Leaseholders right to know what expenditure comprises

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    Leaseholders right to know what expenditure comprises

    As we know, LTA 1985 s.21 says that leaseholders have a statutory right be told what a service charge comprises. However the law has not been subject to a commencement order and is therefore completely useless. Furthermore even though the right still exists if a lessee requests a summary and the failure to produce one is a criminal offense, the Court of appeal decided (Morshead Mansions) that they have no inclination to uphold the law (who would have thought) and that proceedings are only available in an action taken by a local Council -- who will obviously not do so (and another reason I will never let to benefit tenants). So this law is now a total sham, as is the criminal offense. There is no right to a private injunction or court order to produce the information. So basically in law there are no rights at all.

    Which brings me to my question. It is the case that many leases include the requirement on the lessor to provide account information and insurance information -- in order words in theses leases the requirement is contractual and does not rely on LTA1985 (and often predates the legislation anyway). So if it is contractual, does lessee then have the right to pursue proceedings/ask for a court order?

    #2
    Well some leases include providing info or that accounts must be audited as a contract condition but only some.

    The lease may say this must be done, in this case you could sue for damages but alas it would be hard to prove beyond any nominal loss OR the lease may stipulate that payment of service charge is condition that account info is provided or audited in that case the LH can withhold payment
    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
      If your block has more than 4 units, you should get a copy of the audited service charge accounts within 6 months from end of the reporting period.
      Then you can make a written request for access to inspect all the original documents which support the audited service charges accounts . You can make copies for a reasonable cost ( and use the info to apply to the FTT for a judgement on the reasonableness of the service charges ) .

      Comment


        #4
        Yes Gordon, but this is all a "should" -- none of it has the force of law (it is not passed into law) or is enforceable (there is no available mechanism to enforce) or actionable in any shape or form. Injunctions and court orders are not allowed (except via a local council), and the courts have stated clearly that they decline to uphold the law in any case. There are many FTT cases where FH fails to supply any documents to either the lessees or to the FTT itself, or where documents provided are deemed to be falsified -- and yet the service charges are deemed payable and reasonable anyway. And there is also no sanction for failing to provide disclosures to the FTT.

        Which is why I asked whether additional routes apart from the ones in law -- which do not work -- are available if it is contractual.

        The only apparent relief is via "appointment of a manager" where RICS and related failings will be taken into account -- but even this is a) Not available in most circumstances because the constraints mean that it is not possible to locate a manager who will take on management b) it is temporary, and c) the actual misappropriation of money and criminal activity is not dealt with via this route.

        Comment


          #5
          Originally posted by AndrewDod View Post
          There are many FTT cases where FH fails to supply any documents to either the lessees or to the FTT itself, or where documents provided are deemed to be falsified -- and yet the service charges are deemed payable and reasonable anyway. And there is also no sanction for failing to provide disclosures to the FTT.
          I thought the new procedure rules gave the FTT more teeth. I could be wrong but there's always the award of costs when behaviour is deemed unreasonable.

          Which is why I asked whether additional routes apart from the ones in law -- which do not work -- are available if it is contractual.
          Like you point out - it's very hard to imagine being successful. You can apply to the courts for an order of specific performance in relation to a contract but they are very reluctant to make such orders, especially when damages can be sought.

          The only apparent relief is via "appointment of a manager" where RICS and related failings will be taken into account -- but even this is a) Not available in most circumstances because the constraints mean that it is not possible to locate a manager who will take on management b) it is temporary, and c) the actual misappropriation of money and criminal activity is not dealt with via this route.
          I would have thought the police would deal with any serious criminal activity. Also with appointment of manager applications the manager doesn't have to be professionally qualified in any way and could be one of the leaseholders who is able to demonstrate their familiarity with the RICS management code..

          Also, would section 84 of the Housing Act 1996 not be any help to you? There would have to be a tenants association formed and then a surveyor appointed who would be allowed access to documents etc. The County Court deals with any disputes.
          I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

          Comment


            #6
            Found this

            I haven't looked at the details but there appear also to be powers under S76, Leasehold Reform, Housing and Urban Development Act 1993
            I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

            Comment


              #7
              There IS power to enforce, it's criminal offence not to comply with s21 & s22 but as we've found no one really wants to actually do the enforcing
              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


                #8
                Originally posted by andydd View Post
                There IS power to enforce, it's criminal offence not to comply with s21 & s22 but as we've found no one really wants to actually do the enforcing
                Yes it's a problem. I have not heard of a single case brought by any Council. When I was in a similar position the local Council were not interested. Referred me to a solicitor & lease-advice. Lease Advice referred me to the Council.

                I seem to remember one reported case of a private prosecution but when I looked into bringing a private prosecution for myself I found very few people at the Courts actually knew anything about it and the Magistrates Court didn't even know it was something they dealt with.

                I also heard that the Crown Prosecutor don't really like private prosecutions because they feel they are typically vexatious in nature. There is a risk they will take over the case and have the landlord bound over to observe the peace rather than give the LL a criminal record for not providing information.

                All in all I favour the LTT if all else fails. There might not be any unreasonable service charges but there's a good chance the LL will be ordered to pay the fee and will not be allowed to charge their own costs to the service charges. If they fail to provide documentation ordered by the LTT then they may also be ordered to pay the leaseholder's costs.
                I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                Comment


                  #9
                  Originally posted by siva View Post
                  Also, would section 84 of the Housing Act 1996 not be any help to you? There would have to be a tenants association formed and then a surveyor appointed who would be allowed access to documents etc. The County Court deals with any disputes.
                  Most of the legislation is as helpful as a Chocolate Teapot -- and deliberately designed to be unhelpful. Indeed it is hard to conclude otherwise than that the legislation is designed specifically and deliberately to facilitate and to hide fraud and para-fraud.

                  So for example in terms of management audit by a surveyor, if legislators really wanted to facilitate integrity they would have allowed lessees to demand an independent management audit (lessee pays). But no, the legislation allows lessee to audit management only if at least two thirds of lessees seek such an audit. In the case of a block of 5 flats, this means that if a dominant owner owned two properties it would be impossible ever for the other three owners to obtain rights to audit or any sort of redress. If 6 properties it would be pretty damn impossible, and even in larger blocks it is almost never possible to achieve. And that is what the legislation sets out to do in almost every facet.

                  Comment


                    #10
                    >And that is what the legislation sets out to do in almost every facet.

                    I can understand your frustration but I don't come to the same conclusion as you. If there was no good intent behind the legislation then they wouldn't have made it possible in any situation. They could have left things as they were previously with no rights to appoint a surveyor yet in the case where the freeholder has no control of how leaseholders vote it is possible to appoint an Auditor.

                    Didn't you say there were 8 flats in your property? Is it not possible in your case? Can you explain your own situation? Or is it all just academic?

                    The legislation is poor in many ways but you can also cite situations where the freeholder finds it unjust.
                    I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                    Comment


                      #11
                      Originally posted by siva View Post
                      >Didn't you say there were 8 flats in your property? Is it not possible in your case? Can you explain your own situation? Or is it all just academic?
                      A single person owns a majority. Basically the remaining lessees have found we have no rights at all, nor any possible non-transient routes out of the situation.
                      Nor can anyone sell except to the majority owner (because buyers will not buy because the very person who ends up buying is the same person who fails to respond to any solicitor's questions thereby preventing any sales on the open market). So the majority progressively increases as more units are sold to the perpetrator at extremely low prices by distressed sellers. The Directors are effectively operating in their own interest and not in the interest of the Company, but regardless of any fine words options along that route are zero as well.

                      That is I suppose until we have a disaster (like a death, which in our building is not impossible) or a massive uninsured event.

                      More than the legislation, the problem lies in the courts - firstly due to a trio of legal cases which set precedents that the law does not need to be upheld (both in terms of rights to information and the criminal prosecution routes), second due to this fanciful idea that local authorities are supposed to uphold the law in situations where they have no vested interest, and third that the FTT is prepared (based on my reading so far only as this route is still pending) to regard costs as legitimately incurred even in the absence of any invoicing and that they accept things as being correct at face value.

                      All should be illegal, and some is "criminal" (no insurance documents, no accounts, sink funds disappeared).

                      The police just laugh. We have not managed to find any manager who is prepared to be nominated to FTT (it is just not possible). The local authority laugh. The Local Fire department were un-worried about the absence of any Fire Risk Assessment and have never responded or acted as promised.

                      Comment


                        #12
                        Originally posted by AndrewDod View Post
                        The police just laugh. We have not managed to find any manager who is prepared to be nominated to FTT (it is just not possible). The local authority laugh. The Local Fire department were un-worried about the absence of any Fire Risk Assessment and have never responded or acted as promised.
                        And apart from a lack of information you are convinced that service charges are unreasonable or unreasonably incurred? There are other problems?

                        I am in a very similar position, except there's no obvious fraud or wildly unreasonable service charges, just a dispute over communal heating. There are 6 flats. The freeholder owns 2, their son another and there is one other flat who tends to side with them. Our service charges are actually very low but there's one rule for the freeholder owned flats (all sublet) and another for ourselves. The FH tried to have my flat forfeited but I won at the FTT - no breach. I've also won service charge cases at both LVT & CC. Lost an application to appoint manager (long story) and a poorly thought out attempt to amend the lease.

                        Like I mentioned earlier, you can nominate yourself as manager. It might not work but if you can demonstrate all of the problems finding a manager to nominate, then the tribunal might overlook your lack of experience. I seem to remember there being cases where non-qualified managers are appointed.

                        You are right that tribunals have, with a lack of proof, determined that service charges are not unreasonable but this doesn't mean they will always come to this conclusion. Each case is determined on its own merits, arguments made and proof presented. The LTT decision should be based on the balance of probabilities, not beyond reasonable doubt. So if something seems obviously unreasonable then you might get the decision you are looking for. Present evidence from other developments or get an expert witness to support your arguments.

                        If the freeholder fails to provide evidence to the tribunal that they have asked for, they are putting themselves in a weak position. There is no 'one procedure' for LTT's but if they arrange a pre-hearing, you need to show that the owner has not provided documentation when asked in the correct legal manner ask for an order that they produce what you need to see. If there is no pre-trial hearing then you need to put you request in writing ASAP.

                        At my first service charge case the freeholder treated the LVT with contempt, providing no records when the LVT ordered they be produced. Lack of documentation worked in my favour on some disputed items. I was awarded costs, fees and got the benefit of doubt on occasion.
                        I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

                        Comment

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