argument was NOT that you have to pay £ 117.50 if you rent out your flat, but just to show the reasons why a cost May be levied.

The OP did say that he had asked which clause in the lease allowed the charge and could not find one him/herself.

info :
Our lease states :-
" Not to underlet the whole of the Demised Premises except for a term of not less than 1 Year and on the grant of any such tenancy to forthwith notify the Lessor (or any managing agents that may be appointed to act on behalf of the Lessor) of the identity of the tenants under such tenancy and confirm to the Lessor (or managing agents as appropriate) the address to which any future demands for all payments under the terms of this Lease should be sent and to pay such reasonable administration fee (plus VAT if applicable) that the Lessor (or the managing agents as appropriate) may from time to time require."

If your lease does not say this, then you may not have to pay the £ 75 / 117.50 .

( but as previously stated, if posts 5 + 7 are costing the Managment company too much money, then they may well have a meeting to justify extra charges.

The Management Company has no power unilaterally to alter the lease in respect of the charges for gas or water supplied to the premises, nor does the lease provide that changes to the terms may be made by resolution of a majority of lessees at a general meeting.. ..

Our lease states -- ( yours may not )
"The lessor reserves the right to make such other rules and regulations from time to time ( either in addition to or by way of variation or of substitution for these rules or any or them ) as the Lessor may deem needful for the safety care and cleanlines of the building or for securing the comfort and convenience of the tenants ( This means the owners, in this context ) generaly of the building and such further rules or regulations when made shal be binding on the lessee as if the same had been incorporated in this schedule."

If A limited company ( A Management company / tescos / British airways ) cannot add or amend rules to account for items that are causing trouble, to ammend by vote to keep up with current problems that did not exist 30 years ago, then there is no point in having a limited company to make sure that other owners are protected !!, may as well disolve the company if the management company loses control to letting agents !! especialy if if LTA s.19(1) of LTA 1927 prevents, in future --any- company from moving forward, in these times of apathy and lethargy.

Refuse to pay the £ 117.50 if it is not in the lease, but be prepared for amendments to cover the extra costs in future to cover these costs.

[Richard Webster]

Better still is s.19(2). This applies IF your lease:
a. was granted for > 40 yrs;
b. has > 7 yrs. unexpired; and
c. was granted explicitly "in consideration...of the erection, or substantial improvement..., of buildings", and L is not a local/public authority.
If all these three rules are satisfied, the Act overrides thge covenant and states expressly that "no consent or licence shall be required, if notice in writing of the transaction is given to [L] within six months" So L cannot then demand any consent procedure AT ALL, no matter what the lease says. Result!"

This doesn't work to prevent the requirement for a licence in the case of most flats as they were not leased "in consideration...of the erection...of buildings...". That would only be the case if the lease was granted to a lessee by a landowner and the lease provided that the lessee should put up a building.

This is obviously not the case with most flat developments/improvements but generally is the case with long leases of houses built c. 1900.. Here it was common for a landowner to grant a lease to a builder of so many plots of land (typically 2-6 at a time) and the builder would agree to build the houses and pay some small ground rent of £2-£4 per year per plot. The houses were then rented out by the builder/lessee on short term tenancies and at some point from the 1950s onwards aws the tenants died or moved out, the lessee (or his children or grandchildren) would have got bored and sold off the houses. At that point only part of the land comprised in the lease would have been sold and a licence to assign would not have been required because of the 1927 Act.

[animal]

The problem is that ( sorry to repeat ) Letting agents refuse to talk to managing company ( Trust me, they ignor letters and emails ) so you may find clauses being added to leases, or Management resolutions being passed, to include all that I memtiond in 5 + 7, stating that if additional work is having to be done, as letting agents dont deem those to be their responsibility, then an individual charge to the owner for those extra services may be invoiced for those services of the Managing company / agent.

Not arguing for or against extra charges, Ram, but as you seem to be a company secretary of a ROMC you should be aware of the comments in p6.1
of CAM/00MC/LIS/2005/0009

The Management Company has no power unilaterally to alter the lease in respect of the charges for gas or water supplied to the premises, nor does the lease provide that changes to the terms may be made by resolution of a majority of lessees at a general meeting..

The OP did say that he had asked which clause in the lease allowed the charge and could not find one him/herself.