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  • FIRST POST
    • BBH123
    • By BBH123 12th Jul 17, 3:32 PM
    • 502Posts
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    BBH123
    Does anyone know what a Freeholder Loan is on leaseholders service chg account
    • #1
    • 12th Jul 17, 3:32 PM
    Does anyone know what a Freeholder Loan is on leaseholders service chg account 12th Jul 17 at 3:32 PM
    I am surposing its a loan or money taken out by the Freeholder but what would it be for and does it have to be something related to the flats.

    Secondly does the money have to be paid back to the account when we take over as a RTM Company in August ?
Page 1
    • Soundgirlrocks
    • By Soundgirlrocks 12th Jul 17, 4:27 PM
    • 450 Posts
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    Soundgirlrocks
    • #2
    • 12th Jul 17, 4:27 PM
    • #2
    • 12th Jul 17, 4:27 PM
    Im not an expert but I do run a block of flats, any money you have paid in service charges is held in trust to be spent on the building and grounds. If the freeholder has had a loan from the account it will need to be repaid.
    • eddddy
    • By eddddy 12th Jul 17, 5:28 PM
    • 5,549 Posts
    • 5,232 Thanks
    eddddy
    • #3
    • 12th Jul 17, 5:28 PM
    • #3
    • 12th Jul 17, 5:28 PM
    I am surposing its a loan or money taken out by the Freeholder but what would it be for and does it have to be something related to the flats.

    Secondly does the money have to be paid back to the account when we take over as a RTM Company in August ?
    Originally posted by BBH123
    Are you sure you've got this the right way round?

    i.e. Is the freeholder actually lending money to the service charge account, because there were insufficient funds to do some maintenance or repairs etc.

    A lease is essentially a contract that says what the service charge funds are used for (e.g. repairs and maintenance).

    A freeholder would be breaking the terms of the lease, if they used those funds for something else - for example, a loan.
    • BBH123
    • By BBH123 12th Jul 17, 6:02 PM
    • 502 Posts
    • 790 Thanks
    BBH123
    • #4
    • 12th Jul 17, 6:02 PM
    • #4
    • 12th Jul 17, 6:02 PM
    Thanks for your posts both .

    I will have to check but I assumed it was a loan outwards as there is money in the service account . Maybe the fact it is described as freeholder loan rather than credit has confused things.
    • AdrianC
    • By AdrianC 12th Jul 17, 6:33 PM
    • 15,751 Posts
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    AdrianC
    • #5
    • 12th Jul 17, 6:33 PM
    • #5
    • 12th Jul 17, 6:33 PM
    Could it be that the leaseholder - the flat owner - has "borrowed" money from the freeholder, probably for some big maintenance/repair expenditure bill, and is paying it back through a higher service charge? If so, then I'd expect it to be cleared by the solicitors during completion.
    • BBH123
    • By BBH123 12th Jul 17, 8:09 PM
    • 502 Posts
    • 790 Thanks
    BBH123
    • #6
    • 12th Jul 17, 8:09 PM
    • #6
    • 12th Jul 17, 8:09 PM
    There are only 3 flat owners and none of us has borrowed money , tbh the managing agents are vicious and would go for forfeiture , they wouldn't entertain lending to a leaseholder even at a higher rate.
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