Shared Freehold rights and responsibilities

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    Shared Freehold rights and responsibilities

    I have a friend who owns a leasehold flat with a shared freehold (by all resdients).
    She joined the council/group who purport to run the "freehold company" (it is resident owned) but was rather appalled to find that they were badly organised (thats a diplomatic way of putting it) In attempting to try and sort this the rest of the council or committe forced her off using a number of dubious tactics including intimidation and harrassment.
    She was unable to elicit any kind of formal constitution, procedures etc and certainly there doe not seem to be a record of meetings etc.
    Also this group seems to harass and intimidate many of the residents as most are fairly elderly and I have reason to believe that there may even be some maladministration of the finances.
    What duties and responsibilities does this "freehold company" need to perform and what rights does an iindividual resident have to hold this group to account?

    #2
    The duties of the company are laid out in the constitution (memorandum and articles) and should be read in conjunction with the lease. Enforcement of these duties can be expensive.

    1. If the directors of the company are in breach of the articles/any shareholder agreement or of covenants under the lease or statute, then you should try and get a majority to kick them off the board - this is the cheapest option and undoubtedly the best, but probably next to impossible in this situation. You obviously need replacements in accordance with the articles.

    2. Failing that, you can use s24 L&T act 1987 to apply to the LVT to appoint a manager. This is probably the second cheapest option, but likely to devalue your flat. I have yet to see this done where lessees own the freehold, but it should be possible. (I'm not a solicitor, just a lessee in similar situation).

    3. If they have not fulfilled the requirements of the lease, you could bring a claim for compensation in the small claims. This can turn other residents against you or it may make other residents start taking notice and help to improve things. It may also make you company insolvent, thus devaluing your flat.

    4. You could try for an injunction to force them to follow statute/covenants in the lease. Could be expensive or not depending on how strong your case is.

    5. There is s459 of the companies act which you can go to companies court with a claim that the company is being run detrimental to your interests. Very expensive and most likely require a barrister. Unlikely to be an economical solution.

    6. Sell and move to a freehold property :-)

    Can't think of anything else at present...
    I am not a solicitor, I am a lessee/shareholder in conflict with the management. Please seek your own legal advice before relying on my comments in this forum!

    Comment


      #3
      Animal is right re the company as lessor (owner of freehold reversion). However, always distinguish between:
      a. lessor-lessee relationship, based on lease and applicable no matter who owns f/r; and
      b. company-member relationship, based on Memo/Articles.
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).

      Comment


        #4
        The residents took/bought over the original company so the block is managed by the leaseholders and all have a share in the freehold.
        So in this case the company is owned by all the leaseholders.

        My friend tells me she has not been able to get a copy of a constitution or anything else that describes how the company should be run/organised and how officers are appointed. In fact one of the so called officers of the company told her that they did not have one and would not create one as this would be too expensive!
        I assume that something must be held at companies house. I will get her to check out the name and follow that up.

        My partner has a place in Canada which is similarly organised and there the Government has legislation which ensures this sort of behaviour is minimised and controlled. (Strata Councils and compulsory management companies)

        Comment


          #5
          She should've got a copy of the articles and the lease on purchase of her flat. I would ask the solicitor who handled the purchase.

          They cannot create articles out of the blue! The articles and memorandum are the company, so some must have existed at the time of formation. Without those, you cannot be sure of the purpose of the company, however if no one is able to produce them, you could perhaps rely on the default 'table A'.

          Be aware that Canadian properties also have similar issues as do other countries... :-) But I prefer Canada too!

          I suggest having a look at the lease advisory service and check out the rights of lessees. Your friend has some fairly powerful rights and she can make life quite difficult for the management...
          I am not a solicitor, I am a lessee/shareholder in conflict with the management. Please seek your own legal advice before relying on my comments in this forum!

          Comment


            #6
            The company's 'constitution' can be found at:
            http://www.companieshouse.gov.uk/

            Click on WebCheck service
            Type in the company name
            Click the company number when it appears
            Order information

            Order the last 'Articles and Memorandum' of Association.

            If I know what these clowns are like, they will simply be with the incorporation documents.

            As a question:
            1. How many flats are there (or how many shares are there) and what % does your friend hold?
            2. How many other residents may be onside with her?

            Comment

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