Share of freeholder not paying for repairs. Sue him?

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    Share of freeholder not paying for repairs. Sue him?

    Hi,
    I have a flat which is share of freehold i.e. there's a company set up as the freeholder and the flat owners have an equal share of the company.

    According to the lease all communal repairs costs are to be shared between the shareholders. There is now a leak in the roof but we have one nightmare owner who is refusing to pay.

    As it's leaking I need it fixed, if I get the work done myself, how do I get him to pay his share?

    Do I sue the company, which includes me, so seems rather silly or can I sue him directly? Can I sue him for legal costs as well as that could prove even more expensive than the repairs itself!

    Thanks for any advice

    #2
    It depends really, on how much control you have over the company. Is there no service charge account or reserve fund set up for this sort of thing? The company should do the work and sue the non payer if necessary. Failing that, you might agree to do the work and the company pay you the money it has been able to collect, and the company sues the non payer and then gives the money to you once recovered. You as a leaseholder probably do not have any basis to sue the non payer direct as there is no contract between you.

    Comment


      #3
      I don't know how much control I have. I have a quarter share of the company, as a director, as do the other 3 owners(leaseholders).

      There's no service charge or fund and basically just pay a quarter of the costs if and when needed. It's a company by name only really as it's just 4 owners so when you say the "company sues" then do 3 of the shareholders have to agree before I can use the company's name to sue?

      If that is the case, what would happen if no one wants to pay and it's just me as I'm in the top floor? Even though the lease says everyone has to pay, can I, as one of the directors of the company sue, in effect, the other 3 directors?

      So complicated...

      Comment


        #4
        There is no such thing as share freeholder * To make it clear you have a share in a company that owns the freehold, and individually( perhaps with another) the flat on a long lease.

        Your leases all things being equal, must require the freeholder, your company, to repair the building, and for the leaseholder to pay service charge.

        In order for those to be recovered, and if required in court, they need to be
        a; invoiced with all the required information and correctly calculated under the terms of the lease- your lease is unlikely to say, even in legal terminology, "as and when", and
        b: if any one flat must contribute £250 or more( possible with roof repairs) then the company must consult with the leaseholders under section of the landlord and tenant act 1985.

        So take a look at your lease to understand the wording and methodology and take a look at http://www.lease-advice.org/publicat...nt.asp?item=19

        As the directors you should be authorised to take the decision to sue unless the articles of association or any agreement with shareholders limits that.

        * If I ever build a time machine, and owning a shed that is entirely probable, if Douglas Adams can be relied on, one of the top ten things to go back and do is find the person who invented the made up term share of freehold and beat them senseless with smelly oily fish and make them write out freehold and leasehold only a billion gazillion times. And then eat the fish. Raw.
        Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

        Comment


          #5
          section 20 of the landlord and tenant act 1985.

          Leaseholdanswers, Your numeric keys are sticking again !

          Case sensitive
          see http://freespace.virgin.net/xx.x/S20CONSL.DOC ( S20 long )
          http://freespace.virgin.net/xx.x/S20SHORT.DOC ( S20 short )

          dispensation will be added shortly ( done )

          http://freespace.virgin.net/xx.x/S20ZA.PDF
          Last edited by ram; 09-09-2011, 22:49 PM. Reason: s20za.pdf added

          Comment


            #6
            so when you say the "company sues" then do 3 of the shareholders have to agree before I can use the company's name to sue?
            Check your articles of association but it would normally be a majority vote by the board of directors. So yes, in your case if all 4 are active directors you will need 3.

            If that is the case, what would happen if no one wants to pay and it's just me as I'm in the top floor? Even though the lease says everyone has to pay, can I, as one of the directors of the company sue, in effect, the other 3 directors?
            No, but as a leaseholder you can issue proceedings against your landlord (the company), which of course includes you. But you really don't want to take that route. Do you have the support of the other two?

            Comment


              #7
              Originally posted by Tulula View Post
              Check your articles of association but it would normally be a majority vote by the board of directors. So yes, in your case if all 4 are active directors you will need 3.
              And if that vote goes against a freeholder's obligation in the lease, then those directors who voted in favour could and likely will become liable for any consequential loss to the company.
              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


                #8
                So how to move it on.

                1: If you are confident that the repairs are required and the cost and scope of the works are fair and reasonable

                2: It seems as if 3 of the 4 will pay, it is "the one nightmare owner" that will not.

                Then the company should start the consultation process.

                On completion of this and you are confident that you understand that the leases as to when and how these costs can be invoiced-few allow a one off demand- then the shareholders must agree to fund the works , perhaps as a loan, in the meantime.

                As posted the board then resolve to take legal action. It is apparent that 3 will vote in favour.
                Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                Comment


                  #9
                  Thanks for the advice so far guys!

                  Originally posted by Tulula View Post
                  Check your articles of association but it would normally be a majority vote by the board of directors. So yes, in your case if all 4 are active directors you will need 3.

                  No, but as a leaseholder you can issue proceedings against your landlord (the company), which of course includes you. But you really don't want to take that route. Do you have the support of the other two?
                  Where can I find my 'articles of association'? I have read my lease and it just says things like the lessor is responsible for the roof, communal parts etc. Nothing about about how the lessor reaches a decision.


                  Originally posted by animal View Post
                  And if that vote goes against a freeholder's obligation in the lease, then those directors who voted in favour could and likely will become liable for any consequential loss to the company.
                  Who will become liable for any consequential loss to the company? The directors that vote in favour of going against the freeholder's obligation I assume? So in the worst case scenario of only me wanting to fulfil the freeholder's obligation and the other 3 vote against it, the 3 should be the ones liable for any loss and cost?


                  Originally posted by leaseholdanswers View Post
                  So how to move it on.

                  1: If you are confident that the repairs are required and the cost and scope of the works are fair and reasonable

                  2: It seems as if 3 of the 4 will pay, it is "the one nightmare owner" that will not.

                  Then the company should start the consultation process.

                  On completion of this and you are confident that you understand that the leases as to when and how these costs can be invoiced-few allow a one off demand- then the shareholders must agree to fund the works , perhaps as a loan, in the meantime.

                  As posted the board then resolve to take legal action. It is apparent that 3 will vote in favour.
                  1, The repairs are definitely required as there is a water coming through the roof.

                  2, This might not necessarily the case. The problem is that if one person votes not to pay, there might reach a scenario where another one might think 'I might try get out of paying as well'.

                  3, Would you class this as an emergency and therefore omit the consultation process as from what I've read, it will take well over 30 days. Is this where I can use Ram's dispensation document?

                  The lease states:

                  "...paying by way of rent a sum equal to one fourth part of the costs expenses outgoings and matters mentioned in Clause 5"

                  Part of clause 5 says:

                  "That the lessor will maintain and keep in good and substantial repair and condition
                  (i) the main structure of the building including the foundations and the roof thereof with it's gutters and rain water pipes"

                  Another part of the lease say:

                  "The lessee hereby covenants with the lessor as follows:
                  To pay all costs charges and expenses (including solicitor costs and surveyor fees) incurred by the lessor in or in contemplation of any proceedings under Section 146 or Section 147 of the Law of Property Act 1925 (or any enactment amending or replacing the same) whether or not such proceedings are actually taken out and whatever the outcome of any such proceedings."

                  From that information, is it safe to assume that if the company agrees to the work (by majority vote for example) then we can sue the nightmare owner for all costs including legal fees and the loan interest rates etc?

                  Comment


                    #10
                    Where can I find my 'articles of association'?
                    if you don't have a copy you can download one from the companies house website.

                    Would you class this as an emergency and therefore omit the consultation process as from what I've read, it will take well over 30 days. Is this where I can use Ram's dispensation document?
                    The process will take at least 60 days and whilst yes, you could apply for dispensation on the basis that it's an emergency you are not guaranteed to get it (plus it could take weeks to get a determination) so if you go ahead with the work now it's a bit of a gamble. Best to start the consultation now.

                    From that information, is it safe to assume that if the company agrees to the work (by majority vote for example) then we can sue the nightmare owner for all costs including legal fees and the loan interest rates etc?
                    If that is the only clause by which you can recover your costs of enforcement then no, it's not safe to assume. Firstly, the amount due from the lessee would have to be £350 or more for you to be considering forfeiture. You also need to read and understand your lease and in particular when service charges are actually due.

                    Comment


                      #11
                      Originally posted by johndoe1 View Post
                      Where can I find my 'articles of association'?"
                      You should have got copy when you bought the flat.
                      You are entitled to a copy from the freehold company that you have a share in.

                      ask them for it, they cannot refuse, ( no discusions please ) as you need
                      to see

                      It wont tell you much, but you are entitled to have a copy, as you are a
                      leaseholder of the company and a shareholder, and you live there.

                      R.a.M.

                      Comment


                        #12
                        Originally posted by johndoe1 View Post
                        Who will become liable for any consequential loss to the company?

                        1, The repairs are definitely required as there is a water coming through the roof.

                        The lease states:

                        "...paying by way of rent a sum equal to one fourth part of the costs expenses outgoings and matters mentioned in Clause 5"

                        "The lessee hereby covenants with the lessor as follows:
                        To pay all costs charges and expenses (including solicitor costs and surveyor fees) incurred by the lessor in or in contemplation of any proceedings under Section 146 or Section 147 of the Law of Property Act 1925 (or any enactment amending or replacing the same) whether or not such proceedings are actually taken out and whatever the outcome of any such proceedings."

                        From that information, is it safe to assume that if the company agrees to the work (by majority vote for example) then we can sue the nightmare owner for all costs including legal fees and the loan interest rates etc?
                        I think you are hanging onto a term that you have "found". While the directors might seek to avoid incurring costs and therefore put the company in breach, you might have a claim for losses but it is complicated and expensive process and as you are a director, unlikely to find a sympathetic court as you have remedies and the position to act. So for now forget it, yes that's right forget it....

                        Going back to an earlier post if the majority decided not to go ahead then you can as a leaseholder take them to court for specific performance under your lease as per your extract, apply to the lvt to appoint an external manager as this would be a breach, or in milder form seek arbitration and then enforce that through court action if they still refused.

                        All a lot easier and to the point of getting your roof fixed.

                        Have you asked a roofer to see if a temporary fix or covering can stop ingress? ( but don't delay and get the process of consultation started) This may help and if it is possible, the reluctant lessee might argue that it is not an emergency in response to an lvt application.

                        Well it entirely possible to sue them, but you must have a course of action, and based on your lease, a money claim can only claim any costs awarded by the court, unless you apply for forfeiture, in which case the LVT will have to determine the works and costs are reasonable.


                        So start the consultation process, ask a roofer to look and decide if you can wait, and report back.

                        LOL The doors' "riders of the storm" just came on- talking about rain!
                        Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                        Comment


                          #13
                          I'm embarrassed that I didn't see the last couple of replies to this thread last time and started a new thread below.

                          http://www.landlordzone.co.uk/forums...ppoint-manager

                          As Ram suggested I will continue on this thread. To follow up, there have been various fruitless meetings with the other directors and nothing has been resolved at all.

                          [Copy and paste from new thread]
                          It's now come to a point where it can't be delayed any further, as there is a possibility of dry rot, and I want to know what steps I can take.

                          I'm aware of a couple of options but I'm not sure if either of them are ideal and also don't fully understand the implications.

                          First one is to Appoint a Manager. I gather this will take some time and even if LVT grant me to appoint a new manager, what would happen? Could this new manager, whoever they are, demand the (company)freeholder to repair the roof immediately, and at who's cost?

                          Secondly, I could get the work done, depending on the costs involved, then take the company (including myself) to court over disrepair claims? Are disrepair claims a good way to go?

                          Which would be the best option and are their any other options I could consider for a quicker solution?
                          [end of copy paste]

                          Judging by what leaseholdanswers said then appoint a new manager is the best bet? My questions still remain in that "Could this new manager, whoever they are, demand the (company)freeholder to repair the roof immediately, and at who's cost (initially at least)?"

                          Also, does anyone have experience of Appointing a new Manager and how long does the whole process take? Can it be "fast-tracked" in an emergency?

                          Thanks

                          Comment


                            #14
                            The three options in post 12 still exist. The manager assumes all powers ( save collection of gorund rents in most cases) from the freeholder and company, and acts under the authority of the tribunal in an independant fashion, in most respects, as a receiver.

                            If other aspects can be dealt with and it is only this issue that needs attention then specific performance or arbitration might be suitable.

                            http://www.lease-advice.org/publicat...asp?item=18#12
                            Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.

                            Comment


                              #15
                              I just spoke to Lease Advice. I spoke to them before and some advisors are really good but the guy I spoke to today seemed to want to get me off the phone quick! Anyway he said that Appointing a manager is quite difficult to achieve and may not be the quickest course of action. He also said that even with an independent manager they can't force the leaseholders/freeholders to pay?! That doesn't sound right to me .... is that true?

                              He suggested that probably the best course of action is going to court and applying for order for specific performance. Does that advice sound OK? Does this require a solicitor and is it very expensive?

                              So I don't know which option to take now - this is a nightmare!

                              Comment

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