Maintenance charger + reserve fund

[MarkGolf]

Good afternoon,

I have received an application for payment of the maintenance charge for a flat I own, this charge also included an additional reserve fund (300 gbp).

3 years ago, I attended an AGM where the maintenance company at the time suggested adding this reserve fund in order to cover exterior decorations, it was agreed by all attendees that this would be for 2 years. A new maintenance company took over the previous company approx 2 years ago, last year the maintenance charge included the reserve fund, as expected, this year, I did not expect it.

Before I go back to them, I just want to know if I am right to question paying it when it was agreed for a 2 year period only. (The exterior works are due to happen next month)

No AGM has taken place since the last 3 years ago and no letters have been sent out stating that it will continue to be charged. It could well be a mistake but I just wanted to know my standing point in this.

Many thanks

[Gordon999]

Do you have any Printed Summary or Minutes of Meeting from AGM which can be quoted if you want to refere to what was agreed 3 years ago ?

[scot22]

To the best of my limited knowledge if it was agreed for a two year period only, and minuted as such, then that stands. I would certainly query it.

[MarkGolf]

Thankyou for your replies.

I contacted my contact at the maintenance company.

He acknowledged that he was aware that the reserve fund was agreed for 2 years but he took it upon himself to demand it again "owing to the forthcoming decorating works – scheduled in the coming weeks. Further to this, the internal areas will need to be considered next, so the raising of additional funds does seem to make sense."

I'm not 100% clued up with the processes of how things should be done and affording it isn't the issue, it's more the principle of having to pay a sum I wasn't expecting and against what was last agreed..

The joys of apartments! I guess I just have to go along and pay up?

[Snackman]

MarkGolf

You do not say if the AGM was a Freeholder company AGM (do you own a share of the Freehold?) or a Resident Association meeting.

I help run a block of flats where the tenants own the freehold, and we have a managing agent that we keep on a tight leash. What I have learnt over the years though experience is that the Freehold company AGM can vote on whatever they like (and it is good to have full agreement in case of a LVT hearing in case of disputes), but if the AGM decides to override the lease then the management company would be in a weak position to collect if a tenant decides to not pay.

So in your case, if the Lease allows for a sinking fund or a maintenance reserve or some other form of equalisation of service charges across years, then the Freehold company can do this (normally the directors would decide, or they would defer to the company AGM).

If not, you may still decide to go along with paying the demand, as it is sensible to have some reserves and to spread the costs, and £300 seems quite reasonable. From a personal point of view, I would be more concerned that the work that is going to be carried out has received several competing quotes so you are not overpaying for the work. The management company will charge a percent for managing the works (so they are not incentivised to find you the lowest quote). Tenants have the right to get involved in this process, and you should receive Section 20 notices of the work.