Managing agent wont refund money

pyueck

Hi,

I own a leasehold flat. We had a management company which managed the propety (cleaning hallways etc) up to March 2012. We now manage the property ourselves. The managing agent admits that there is a credit of £310 on our account. However they are saying that because one other leaseholder has not paid their management fee for a year and a half, there is no money in the client account and therefore we cannot be repaid until this other person repays their bill. I have no idea who this other person is but apparantly there is some dispute over something.

This on first impression to me seems rubbish as you cannot refuse to pay a creditor just because another debtor is not paying you. I am not up on this area of the law though and it would be good to know if I should go back and say on your bike, or whether the letting agent is actually correct.

Thanks!

BitterAndTwisted

Actually, if what the managing agent is saying is true, then they can withhold leaseholder's funds. That's because to them you are not strictly individuals but a group, and if the group is in arrears no-one get their money.

Of course, now that you have relieved them of the contract you have no hope of them taking very harsh action to recover those funds. You leaseholders as a group will have to do that yourselves now.

Have you asked the ex-agents to furnish you with all of the documentation together with the individual leaseholder's accounts? That's when you should be able to see which one of you is in arrears.

G_M

pyueck wrote: »

Hi,

...However they are saying that because one other leaseholder has not paid their management fee for a year and a half, there is no money in the client account and therefore we cannot be repaid until this other person repays their bill....
Thanks!

What exactly is the unpaid fee?

If it is the annual service charge, then that is a matter for you (the new self-managers) to extract from the leaseholder. You will have to chase them for their arrears as well as their current/next payments.

That money is not owed to the management company.

However presumably you have been paying the management company a fee each year for managing the property (I don't mean the costs of cleaning communal areas etc which come from the service charge, I mean THEIR fee).

Normally this would be paid as a single charge, it would not be paid by each leaseholder individually.

I guess you need to look at the accounts (you have got copies...?) to see if their fee is paid in full. Assuming it is, then they should pass all the funds they hold to you and leave you with the priblem of the 'non-payer'.

BitterAndTwisted

Actually, the management fee is issued as one invoice by the Man. Co. to each property/development and then allocated to each leaseholder's service-charge account according to whatever proportion is stated in the lease. At least, that's how it worked when I was employed by an international property management company both in residential and commercial property management. I have no reason to believe that this accounting procedure may have changed.

I have never seen individual management fees invoices issued to each individual leaseholder.

If one of the leaseholders has declined to pay any charge levied against them, then the whole lot of monies is always cross-collateralised. So I'm not surprised that no money has been passed back to you as there may not be any. If there is a shortfall the Man Co would always ensure they get paid, even before any of the contractors do for whatever work they have carried out. Otherwise why be a Man Co?

propertyman

Sadly you have it muddled so let me untangle it.

The MA acted for "you" being the residents as a group who are, in various forms treated as the "landlord". They billed the apportioned service charge which has been mis-labelled management fee and confused with the MA's own professional fees.

That SC has been billed on behalf of "you" as they are agents who manage your services and your money, not a contractor who for one fee employs sub contractors).

The funds are not cross collateralised, the costs expended are always the responsibility of the landlord, and the funds paid in held on trust in account for your building alone for the residents- it is not the MA's money nor the Landlord's.

The service charges therefore run with the land and are continuous year to year, they are are always your costs and charges, no matter who actually bills them.

What the agent is saying, poorly, is that they have your unpaid bills for cleaners etc, which may include their fees, which exceed the £310 in the client trust account and they are unwilling to part with it.

You need to agree what is outstanding and if it is unchallenged agree to pay the bills out of your current funds, and as an opening balance on the non payers account chase payment yourself.

Yes you not the agent, as the cost of doing so, and right to collect, is always and only yours, your only redress against the agent is for not starting collection procedures earlier in the agreed procedure when they were acting for you.

I am sorry but you cannot treat this as their problem it's not, it is and is always yours, the landlord.

Like it or not that is how service charges on residential property work and that agents are not a contractor or supplier you terminate and close an account with them, they are only holding your funds for a period of time during the 125 or 999 years of the leases.