Reserve Fund used to subsidise non paying tenant

[TNA]

Please can somebody tell me whether "a reserve fund set aside for future redecoration and renewals" can be used by the LL/MA to make up the shortfall of a non-paying tenant?

I am a leaseholder in a small block of 7 flats + 1 office. One of the tenants (used to own 1 flat and office, now just owns the office) has not paid a penny (or been chased for payment) for years and the reserve fund has been plundered to the tune of £50k to make up the shortfall. Lease says each unit pays 1/8 of sc. It also says that reserve fund will be held upon trust for the tenants.

Our case is going before LVT later this month and LL's case is that
1. he can use reserve for this purpose.
2. the matter falls outside LVT jurisdiction

Thanks for any advice.

[andydd]

Please can somebody tell me whether "a reserve fund set aside for future redecoration and renewals" can be used by the LL/MA to make up the shortfall of a non-paying tenant?

I am a leaseholder in a small block of 7 flats + 1 office. One of the tenants (used to own 1 flat and office, now just owns the office) has not paid a penny (or been chased for payment) for years and the reserve fund has been plundered to the tune of £50k to make up the shortfall. Lease says each unit pays 1/8 of sc. It also says that reserve fund will be held upon trust for the tenants.

Our case is going before LVT later this month and LL's case is that
1. he can use reserve for this purpose.
2. the matter falls outside LVT jurisdiction

Thanks for any advice.

Have you got legal representation, are you preparing your statement of case (or have you already), I'm sure this is an issue that has been before the LVT before, have you searched for similar cases ?

Personally I'd believe that they would agree in your favour.

Andy

[TNA]

Have you got legal representation, are you preparing your statement of case (or have you already), I'm sure this is an issue that has been before the LVT before, have you searched for similar cases ?

Personally I'd believe that they would agree in your favour.

Andy

No legal representation on tenant side - I'm representing tenants and have prepared our case. I am out of my depth on issues relating to LVT jurisdiction and accepted use of reserve though! I've searched but been unable to find similar issue in previous LVT cases.

[andydd]

No legal representation on tenant side - I'm representing tenants and have prepared our case. I am out of my depth on issues relating to LVT jurisdiction and accepted use of reserve though! I've searched but been unable to find similar issue in previous LVT cases.

Not something I've really come across but the Lease Advice Site has some info http://www.lease-advice.org/publicat....asp?item=14#7 (and yes they are in an LVT's juridstiction), also see P42 - L & T Act 1987 - http://www.legislation.gov.uk/ukpga/1987/31

I had a quick search and found this one http://www.residential-property.judi...r/11002D5E.pdf prob not entirelly relevant but in your case i think you would rely upon the wording of the lease does not allow the reserve fund to be plundered because certain people havnt paid, and in fact you could go on to say its bad management to allow this, the landlord/managemnet company should be chasing the non-payers.

Andy

[andydd]

The (OP's) question is also raised here http://www.guardian.co.uk/money/2011...nguiz-property

Andy

[TNA]

Not something I've really come across but the Lease Advice Site has some info http://www.lease-advice.org/publicat....asp?item=14#7 (and yes they are in an LVT's juridstiction), also see P42 - L & T Act 1987 - http://www.legislation.gov.uk/ukpga/1987/31

I had a quick search and found this one http://www.residential-property.judi...r/11002D5E.pdf prob not entirelly relevant but in your case i think you would rely upon the wording of the lease does not allow the reserve fund to be plundered because certain people havnt paid, and in fact you could go on to say its bad management to allow this, the landlord/managemnet company should be chasing the non-payers.

Andy

Really helpful - thanks. If I've understood it correctly it looks as though s42 falls under jurisdiction of county court rather than LVT (see 52(2)(b) L&T 1987?

[leaseholdanswers]

Didn't you go through this in an earlier thread? Was it not roof works?

[TNA]

Didn't you go through this in an earlier thread? Was it not roof works?

yes - well remembered. We were struggling to get accounts, which we now have. LVT case submitted and now I'm trying to fully understand the ins and outs of the LL's case.

[Carine]

Hi TNA,

I would really like to know what the outcome of the LVT is.
Quite shocking that monies put aside for a purpose are being used because a leaseholder is not paying their service charge (and has not been chased for that).
Good luck with it all, you are brave to go through it without legal representaion.

[TNA]

Hi TNA,

I would really like to know what the outcome of the LVT is.
Quite shocking that monies put aside for a purpose are being used because a leaseholder is not paying their service charge (and has not been chased for that).
Good luck with it all, you are brave to go through it without legal representaion.

Brave or mad I'm not sure! Hearing adjourned til Jan. Will update here when case concludes. Thanks for support.

[andydd]

Hi TNA,

I would really like to know what the outcome of the LVT is.
Quite shocking that monies put aside for a purpose are being used because a leaseholder is not paying their service charge (and has not been chased for that).
Good luck with it all, you are brave to go through it without legal representaion.

LVT's are 'supposed' to be informal courts suitable for the litigant-in-person, whether they are or not could be argued. I wasnt too impressed at mine, although I did win on a large number of issues.

I like many others prefered the setup of the small claims court, it seemed far easier and fairer and the judge (clearly qualified) stuck strictly to issues of law whereas LVT's (not nesacarily legally trained) tend to veer off and make judgements depending on all sorts of facts and not always the law and often just ignoring laws and previous cases even when pointed out to them.

But ranting aside, a good mind, an internet connection and access to a free printer are all thats required.

I have seen my freeholder spend a fortune of solicitors, barristers and his so-called LVT expert only to come away disapointed.

Andy

[TNA]

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.

[andydd]

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

Andy

[TNA]

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

[leaseholdanswers]

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 !