S21, S22 LTA 1985 Questions

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    S21, S22 LTA 1985 Questions

    Some questions:
    L produces unaudited accounts. L has no lease enshrined reason to audit.
    L issues a S21 Summary of costs under LTA 1985 after T requests. Summary of costs identifies aggregate balances per relevant dwelling (s21(5)(c)) but only for the past 6 years, not accounting for the full lifetime of the service charge fund - some 20 years.
    Has L failed to provide a valid S21 Summary of Costs under S21, LTA 1985?
    L issues a S21 Summary of costs under LTA 1985 for the following year after T requests. T is told to refer to previous report for the closing balance re: a similar S21 (5)(c) query.
    Has L failed to provide a valid S21 Summary of Costs?
    L issues a S21 Summary of costs under LTA 1985 that states the managing agent, MA produced report and the RMC accountant has certified under S21(6), LTA 1985. The reality is that the report has been provided by the RMC accountant using figures provided by MA and then self certified. 2 questions here:
    1) can the RMC accountant provide an auditor for the purposes of S21(6) with respect to S28, LTA 1985?
    2) has L complied with S21(6) re: self certification?

    T requests right to examine accounts under S22, LTA 1985. the summary lists summarised costs, and reserve balances. L provides invoices for costs, and accounting reports for demanded sums. T requires to see demands as the lease requires that the individual expenditure be demanded as T wishes to verify S21(5), LTA 1985 has been followed with respect to setting out costs in a way showing…how they have been…reflected in demands for service charges. L refuses quoting taber v macdonald & Clockscreen Holdings Ltd [1999] 31 HLR, stating the certifying accountant did not see the demands when certifying. The RMC accountant never sees demands apparently.
    Given L possible defence in Taber predicated on audited accounts, has L failed to comply with the S22, LTA 1985 request by not providing demands or bank statements (to verify reserves) remembering that the accounts are unaudited?

    Many thanks.
    Tmac

    #2
    *Rubs head*..Oww..me brain !
    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


      #3
      yes, i know.

      Comment


        #4
        L issues a S21 Summary of costs under LTA 1985 after T requests. Summary of costs identifies aggregate balances per relevant dwelling (s21(5)(c)) but only for the past 6 years, not accounting for the full lifetime of the service charge fund - some 20 years.
        Has L failed to provide a valid S21 Summary of Costs under S21, LTA 1985?
        He is only required to produce one for the last accounting period or 12 moth period. He can refuse to do so and you cannot force him to on earlier periods; however you might challenge the costs recovered at LVT for up to 12 years, and in limited circumstances up to 20.



        L issues a S21 Summary of costs under LTA 1985 for the following year after T requests. T is told to refer to previous report for the closing balance re: a similar S21 (5)(c) query.
        Has L failed to provide a valid S21 Summary of Costs?
        Unlikely no, as the balance held to the credit should be in the report section; but the intention of the Act is to report the year (or strictly, the period).


        L issues a S21 Summary of costs under LTA 1985 that states the managing agent, MA produced report and the RMC accountant has certified under S21(6), LTA 1985. The reality is that the report has been provided by the RMC accountant using figures provided by MA and then self certified.
        I assume the RMC is the LL ?

        It cannot be self certified if the RMC AC, as you posted, certifies it. If you mean that the MA produced the report and the RMC AC signed it off, then that is common practice. No point paying an accountant to duplicate a report which is produced on the MA software….! And remember the Act suggests it is the landlord that produces the summary and the auditor that certifies it.

        2 questions here:
        1) can the RMC accountant provide an auditor for the purposes of S21(6) with respect to S28, LTA 1985?
        2) has L complied with S21(6) re: self certification?
        1 Yes and 2 it’s not self certification.

        T requests right to examine accounts under S22, LTA 1985. the summary lists summarised costs, and reserve balances. L provides invoices for costs, and accounting reports for demanded sums. T requires to see demands as the lease requires that the individual expenditure be demanded as T wishes to verify S21(5), LTA 1985 has been followed with respect to setting out costs in a way showing…how they have been…reflected in demands for service charges. L refuses quoting taber v macdonald & Clockscreen Holdings Ltd [1999] 31 HLR, stating the certifying accountant did not see the demands when certifying. The RMC accountant never sees demands apparently.
        And they don’t need to as the scope of certification of Section 21 only need report on the amounts demanded, usually available in a summary report, and evidenced in the debtors report and the bank statements and reconciliation.

        Given L possible defence in Taber predicated on audited accounts, has L failed to comply with the S22, LTA 1985 request by not providing demands or bank statements (to verify reserves) remembering that the accounts are unaudited?
        You are conflating terms there is no audit merely a summary certified by an auditor. The requirements on reporting and auditing the RMC accounts often have a higher standard, while still not being an audit. Demands need not be seen if the total due, the estimate, is properly calculated and apportioned to the flats by a report, and the balances paid outstanding and held, tally.

        It would be certainly a hard question to answer for the certifier if they had not seen bank statements as they need to verify what they have been sent. There is current guidance but even going back into the past the ICAEW rules always required sight of original records or certified copies.

        I would suggest that you look more closely at challenging the past expenses v contributions at the LVT basing it on a scott schedule of items in dispute.



        http://www.icaew.com/~/media/Files/T...-accounts.ashx

        Be warned read this in a seated position with adequate cushioning nearby- you will lose the will to live
        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
          L issues a S21 Summary of costs under LTA 1985 after T requests. Summary of costs identifies aggregate balances per relevant dwelling (s21(5)(c)) but only for the past 6 years, not accounting for the full lifetime of the service charge fund - some 20 years.
          Has L failed to provide a valid S21 Summary of Costs under S21, LTA 1985?
          He is only required to produce one for the last accounting period or 12 moth period. He can refuse to do so and you cannot force him to on earlier periods; however you might challenge the costs recovered at LVT for up to 12 years, and in limited circumstances up to 20.



          L issues a S21 Summary of costs under LTA 1985 for the following year after T requests. T is told to refer to previous report for the closing balance re: a similar S21 (5)(c) query.
          Has L failed to provide a valid S21 Summary of Costs?
          Unlikely no, as the balance held to the credit should be in the report section; but the intention of the Act is to report the year (or strictly, the period).
          agreed that disclosure of costs relates only to the period. that is clear from statute. However the requirement to disclose the aggregate of any amounts received does not appear to be bound by the start of the period, particularly as statue requires that any balances still standing to the credit of...tenants should be disclosed. this would appear to require at least an opening balance from the previous period, or workings from the start of the fund. With this in mind did parliament intended this S21 Summary as a periodic reporting or one to be requested each year for the sake of continuity?

          I assume the RMC is the LL ?
          Yes

          It cannot be self certified if the RMC AC, as you posted, certifies it. If you mean that the MA produced the report and the RMC AC signed it off, then that is common practice. No point paying an accountant to duplicate a report which is produced on the MA software….! And remember the Act suggests it is the landlord that produces the summary and the auditor that certifies it.

          2 questions here:
          1) can the RMC accountant provide an auditor for the purposes of S21(6) with respect to S28, LTA 1985?
          2) has L complied with S21(6) re: self certification?
          1 Yes and 2 it’s not self certification.

          The agent passed the data to the RMC accountant some of which comes from the filed annual accounts, who produced the report and certified. No bank statements were provided as evidence for the S22 Inspection, just the annual accounts and debtors report. Query whether such circular reporting is in the spirit of S21/S22?

          You are conflating terms there is no audit merely a summary certified by an auditor. The requirements on reporting and auditing the RMC accounts often have a higher standard, while still not being an audit.

          Demands need not be seen if the total due, the estimate, is properly calculated and apportioned to the flats by a report, and the balances paid outstanding and held, tally.
          The S21 report identifies all costs and a different demand amount for each property (4 styles in all, among 20 properties). It is not possible to identify the reported costs used to make up the 4 types of amounts demanded. MA demands a single amount via the demand. In short, the demand does not specify the breakdown of costs that make up the demanded amount, nor does the S21 report. Query whether the certifying accountant should have required to see the demands?

          I believe LJ Roch based judgement on Taber (provide lessee with the same documents certifying accountant used) on the fact that the service charge accounts had been audited. Query whether Taber offers a defence where the RMC accounts have not been audited? Appreciate this audit is separate from the standard required for S21 reporting.

          Many thanks for your help!

          Comment


            #6
            Well I already answered your first query yes it was intended to be one period at a time and no statute makes it clear it is the balance at the end of the period for sums due or demanded in that period. C/fwd from an earlier period is not considered.

            It was not intended to report the balance in any account, that is something the lease must do, or as you have now explained there is an RMC, will be in their balance sheet, if not dedicated report, and explained in the notes.

            For many years I had auditors do a separate I & E for SC and for RF, both certified and c/fwd
            It’s only a very small amount of work and takes hours out of explanation.

            Shareholders can pass a resolution asking the auditor to report that way

            The RMC must keep separate its own funds from any service charge/reserve funds held on trust.

            Again it is not circular reporting! The information is produced from the MA client records and incorporated into the P&L or I & E, and then presented in accordance with the Acts one for L & T one for the Companies Act.

            You are focusing on the decision, which though helpful reached a conclusion on those facts. While producing the demands would be almost conclusive, there are other ways of presenting these, you all have the year estimate which should tie up with the amount reported as demanded, and the expenses creditors and debtors should all balance out, for that period.

            If that can be explained by other means then it may be satisfactory, it may not, there is no must to see demands or bank statements , save for the requirements of what particular audit or report was done for the company, and you would not see demands, as after all the originals went to the flat owners, and contain data protected info.

            Were the RMC accounts have an auditors report or directors report?

            Perhaps you can tell us the problem you are facing all this staccato “query” is doing my head in.
            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
              Appologies, when you live with this for such along time, you learn to focus your questions.

              Development 20 properties, 18 residential, 1 shop, 1 maisonette (over shop - my property)

              LL (RMC) will not disclose value of SC fund prior to my purchase claiming no contributions by previous LH which is dubious given evidence. Also will not maintian/repair for same. at purchase however, these details not disclosed, rather a plan to redecorate etc was proposed. LL claims this now a mistake. Shouts stitch up. legally not sure which way to go - and net effect driving us to firesale and get out.

              Comment


                #8
                As an RMC I would think that the other shareholders or members would want to know what monies of theirs are being held and therefore outside the issues above they would require the directors to investigate and the agents to comply as the lawful execution of their duty contractually equitably and as trustees of the funds.

                In allowing a situation where reports are not made then the directors have a lot to answer for frankly.

                Do not the annual accounts of eh company not report cash at bank and debtors? ( based on your post the I & e includes SC expenses so it ought to).
                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

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