Sinking fund.... why so huge?

tim123456789

propertyman wrote: »

In simple terms, even in simple terms, your post was fundamentally wrong:A

not it wasn't

your corrections were nit-picking (once again)

tim

propertyman

tim123456789 wrote: »

not it wasn't

your corrections were nit-picking (once again)

tim

No Tim, they are not; you were wrong in your post even in simple terms as you misstated two fundamentals.

The OP would have walked of thinking, and asserting, that they don't have to contribute to a sinking fund until consulted under section 20 which is completely wrong, not a simplification.

Similarly the £250 was also wrong as the OP could miss out on their right to be consulted. They may only pay say £175 and believe they have no right. But if one or other flats are larger and would pay over £250, then everyone must be consulted.

Thats not nitpicking......................

Your issue is that you have a problem in saying " Ok great I see; thanks"

tim123456789

propertyman wrote: »

No Tim, they are not; you were wrong in your post even in simple terms as you misstated two fundamentals.

The OP would have walked of thinking, and asserting, that they don't have to contribute to a sinking fund until consulted under section 20 which is completely wrong, not a simplification.

Similarly the £250 was also wrong as the OP could miss out on their right to be consulted. They may only pay say £175 and believe they have no right. But if one or other flats are larger and would pay over £250, then everyone must be consulted.

Thats not nitpicking......................

Your issue is that you have a problem in saying " Ok great I see; thanks"

On point 1 the OP would only have come to that conculsion if he had completely misread my post, as you obvioulsy have, as I did not say that. (I said that they had to consult before he handed over the money for specific defined works, not if the money is a contributrion to a sinking fund for general undefined works).

The second point is nit-picking in the contex of the OP being asked for 5 grand.

HTH

tim

propertyman

No Tim thats not waht you said.

1) if you have to contribute to a sinking fund aganst unspecified future works then this will be detailed in your lease. If it isn't so detailed then they can't collect money in this way.

2) If they want to collect money for specific extraordinary works then (assuming that it's above 250 pounds per flat) they have to go through the correct section 20 notification and consultation process and if they don't, you don't have to pay (not just in advance - at all.

Point 1 agreed. Point 2 is wrong. The collection for works, specific or not extraordinary or not, in SF, RF or even for that matter in the current years estimated budget, is never subject to section 20 consultation.

That is only required when there is the intention to spend it.

You also said

(I said that they had to consult before he handed over the money

which is also wrong as above.

You also say that the £250 is nitpicking, which it is not as you have conflated it with the collection of monies when as above it is only relevant when the money is to be expended.

The £5K is only subject to S19, not s20, LTA 1985, as posted.

propertyman

So to be clear

1: if the lease allows an SF and the amounts of and works are recoverable under the lease and reasonable in scope and provision then the SF of £5K can be collected as and when the lease allows.

2: When they decide to say redecorate, that is when, if any one flat would contribute more than £250, that they are entitled to be consulted*.

If flats in a block vary in size, a flat may pay less than £250 but as one or more will, everyone has to be consulted*.

( That is they have to be consulted if the LL intends to recover his money as SC or use the SF!)

tim123456789

propertyman wrote: »

No Tim thats not waht you said.


Point 1 agreed. Point 2 is wrong. The collection for works, specific or not extraordinary or not, in SF, RF or even for that matter in the current years estimated budget, is never subject to section 20 consultation.

That is only required when there is the intention to spend it.

Now I don't understand:

If:

a) the have no reasonably immediate intention to spend it (on some defined works or whatever)

and

b) the lease does not allow them to collect money in a SF

What authority do that have to demand such a sum in the first place?

propertyman

if the lease does not provide for a sinking or reserve find then there is no basis to demand monies on either a provision or actual quote- save that some schemes have voluntary reserve funds with voluntary contributions.

Now in the case of an annual or in rare cases a periodic service charge say quarterly, where the contribution is estimated, all it need do is contain a provision which is reasonable say a qualified surveyor or hopeful contractor said to provide £x for projects in the year.

When they come to plan the works then they must consult and then after that can use the funds collected. If the funds are not spent then they are often refunded as a year end surplus.

Occasionally there are quasi reserve finds where any surplus in a year can be held back as a provision against such non annual works.

In some cases where the money is not spent in the year a lease can so allow for a provision to be added in to the year end costs and retain it for a major project in the following year or years.

So in simple cases where there is no reserve fund, and a lease does not allow for one off demands the annual or periodic estimate would often include x as a provision for major works, and when programmed the consultation process begins.

It could be that given that the view of residents might be hard to gauge or that there are several projects to do with uncertain costs or scope several provisions might be made even though not all of them might in the end by used.

Some older or defective leases leave the LL in a poor position in that they can only collect the money after the works are done and the year has ended. In those cases consultation is done first even though the bill might be some time in coming.

In the case where a lease does allow for a one off demand consultation is often done first and the bill comes at that time.

What authority do that have to demand such a sum in the first place?

The authority is therefore "what does the lease say"