Reserve Fund used to subsidise non paying tenant

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  • TNA
    replied
    Update

    Landlord's/liquidator's appeal has been refused by tribunal. Now to get back to the tricky business of recovering the £'s.
    Thanks to all at LLZ for invaluable help and support. I couldn't have got to this point without you.

    Leave a comment:


  • leaseholdanswers
    replied
    Originally posted by TNA View Post
    it might easily cost £133k in fees to get that back.

    yes, I know. We spent £12k on solicitors fees before deciding to go to the LVT in the first place. £12k just to establish that it would cost a fortune to get our money back. On that basis, we would do nothing. Just forget about the £130k. And that doesn't sit right somehow. Hmmm.
    No it doesn't sit right.

    Your action is the recovery of the funds, which is relatively simple. It is whether the landlord can do so without pursuing litigation against others. That the LL is in a form of liquidation means that it it unlikely.

    Your only other avenue is to look at the directors and if you can get to them. That is complicated and outside the scope of the forum.

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  • Perplexed
    replied
    What worries me is that you say the tenant...

    has not paid a penny (or been chased for payment) for years
    Has the tenant always been served with proper demands in compliance with the Lease and current legislation? Because if he hasn't, no money is payable.

    If that is the case you could serve him with a demand now, in the proper form and including all the information to which he is entitled, but you would only then be able to recover service charges relating to the last 18 months, and ground rent for the last 6 years.

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  • worzelgummage
    replied
    This is where it becomes a game. You want to threaten action and agree an out of court settlement. what can they afford and what will they pay to make you go away. Good luck

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  • TNA
    replied
    it might easily cost £133k in fees to get that back.

    yes, I know. We spent £12k on solicitors fees before deciding to go to the LVT in the first place. £12k just to establish that it would cost a fortune to get our money back. On that basis, we would do nothing. Just forget about the £130k. And that doesn't sit right somehow. Hmmm.

    Leave a comment:


  • leaseholdanswers
    replied
    that depends on the scope of the liquidators appointment as posted. There are different types and intentions in liquidation.

    I dont see how PI resolves it entirely, as it depends who did what and to what extent contra agreements between parties ( let alone works that have failed or been compromised) are between those parties and nothing to do with PI.

    I would ask for the £8K to put in reserve and concentrate on your immediate duties under RTM. Any legal action starts with RTM against the liquidator or landlord for handover monies and individual leaseholder action over holding monies in trust which then tear open the old arguments over contra works and the underlying disputes.

    A lawyer will look at the decision and realise this and look at the likely costs and complexity and if they are honest as some of my colleagues who are a short walk up the road from your block would say it might easily cost £133k in fees to get that back. And then ask do they have £133K between them?

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  • TNA
    replied
    Thanks for advice. I am struggling to get a response from legal advisers - seems it's just too messy. Liquidator has said all along that it will be either his or the managing agent's professional indemnity insurance that will foot the bill in the end.

    I'm trying to figure out who to pursue, liquidator or agent, what I need in place to do this (lvt/court decision) and which path to take to recover money. Liquidator currently holds just £8k in the reserve fund. I could ask for this to be transferred to RTM now but am thinking it would be better to make a claim for the full amount.

    Does it matter that the reserve fund was first set up 2 years after the liquidator took over? i.e. it was nothing to do with the freehold company that went into liquidation.

    Leave a comment:


  • leaseholdanswers
    replied
    Originally posted by TNA View Post

    Do I need to await outcome of appeal before starting cc action?

    Thanks again.
    Well it's the difficulty and likleyhood in

    a; getting the landlord to restore funds they had custody of but who are in one form or other of liquidation
    b; that sums expended and held are related to the office which is outside the Trust
    c; adjusting sums no longer due through failure to consult but spent- see a for likelihood of recovery
    d; the likely effect of several lessees owing each other over disputes works and specifications before the landlord would be in funds.
    e; the return of any fees by the agent taken out of reserves
    f; whether the landlord wishes to consider if there was any negligence on the agents and a contract administrator's part.

    Your action is to first have the landlord make good the funds held on trust and pass the amount due over to the RTM in a parallel to actions by each of the leaseholders to whom he was required to hold monies in trust.

    Will he, I suspect it's a question of can he or rather, depending on the scope of liquidation, if the liquidator can or will.

    I needs a thorough review before thinking about litigation.

    Leave a comment:


  • TNA
    replied
    Thanks LA for reading.

    To restore missing £130k reserve fund and service charge I guess we'll need county court ruling on breach of trust and lease. Then if they don't settle, back to LVT for decision on balance to be transferred to RTM and if they don't settle then, it's back to the cc for enforcement. Is that right?

    Do I need to await outcome of appeal before starting cc action?

    Thanks again.

    Leave a comment:


  • leaseholdanswers
    replied
    Originally posted by TNA View Post
    Here's a link to the decision http://www.lease-advice.org/decision...-8000/7767.pdf
    Landlord (liquidator) is appealing on grounds that tribunal had no jurisdiction under s27A to determine breach of lease & trust. Am trying to work out best course of action to recover missing £130k. Thanks for any help!
    In the strictest sense that's right. S27A establishes what to who from whom and when amounts are due using the criteria in section 19 " fair and reasonable etc" and in these cases of major works, section 20 et al.

    They may comment that there is a breach or that section 42/42a has not been complied with but that is not a determination under section 27A. It does however establish what should have happened and what is to be done to remedy it.

    The biggest concern arises right at the first point which is that the office is outside the statutory regime entirely, and only scrapes into play by virtue of the RTM, which was not part of an LVT application.

    I read, but not with entire certainty due the length and complexity that substantial amounts are time barred or were not consulted on ( and you cannot enter a section 20ZA dispensation under the old regime ! ), an agreements over set off and contra agreements are really a matter of litigation and not s27a determination, complicated by claims against two contractors and who ever did the contract admin on the roof works, and whether it as specified for a roof garden and irrigation system, and why what the panel saw as opportunities for litigation were not followed through.

    Once you stray from the lease..... I really cannot say as any advisor would have to review the entire file. It's a doozy

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  • TNA
    replied
    Originally posted by andydd View Post
    Has the decision been published online yet ?. Might be easier for us if we could read actual decision, it sounds quite complex.

    Andy
    Here's a link to the decision http://www.lease-advice.org/decision...-8000/7767.pdf
    Landlord (liquidator) is appealing on grounds that tribunal had no jurisdiction under s27A to determine breach of lease & trust. Am trying to work out best course of action to recover missing £130k. Thanks for any help!

    Leave a comment:


  • leaseholdanswers
    replied
    Originally posted by TNA View Post
    LVT have ruled in our favour. Applicants not liable for roof costs. Landlord in breach of lease and breach of trust.
    Wahoo another victory for an LLZ member !

    Leave a comment:


  • TNA
    replied
    Not yet, decision is dated 22. April so it could be a few weeks before it's available online.

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  • andydd
    replied
    Has the decision been published online yet ?. Might be easier for us if we could read actual decision, it sounds quite complex.

    Andy

    Leave a comment:


  • TNA
    replied
    LVT decision - Update and help needed

    LVT have ruled in our favour. Applicants not liable for roof costs. Landlord in breach of lease and breach of trust.

    Background:
    Block of 7 flats + 1 office. 12 yrs ago, owner of top flat and office (owned by his pension fund) paid £56k for roof works thinking they would be recoverable via service charges. Landlord in liquidation failed to serve s.20 and costs are now time-barred. Meanwhile, owner of top flat and office has offset £50k service charges over 12 yrs. Applicants (other leaseholders) brought case because there is a £50k hole in reserve fund that has been used to make up shortfall in service charges.

    Help please:
    LVT has ruled in our favour but I am struggling to interpret part of decision. LVT is satisfied that set-off was agreed between managing agent and owner of top flat for both flat and office arrears. Decision says that whilst it made sense to agree set off with top flat, it should not have extended to office owned by pension fund. Top flat was sold 6 years ago but pension fund still owns office and continues to offset service charges. Does this decision mean that he should now start paying office service charges? Also is Landlord liable to pay office arrears (£40k)?

    Thanks for any help.

    Leave a comment:

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