Counter Notice - Leasehold Property (Repairs) Act 1938

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    Counter Notice - Leasehold Property (Repairs) Act 1938

    The directors of a reversionary lease we manage need to serve counter notice on the freeholder under the above Act, having been served a s146 notice following an LVT ruling regarding repairs breach which found in the freeholder favour.

    Sad situation really. The director of the Freeholder (Ltd Co) in his individual capacity managed the property under the reversionary lease for almost 15 years, until dismissed for incompetence by the then directors. For the last 10 years massive strides have taken place to make improvements. The lease covenant is in current tense "to keep the building in a good state of repair" and as yet there are still a number of outstanding issues, hence the ruling in freeholders favour. Freeholder desperately needs reversionary lease as it stands in the way of significant financial gains for himself.

    Having received the s146 notice, the directors thus need to make use of the above 1938 act to protect their property.

    Is there a set format for this counter notice? is it something that can be bought of the shelf, from say Oyez?

    Thanks in advance.
    On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

    #2
    What exactly is the "repairs breach" at your site causing the freeholder to serve the notice under the 1938 Act ?

    I have never heard of the LP ( Repairs) Act 1938 until your posting.

    But I have found some information from a firm of solicitors and para 4. would seem to indicate what content should be included in the counter-notice.

    http://www.practicalconveyancing.co....iew/8651/1123/

    Comment


      #3
      Thanks for that information - very useful. I did a search and that didn't come up!

      An extremely detailed schedule together with pictures were provided to the freeholder by a large from of surveyors he instructed. The total bill has just been received totalling £12K (payable by the leaseholders under the terms of the lease!). Money that is not there without a supplementary levy, plus at least the same again to remedy the 'repair breaches' ruled necessary by the LVT.

      As I said above (and I need to be careful incase the FH discovers this thread) the FH is desperate to get hold of the reversionary lease (and has tried to get the directors to surrender it before starting the s146 action). This is because he is restricted in what he can do with it in place, and stands to earn £500K if he gets full control - hence it has really concentrated his mind.
      On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

      Comment


        #4
        Originally posted by Gordon999 View Post
        What exactly is the "repairs breach" at your site causing the freeholder to serve the notice under the 1938 Act ?

        I have never heard of the LP ( Repairs) Act 1938 until your posting.

        But I have found some information from a firm of solicitors and para 4. would seem to indicate what content should be included in the counter-notice.

        http://www.practicalconveyancing.co....iew/8651/1123/
        Nor me..Just read through it..and the above useful link.

        Andy
        Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

        I do not accept any liability to you in relation to the advice given.

        It is always recommended you seek further advice from a solicitor or legal expert.

        Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

        Comment


          #5
          Originally posted by Gordon999 View Post
          What exactly is the "repairs breach" at your site causing the freeholder to serve the notice under the 1938 Act ?

          I have never heard of the LP ( Repairs) Act 1938 until your posting.

          But I have found some information from a firm of solicitors and para 4. would seem to indicate what content should be included in the counter-notice.

          http://www.practicalconveyancing.co....iew/8651/1123/
          The FH has served a s146 notice. It is for the leaseholders via the management company (as reversionary leaseholder) to serve counter notice.

          The reversionary lease stands between the FH being able to make a financial gain of at least £500K, hence his concentration on trying to get the directors to firstly surrendering the reversionary lease (even trying to bribe me (verbally and nobody else present) - unsuccessfully - to get the directors to do this). As this didn't work, he then started on the breach of repairing covenants, spending a lot of money on a detailed survey of the whole property and grounds. Such sum he is now claiming under the terms of the reversionary lease.
          On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

          Comment


            #6
            C'mon chaps I did a detailed response on that not so long ago !

            I agree with Band on the run this has to be defended by your solicitors.

            The court will look at the breaches, how the breach arose , why it arose and the intent and willingness, as well as capability, to remedy them.

            If the intent of the s146 is to remedy the breach, a well reasoned case will grant relief, perhaps on a suspended basis pending compliance.

            If there is an ulterior motive such as a windfall, the court will take that in to account as to the intent of both parties.

            A major point is what is the effect on the landlord's reversion of the breaches; if the reversion is some year's away then "time to deal with them" is arguable.

            I would question how the LVT has jurisdiction in determining the breach as well....

            The legal fees are due and you will have to factor that into your plans to address the breach. The money not being there is not a defence at all, if anything that would convince the court to grant forfeiture- you have to get a plan to do the works and get the money in, and seriously think about those at the helm that put your ship the rocks.
            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


              #7
              Originally posted by leaseholdanswers View Post
              A major point is what is the effect on the landlord's reversion of the breaches; if the reversion is some year's away then "time to deal with them" is arguable.

              I would question how the LVT has jurisdiction in determining the breach as well....

              The legal fees are due and you will have to factor that into your plans to address the breach. The money not being there is not a defence at all, if anything that would convince the court to grant forfeiture- you have to get a plan to do the works and get the money in, and seriously think about those at the helm that put your ship the rocks.
              The reversionary lease (as do the individual ones under this) still have 970 years to go.

              The sole director of the FH (Ltd Co) managed the block for 15 years (personally - not via his FH Ltd Co) until dismissed as incompetant by the then directors of the mgmt co. Proper managing agent appointed 8 years ago who inherited a deficit of almost £10K in the accounts, a haunt for druggies and prostitutes (with complaints from police, council and MP) and a myriad of outstanding repairs!
              On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

              Comment


                #8
                With your leases still having 970 years, it's probably better for the leaseholders to collectively buy the freehold title rather than pay the 12K demand.

                Comment


                  #9
                  Originally posted by Gordon999 View Post
                  With your leases still having 970 years, it's probably better for the leaseholders to collectively buy the freehold title rather than pay the 12K demand.
                  mmmm chances are if the breach is determined and the lease allows recovery of s146 costs ( bear in mind this is a head lease) the costs are likely due anyway.
                  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


                    #10
                    The saga continues.

                    First week of May received a letter from FH's lawyer requiring us to furnish details of remedies to the LVT decision within 14 days. Replied accordingly together with works done and a gantt chart of remainder of works scheduled over the coming 18 months.

                    Last week in May received another letter from FH's lawyer stating that 'In light of the continuing breaches ... our client is to file an application at court for leave under s1 of the LP (repairs) act 1938 ... within the next seven days' and that the information enclosed insufficient and to provide fully itemised schedules of work, tenders, budgets and funds in reserve. We replied that we have £5,000 in reserve to cover repairs as of that time, and that we would provide more detailed information as each stage is reached.

                    Depressingly, we got a Part 8 claim through the post, claiming:
                    1. Leave under s1 of the LPRA 1938 to take proceedings for enforcement of right of re-entry.
                    2. Leave under s1 of the LPRA 1938 totake proceedings for damages for breaches
                    3. Under s2 of the LPRA 1938 that the applicant has the benefit of s146(3) of the LoPA 2915 in relation to costs and expenses
                    4. Order the respondent to pay the costs of this application

                    I am looking at the explanatory notes to N408 Acknowledgement of Part 8 Claim. In particular Section D - objecting to the use of Part 8 - where it asks if there is a substantial dispute of fact involved. The only fact that is agreed is the decision of the LVT where they found in favour of the FH that there were certain breaches. A number of these have already been remedied: the rest are scheduled to be completed within 18 months on a rolling scheme of works based on the perceived urgency of the work needed. (In effect our existing five-year program of work has been condensed to under two years, with a couple of additions.)

                    The FH's actions and claim are draconian in relation to the relatively minor level of disrepair remaining from the LVT decision. The claim pack we received was at least 1" thick and unbeknown to the leaseholders the FH has over recent months arranged various reports to support his case, with a commentary from qualified surveyor summarising the reports as demonstrating substantial disrepair which is not the case.
                    • For example, he contracted an NICEIC electrician to to a periodic report on the electrical system which has noted a number of C2 'Urgent work needed' and a couple of C1 'dangerous' elements. We also had a periodic test done 18 months ago, again by an NICEIC contractor who was instructed to deal with all and any C1 and C2 elements without delay. I have copied him the FH's report and our guy says that the tester must have had a remit to be as harsh as possible, as practically none of the C1 and C2 elements listed are valid on an existing installation - though on a new installation they would be justified. He is willing to do another periodic test (at a cost, of course) if that will help our defence.
                    • Again, he has also had a health and fire safety report done which in the main summary 'Safety Actions Requiring Immediate Action', the assessor has written "No immediate actions require attention" yet the surveyors commentary has picked up narrative from within the report, such as recommendations for emergency lighting to be considered, as a failure and a requirement to be remedied - even though this was not mentioned in the LVT Decision.
                    • He has also stated that there is no evidence of an asbestos report having been conducted, and has thus assumed that there is substantial risk to life. There was one done 4 years ago that he is not aware of with none discovered - and again this area has no mention in the LVT Decision.


                    What it boils down to is that he must be aware that the breaches within the LVT decision have or are being dealt with already meaning his claim in this aspect is out-of-date. Thus in order to make a case he has introduced additional items and trying to have these regarded as breaches for which no LVT application or decision has been granted.

                    Sorry this is a bit long-winded, but in a nutshell, my main question is does the above indicate a 'substantial dispute of fact' and can we make use of this section in our acknowledgement?



                    (Separately, the enfranchisement route is slowly meandering through the initial processes. Over 50% have now parted with money so a valuer was appointed, being the normal first step. However due to potential hope value in the lucrative planning permission granted, the valuer has asked for us to obtain legal opinion. The valuers feel that the terms of the reversionery lease negate any hope value due to the restrictions on the FH while it remains in existence (which would explain why the FH is going to such lengths to obtain forfeiture!). However, they have asked us to obtain legal opinion on whether there is anything that disabuses their view before they provide a value. We should get a decision on this within the next week.)
                    On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

                    Comment


                      #11
                      Successfully Moved to Part 7

                      We completed the N408, and completed Section D where we objected to the use of Part 8 due to a "substantial dispute of fact involved".

                      Three months later there was a Telephone Directions Hearing, where the Judge and both sides could put their case with 30 minutes allocated. On the day the main Director was unable to take time off work, so it was me only on the defence. The freeholder had Counsel batting on their behalf.

                      Once the introductions were completed the judge asked Counsel to put the applicants case, which he did for some minutes quoting various cases. I was then asked to respond. I kept it simple and just maintained that Part 8 was unfair in view of the new evidence introduced by way of the reports that we were unaware of (because the freeholder decided to hide them from us, yet then claims that deficiencies within the reports required rectification 'urgently and without delay').

                      After some moments of silence (it seemed like hours) the judge said that whilst taking on board Counsels comments, he regarded the action as better suited to Part 7 and for Multi Track.

                      Counsel then annoyed the judge by questioning this, saying that is was plain that the defence case was extremely weak and that Part 7 and the Multi Track would only increase costs for both sides which the defence would end up having to pay.

                      In polite words, the judge told him to shut up as that was his decision.

                      Directions leading to an expected trial date of Summer 2013 were then agreed.
                      On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

                      Comment


                        #12
                        Leaseholders Agree to Purchase Freehold (Enfranchisement)

                        It is a momentous day today. I haven't been able to post any updates in case the freeholder came across this thread and realised what was going on.

                        For over a year I have been working with the leaseholders to raise funds and get enough of them to get to commit to get over 50% barrier to enfranchisement. Well, 2/3rds have done so and signed the Participation Agreement. As a result the enfranchisement lawyer has today issued the s13 Initial Notice to the freeholder!!

                        He should get it tomorrow morning - and what I would give to be a fly on the wall. I'm sure he will have an apoplectic fit and will be absolutely furious.

                        From documents submitted by the freeholder so far, I reckon that he has spent at least £35,000 to £40,000 in legal and survey costs. At the start, if he had approached the leaseholders and offered them, say, £20K in return for granting access rights to the purchasers of the flats approved in the planning permission, I'm sure they would have agreed as this would have allowed a full refurb of the rest of the block and grounds. But no, he decided on the litigation route.

                        The value in the Initial Notice is little more than a few thousand. This is firstly because of the long leases; secondly, the low amount of annual ground rent (with only a 10% increase in 12 years time); and thirdly that both our valuer and lawyer agree that there is no 'hope value' in the planning permission the freeholder obtained - due to the head lease acting in the same was as a Ransom Strip. (Which is why he has been so intent on the forfeiture action he has waged against the head lease).
                        On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

                        Comment


                          #13
                          Application to Stay Freeholders Legal Action

                          In June 2012 the freeholder started a court action applying for leave to take forfeiture action against the head lease under the Leasehold Property (Repairs) Act 1938.

                          The leaseholders have now started the formal process of enfranchisement, and once completed a new already formed freehold management company will take over, which all participants will have a share in. The current head lease will then cease.

                          Now that the Initial Notice has been issued, we need to apply to the court to have the current forfeiture action stayed - pending the outcome of the application to enfranchise.

                          I hardly think that the freeholder would consent to a mutually agreed Tomlin Order, so this would mean a direct application to the court. Thus does anyone know if this would this be done by a simple letter to the court, enclosing a copy of the Initial Notice, or if there is a specific form? Also, would there be a fee to accompany this application?
                          Last edited by Esio Trot; 07-02-2013, 16:14 PM. Reason: typo
                          On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

                          Comment


                            #14
                            Originally posted by Esio Trot View Post
                            The current head lease will then cease.
                            Aah be careful of that if the HL is a company which presumably is held by all flat owners as shareholder or members, the as only 2/3rds + are participating in the FH purchase, then that company is under no obligation to surrender it's head lease.

                            There is no reason why the new FH company can't be left to collect its ground rent(?) and stay quiet leaving the management of the building to the HL. It can ease tensions arising from a them and us situation as the managers, the HL, who therefore account for 99.9% of expenses and all decisions remain inclusive of all shareholder/members/leaseholders.

                            After all buying the FH is only about getting this current FH off your, the HL's, back.
                            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
                              Originally posted by leaseholdanswers View Post
                              There is no reason why the new FH company can't be left to collect its ground rent(?) and stay quiet leaving the management of the building to the HL. It can ease tensions arising from a them and us situation as the managers, the HL, who therefore account for 99.9% of expenses and all decisions remain inclusive of all shareholder/members/leaseholders.

                              After all buying the FH is only about getting this current FH off your, the HL's, back.
                              Thank you very much for your suggestion. I discussed it with the HL directors last night (who are the same directors of the new FH company!) and they agree that you have given a cleaner way forward than they had previously considered!
                              On some things I am very knowledgeable, on other things I am stupid. Trouble is, sometimes I discover that the former is the latter or vice versa, and I don't know this until later - maybe even much later. Because of the number of posts I have done, I am now a Senior Member. However, read anything I write with the above in mind.

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