Deed of variation - Who needs to sign it?

japher

Hi all,

I live in a leasehold flat, our building has three flats in total. Each flat owner owns a one-third share in the ltd management company and is a director the management company (3 directors in total). The management company owns the lease.

We've recently been told that we're liable to cover some building work in the flat above us. A roof terrace is showing signs that it doesn't have adequate joists (ceiling joists were probably not replaced with floor joists when the flat part of the roof was converted into a roof terrace) and needs to be completely renewed. The costs run into many thousands.

On checking the lease, we've been told that we are liable to cover the costs because a Deed of Variation was made to the lease, without our knowledge, that designated the 'roof terrace for the exclusive use of the top flat'. Now that we've seen the lease for the top flat, we've noticed another (unrelated) Deed of Variation has been made to allow sub-letting (again without our knowledge).

My question is, when a Deed of Variation is made to a lease, who in needs to be made aware and who (at least) needs to agree and sign it? Is one director enough to make a decision for the Lessor?

G_M

The freeholder and the leaseholder whose lease is being altered. Not the other leaseholders.

So - who is the 'freeholder'? Although you say "The management company owns the lease." I suspect you mean that the Mgmt company owns the freehold (ie each flat owner owns 1/3rd of the freehold via the magmt company, as well as their own individual lease?

If so, you need to look at tthe constitution of the management company to find out how it operates, and who is aurthorised to sign on its behalf.

Possibly all 3 'Directors' need to sign.
Possibly any 2 out of the 3.
Possibly the elected 'Chairperson' can sign on behalf of all 3.

Impossble for us to know.

DVardysShadow

You need to be more specific here about who has been varying what deeds for whom. I suspect at great cost you could get any Deed of Variation struck down where one person acting on behalf of the freeholder and on behalf of himself as leaseholder has simply imposed obligations on the other leaseholders.

japher

@GM:

Yes you're right, sorry, I did mean that the Mgmt company owns the freehold.

@DVardysShadow:

We have one leaseholder who wanted a change made to the lease (acting as lessee). They agreed with another leaseholder (acting as a director of the mgmt company, representing the lessor) to make the change, and both signed the deed of variation. This was without our knowledge or consent. Now that there's a problem with the roof (it can't stand up to being used as a roof terrace), we're being told that it's a mgmt company responsibility and that we have to pay.

Thanks for the advice. I don't have a copy of any constitution (or similar) for the mgmt company unfortunately, I have never seen such a document (is it required to exist?).

propertyman

A lease is a contract between two parties the Man Co ( as freeholder) and a leaseholder.

Only the parties to a lease can vary the terms of a lease.

Therefore
1:until your lease is varied by your agreement no other document can do that, and it is your sole decision to vary, it cannot be imposed
2: No other document entered into by others can vary your lease.

DVardysShadow

propertyman wrote: »

A lease is a contract between two parties the Man Co ( as freeholder) and a leaseholder.

Only the parties to a lease can vary the terms of a lease.

Therefore
1:until your lease is varied by your agreement no other document can do that, and it is your sole decision to vary, it cannot be imposed
2: No other document entered into by others can vary your lease.

Hmm. I am wondering whether the variation attaches the roof terrace to an already existing obligation in the lease implicitly rather than explicitly. For example 'a fair contribution to the costs of maintaining the building' is the explicit clause - the DoV has now changed the definition of 'building' implicitly.

propertyman

I follow your reasoning and it depends on whether the joists are demised in that lease or were retained parts.

Assuming that they are retained parts, in granting consent for the use of the area and varying the Top floor flats lease to use the area exclusively, the freeholder cannot simply pass on the costs of doing so under the lease, having varied the original use and arrangement of the building in that manner. Quite apart from the fact that they should have established that the joists could take the load.

it is one thing to say that we have added a flat and have re jigged the service charge matrix, quite another to say we have given this chap a terrace and everyone has to pay for the supports.

Similarly leases often define the building, as well as put a scope on repair clauses that would limit the contribution.

japher

Hi all, thanks hugely for your responses!

@propertyman:

I think you're correct, the joists are not demised in the lease of the top flat. 'Roof timbers' are explicitly mentioned as not part of the demised premises so I guess this means we can safely assume they are retained parts.

When you say that the freeholder can't simply vary the use and pass on the costs of that change to other lessees, what would you imagine would happen to those costs? It seems like if we, as the lessee, can't be made responsible without our knowledge/consent then the lessor is stuck with the costs, but the lessor is a company made up of three stakeholders, one of which is me. So, I guess as a director and third-shareholder of the freeholder, I'm then responsible for one third of the cost that I refused to pay? This sounds a lot more palatable if plausible.

I'd like to understand more about your view that the freeholder cannot simply pass on the costs arising from their decision to vary the use. Is this formalised in property law anywhere or were you speaking here more in terms of what should be considered fair and reasonable?

I'd also like to understand more about your point that the lessor should have ascertained whether the joists could take the load. Of course I agree this whole mess has been caused by the fact that this was never done. Are there any formal rules in law around this or are you referring more to a general principle of the lessor acting responsibly with respect to variations?

@DVardysShadow:

Our lease states that the Lessor has to maintain, repair and renew "The main structure of the building and in particular the roof, foundations, load-bearing walls including load bearing party walls, chimney stacks, gutters, drainpipes and main water pipes".

As you theorised, the owner of the top flat argues that we are obligated to contribute to the cost of maintaining the the roof; that the roof terrace is the roof, therefore we are implicitly obligated to pay for it.

It's certainly true that (as propertman points out) our lease was not varied when the deed of variation was applied to the top flat.

propertyman

I was addressing what a lessee should pay it terms of what they are obliged to contribute to , in this case a roof. If the landlord changes that use then it is the contractual obligation, in the lease, and the equitable one, what is fair and reasonable as set out in statute.

If as a lessee you do not have to pay , as a shareholder/member of the freeholding company you get the thick end of it by
a; it being a service charge item that is unrecoverable
b; that as "a" applies the freeholder is saddled with the obligation and cost
c; the freeholder foolishly created the situation by inexpertly varying the lease to that flat to have a terrace.

It is therefore a matter of negotiation finding an alternative ( a suspended deck?), suing the director for their silly actions ( assuming you the other directors were unaware of this), or refusing to contribute so that the company becomes insolvent, and through brinkmanship achieving a new variation.

The options need to be examined by a solicitor and it's really outside the scope of a forum with limited information.

its a fine mess.

mbo

Hi, can I ask another question regarding a variation of deed?

We are selling our flat, as leaseholders, and our buyers are demanding a change in the lease (deed of variation) to be activated on sale of the flat. A draft has been written, but my solicitor is saying she will charge £500+ to read over it and check it. If the freeholders solicitor and buyers solicitor are dealing with it, does my solicitor even need to read it? Can i not just sign it as the changes will not effect me- only starting when i have sold it?